The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry, by William K. Black. Austin, Texas: University of Texas Press. 2005. Cloth, ISBN 0292706383, $24.95. 286 pages.
William K. Black served in several capacities as a senior regulator during and after the meltdown of the savings and loan (S&L) industry during the 1980s. A lawyer and litigator, he then earned a Ph.D. in criminology before taking up a position teaching public policy at the University of Texas. In short, Black is an exceptionally well-informed insider with a strong academic background-the perfect authority on the subject. The consequence is a book that is both unique and highly informative.
An important element of Black's book is its summary, at times highly detailed, of his experiences as a senior regulator and litigator trying to reign in an enormous wave of fraudulent S&Ls. Beyond fascinating details of bureaucratic and political infighting, he also presents several broad lessons concerning the complexity of the regulatory process. Specifically he makes us consider the extent to which this process is shaped by the ideologies and personal agendas of the melange of persons, some qualified and others less so, that make up the senior staff of an important regulatory agency (a lesson, tragically, that we were unable to absorb prior to the recent New Orleans hurricane). Black names names as he recounts some of the critical bureaucratic debates and struggles that occurred around critical decisions taken, or not taken, as the crisis unfolded. He makes it clear that several, at times flatly indefensible, decisions were taken that greatly facilitated the ends of institutions and individuals who were, and were known to be, fraudulent. Sadly, these decisions enabled many S&Ls, including that of the notorious Charles Keating, to remain open long after it was obvious that they were frauds, hopelessly insolvent, and continuing to hemorrhage the money of the government and private investors.
The history and experiences presented in this book are, on their own, most worthy of reading and contemplation. Just to give a single example, Black reminds the reader that from the beginning to the end of this episode not a single outside auditor reported fraudulent banking practices to the authorities. Many prominent assessors, accountants, and lawyers were participants, accessories, or facilitators of fraud. It follows that many individuals were...