Who is responsible? - savings and loan scandal - column

National Review, Sept 3, 1990 by William F. Buckley, Jr.

A NATIONAL REVIEW editorial two issues ago reported that three Democrats plus Senator Jake Gam of Utah, who is a Republican, met informally in a back room" during a 1980 House-Senate conference on banking legislation and decided to raise deposit insurance from $40,000 to $100,000. We got this datum from the Washington Post, but now receive a letter from Senator Gam vigorously denying that it happened in that way. "Let me state clearly and for the record: No such meeting took place. The increase in deposit insurance was suggested and debated during a public session of the House-Senate conference committee in 1980. The views of the then FDIC Chairman Irvine Sprague were solicited through his representative at this public meeting, and his official response was that he did not object to the increase to $100,000. Based on this information, the conference committee members voted to accept the proposal."

Now using only very round figures, the difference between a guarantee of $40,000 and of $100,000 may mean something like, oh, $200 billion. When Senator Gam reports that the chairman of the FDIC "did not object" to the increase of the guarantee by 150 per cent, one catches one's breath. At least, I do. Moreover, when Senator Gam says that the subject was debated," are you not curious to know what were the objections listed by the dissenters?

While, then, it is true that Senator Gam didn't participate in a back-room deal with three Democrats to increase the guarantee, the public is left mystified as to what kind of deliberations were taken before the conference committe of the House and Senate agreed to commit what turned out to be several hundred billion of the diminishing supply of post-tax American dollars. The whole question of the responsibility for the S&L mess is a mess. We have pieced together parts of the story, and spin-controllers are out there actively attempting to crank up tendentious versions. The Democrats would like everybody to blame Neil Bush, and then sit back, rising from one's bed of fury just long enough to vote for Democrats in November. The Republicans would like the voters to bear in mind that during the period when the S&L scandal flowered, Democrats controlled the House and the Senate. And when Charles Keating got around to trying to influence five critically situated senators, only one of these was a Republican, and he received a relatively trivial amount of money.

And then the Democrats counterattack by reminding us that during the Eighties, the President of the United States was a Republican, and since the FSLIC is a federal agency, and since the President is responsible for overseeing the executive, ought not Ronald Reagan to be held responsible for the negligence of the FSLIC?

To which (of course) the Republicans have a reply. It is that the oversight committees on which the public depends are a part of the legislature. The very idea of the separation of powers calls for the legislature to oversee the executive, the judiciary to oversee the legislature, the executive to curb the legislature via the veto). And, of course, the President uniquely can address the entire nation. Had he known what was going on, Mr. Reagan might have said something like, You will not believe this, but a great big grown-up committee of senators and congressmen voted to increase the exposure of the United States Government by 150 per cent at a time when the thrifts have been deteriorating. It's too late to reverse that protection for depositors already sheltered, but not too late to legislate a reversal of the guarantee."

The public ought to know what happened. In part, perhaps, to prosecute the tortfeasors and take the negligent to the woodshed. In part to study what are the defects in our current system.

But who will do the investigation? A congressional committee would need to investigate, among other things, itself. A Justice Department attorney would be .. easygoing on a Republican Administration?

The Brits have something on us, with their Royal Commissions. We could use one on the S&L business, which makes Teapot Dome look like a game of Parcheesi.