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Now
After months of hype and speculation,
James A. Baker III and the Iraq Study Group are on the verge
of releasing their recommendations. And yet after all of that
hype, the group won't provide a single deadline for getting American
troops out of Iraq nor will the group address the seminal question
when it comes to America's future in Iraq, which, obviously is:
should we stay, or leave?
That Baker and the rest of
his group fail to provide guidance on this essential point shouldn't
be surprising. Baker has made a career out of omitting the obvious
whenever it suits his political purposes. That's made abundantly
clear in his new book, Work Hard, Study and Keep Out of Politics.
In that tome, a 460-page auto-hagiography
that recounts his career working for presidents from Ford to
Reagan to the First George Bush to the Second George Bush, Baker
neglects to mention a single word about his role in one of the
defining events of the Reagan/Bush era: the savings and loan
debacle.
Baker perhaps more than
any other single American bears primary responsibility
for the loss of more than $100 billion in taxpayer money during
the savings and loan meltdown of the 1980s. Baker served as Reagan's
treasury secretary from early 1985 to August 1988, a time period
when fraudsters and con artists were looting banks and thrifts
all over the country, but particularly in Texas. Throughout his
stint at the treasury, and particularly in 1988, Baker worked
hard to downplay the magnitude of the growing S&L disaster
for obvious reasons: admitting the scope of the mess would make
Texas look bad, it would make Reagan look bad, and in doing so,
it would hurt Baker's crony, the First George Bush, who was running
for president in November 1988.
The smoking gun for the cover
up is most evident when looking at Baker's testimony before a
House Appropriations subcommittee on April 19, 1988. During that
appearance, Baker said that the $10.8 billion that had recently
been appropriated
to the Federal Savings and Loan Insurance Corporation to clean
up the S&L disaster was all that was needed. That amount
of money, Baker told the panel, "will provide FSLIC with
enough resources to handle the problems of the industry over
the next three years." Baker went on to say that the Federal
Deposit Insurance Corporation, which insures banks, had plenty
of funds. "There are some commercial banks that are having
problems, but the FDIC's fund, currently with about $18.6 billion
in it, should be able to handle these problems," he declared.
Even Baker's own deputy, George
D. Gould, the treasury department's undersecretary for finance
and the Reagan Administration's top policy maker for banking
and finance, was saying more money was needed. In May 1988,
the month after Baker appeared before the House subcommittee,
Gould told the Associated Press that $20 billion was "probably
not enough."
Not only did Baker hide the
extent of the cost, he agreed to get rid of Edwin Gray, the aggressive
head of the Federal Home Loan Bank Board, the agency that regulated
S&Ls. In 1986, Gray, a political appointee, had launched
an aggressive investigation of Texas S&Ls including Vernon
Savings, which was being looted by a group of bandits led by
Don Dixon. In 1987, rather than appoint Gray to another four
year term, the Reagan White House decided to replace him with
M. Danny Wall, a bureaucrat whose only real job qualification
was the fact that he'd been the Republican staff director of
the Senate Banking Committee when it drafted the S&L deregulation
law (Garn-St. Germain) that had opened the vaults to the fraudsters
and looters in the first place.
In June 1985, just a few months
after he moved to treasury after working for four years as the
White House chief of staff under Reagan, Baker received a confidential
letter from the chairman of the FDIC, William Isaac, who warned
him that the "problems of the thrift industry are of such
proportions that they will soon overwhelm" the FSLIC. Baker
ignored Isaac.
In my book, Cronies:
Oil, the Bushes, the Rise of Texas, America's Superstate,
I wrote about the S&L mess and Baker's role in it. I quoted
William Black, an attorney who helped clean up the S&L mess
while working for the Federal Savings and Loan Insurance Corporation
and later, as the deputy director of the Office of Thrift Supervision.
Black told me that the Reaganites were "willing to do the
most outrageous, unprincipled and dangerous things to maintain
the cover up" of the S&L disaster. And said Black, Baker
was one of "the centerpieces of this strategy."
To be fair, Congress shares
the blame for the S&L meltdown. Jim Wright, the Democratic
Speaker of the House worked hard to prevent federal regulators
from cracking down on S&Ls in Texas. On the other side of
the Capitol building, the Keating Five, a group of senators which
included 2008 presidential hopeful John McCain, ran interference
on behalf of disgraced S&L boss Charles Keating, the chairman
of California-based Lincoln Savings and Loan.
But none of those men were
the secretary of the treasury. None of those men had their signatures
on American greenbacks. None of those men had the power to appoint
aggressive regulators to delve into the unfolding S&L disaster.
Baker did. And yet he did nothing.
For the record, 1,169 savings
and loans in the United States failed. Texas had the most failures,
237. That's more than twice as many as any other state. In 2000,
the FDIC said that the S&L disaster cost taxpayers some $124
billion. But that sum does not reflect the entire bill. In order
to pay for the S&L bailout, the federal government sold bonds.
By the time those bonds are finally retired in 2020 or so, the
total cost of the S&L mess will likely be some $300 billion.
Despite those numbers, despite
the magnitude of the S&L mess, despite the fact that he was
on the job during the worst of the fraud and looting, none of
this information appears in Work Hard. In fact, the phrase
"savings and loan" doesn't even appear in Baker's book.
Given that omission, given
his record of malfeasance during the S&L disaster, is it
any surprise that Baker has failed to address the central question
in Iraq?
CounterPunch
Speakers Bureau Sick of sit-on-the-Fence speakers, tongue-tied and timid?
CounterPunch Editors Alexander Cockburn and Jeffrey St Clair
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