Greenspan on the S&L industry... The last thing that Alan Greenspan did before he left Townsend Greenspan to become Fed Chairman, was to opine on the S&L industry, and more precisely Charlie Keating's S&L. What follows is a vignette from the book "Inside Job," written by Steven Pizzo, about an encounter in 1984 between Greenspan and Ed Gray, who was the Federal Home Loan Bank board chairman.
"Gray received a letter from respected economist Alan Greenspan telling him he should stop worrying so much. Greenspan wrote that deregulation was working just as planned, and he named 17 thrifts that had reported record profits and were prospering under the new rules. Greenspan wrote the letter while he was a paid consultant for Lincoln Savings & Loan of Irvine, CA, owned by a Charles Keating, Jr., company. Four years after Greenspan wrote the letter to Gray, 15 of the 17 thrifts he'd cited would be out of business and would cost the FSLIC $3 billion in losses."
In addition, in 1985, Greenspan pronounced specifically that the management of the Keating thrift enterprise was "seasoned and expert" with a "record of outstanding success in making sound and profitable direct investments." For that quote I'm indebted to Jim Grant's terrific book, "The Trouble with Prosperity," which we will quote from again later.
quoted from: fleckensteincapital.com |
