Dakatsu wrote:Doesn't matter …
Well, I’m not a tax attorney, but my cursory research leads me to say -
FAIL !!
Let’s take these in reverse order:
Dakatsu wrote:Actually, the link was that both were caused by a massive amount of deregulation proposed by John McCain, and that Keating (the person) influenced McCain's descisions to deregulate.
Well, if you start from wiki …..
From
Savings and loan crisis, one of the causes was the -
Causes
Tax Reform Act of 1986
By enacting 26 U.S.C. § 469 (relating to limitations on deductions for passive activity losses and limitations on passive activity credits) to remove many tax shelters, especially for real estate investments, the Tax Reform Act of 1986 significantly decreased the value of many such investments which had been held more for their tax-advantaged status than for their inherent profitability. This contributed to the end of the real estate boom of the early to mid '80s and facilitated the Savings and Loan crisis. Prior to 1986, much real estate investment was done by passive investors. It was common for syndicates of investors to pool their resources in order to invest in property, commercial or residential. They would then hire management companies to run the operation. TRA 86 reduced the value of these investments by limiting the extent to which losses associated with them could be deducted from the investor's gross income. This, in turn, encouraged the holders of loss-generating properties to try and unload them, which contributed further to the problem of sinking real estate values. This turmoil and repositioning in real estate markets was caused not by changes in market conditions.
But apparently this legislation was not a Republican sponsored bill …
The U.S. Congress passed the Tax Reform Act (TRA) of 1986, (Pub. L. 99-514, 100 Stat. 2085, enacted 1986-10-22) to simplify the income tax code, broaden the tax base and eliminate many tax shelters and other preferences. Although often referred to as the second of the two "Reagan tax cuts" (the Kemp-Roth Tax Cut of 1981 being the first), the bill was actually officially sponsored by Democrats, Richard Gephardt of Missouri in the House of Representatives and Bill Bradley of New Jersey in the Senate.
From
here.
Well, the wikis don’t have a great deal of source citations, so let’s look elsewhere.
Timelines of the S&L Crisis can be found at
erisk and at the
fdic website.
erisk wrote: One problem was that regulation intended to help the S&L sector in the 1960s had put a ceiling on the interest rate that S&Ls could offer to depositors. This measure succeeded for a while in dampening competition for depositor funds between banks and S&Ls. But as new money market funds began to compete fiercely during the 1970s for depositors' money by offering interest rates set by the market, S&Ls suffered significant withdrawal of deposits during periods of high interest rates - a process known as disintermediation.
The biggest problem, though, was more fundamental. When S&Ls tried to compete for funds by offering relatively high rates or - after deposit interest rate ceilings were eliminated between 1980 and 1982 - by offering interest rates in line with or above market rates, an unsustainable gap opened up between the cost of their funding liabilities (short-term interest rates) and the income generated by their assets (long-term, fixed-rate mortgage repayments).
Worse, as interest rates moved higher, the economic value of existing S&L portfolios of long-term, low interest rate residential mortgages moved sharply lower, threatening institutions with insolvency.
The trigger for the closing shut of this asset/liability trap was the shock rise in oil prices in 1979, pushing up inflation and headline interest rates around the world. By 1980, with interest rates on US government debt hitting 16%, many S&Ls had already been fatally wounded.
fdic page wrote: 1980-1982 Statutory and regulatory changes give the S&L industry new powers in the hopes of their entering new areas of business and subsequently returning to profitability. For the first time, the government approves measures intended to increase S&L profits as opposed to promoting housing and homeownership.
March, 1980--Depository Institutions Deregulation and Monetary Control Act (DIDMCA) enacted. The law is a Carter Administration initiative aimed at eliminating many of the distinctions among different types of depository institutions and ultimately removing interest rate ceiling on deposit accounts. Authority for federal S&Ls to make ADC (acquisition, development, construction) loans is expanded. Deposit insurance limit raised to $100,000 from $40,000. This last provision is added without debate.
November, 1980--Federal Home Loan Bank Board reduces net worth requirement for insured S&Ls from 5 to 4 percent of total deposits. Bank Board also removes limits on the amounts of brokered deposits an S&L can hold.
August, 1981--Tax Reform Act of 1981 enacted. Provides powerful tax incentives for real-estate investment by individuals. This legislation helps create a "boom" in real estate and contributes to over-building.
September, 1981--Federal Home Loan Bank Board permits troubled S&Ls to issue "income capital certificates" that are purchased by FSLIC and included as capital. Rather than showing that an institution is insolvent, the certificates make it appear solvent.
…
July, 1985--Chairman Gray begins transfer of federal examiners to the twelve regional Federal Home Loan Banks so that they are no longer overseen by OMB and their salaries are paid directly by the Bank Board system.
August, 1985--Only $4.6 billion in FSLIC insurance fund. Chairman Gray tries to gain support for recapitalizing FSLIC on Capitol Hill. In 1986, GAO estimates the loss to the insurance fund to be around $20 billion.
…
1989--President Bush unveils S&L bailout plan in February. In August, Financial Institutions Reform Recovery and Enforcement Act (FIRREA). FIRREA abolishes the Federal Home Loan Bank Board and FSLIC, switches S&L regulation to newly created Office of Thrift Supervision. Deposit insurance function shifted to the FDIC. A new entity, the Resolution Trust Corporation is created to resolve the insolvent S&Ls.
Other major provisions of FIRREA include: $50 billion of new borrowing authority, with most financed from general revenues and the industry; meaningful net worth requirements and regulation by the OTS and FDIC; allocation funds to the Justice Department to help finance prosecution of S&L crimes. Additional bank crime legislation the next year (i.e., the Crime Control Act of 1990) mandates a study by the National Commission on Financial Institution Reform, Recovery and Enforcement to uncover the causes of the S&L crisis, and come up with recommendations to prevent future debacles.
It pretty obvious that the S&L situation was a lot more complicated than just
deregulation, as there were plenty of other regulations still on the books.
OK, Dak, now that I’ve pointed you to some actual sources, please tell me where you found the information that
" both were caused by a massive amount of deregulation proposed by John McCain". I’m sure this would be news to just about
everybody..
Next –
Dakatsu wrote: Just because there were democrats in it doesn't excuse McCain ...
Apparently you did not take the time to read and understand the last link from my earlier post (the one from azcentral.com). Please go back and read it again. McCain involvement was found to be peripheral to the much more substantial involvement of the Democratic senators (excepting Glenn), especially DeConcini and Cranston. If you’d like another source from a few years back, try this one -
From a
2000 Slate article -
Chris Suellentrop wrote:In February 1991, the Senate Ethics Committee found McCain and Glenn to be the least blameworthy of the five senators. (McCain and Glenn attended the meetings but did nothing else to influence the regulators.) McCain was guilty of nothing more than "poor judgment," the committee said, and declared his actions were not "improper nor attended with gross negligence." McCain considered the committee's judgment to be "full exoneration," and he contributed $112,000 (the amount raised for him by Keating) to the U.S. Treasury.
(emphasis mine)
Furthermore, it’s more than a little naïve of you to exclude to party affiliation from this discussion. Perhaps you should share your wisdom with Senator Obama, since it has been a touchstone of Obama’s strategy throughout the campaign to try to link McCain hand-in-glove with "the failed policies of George W. Bush and the Republicans". The Democrats are clearly trying to paint the Republicans as corrupt in general, and that all the electorate needs to do is sweep the Democrats into power in order to initiate a Golden Age of wisdom and prosperity, sweet flowers and pretty butterflies.
Of course, this completely ignores the fact that Democrats are as responsible for this mess as Republicans.
