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2 Stan. L. & Pol'y Rev. 21 (1990)
A Never Ending Story - An Introduction to the S&(and)L Symposium

handle is hein.journals/stanlp2 and id is 23 raw text is: A Never Ending Story An Introduction to the S&L Symposium by G. Christian Hill Despite the hundreds of articles written about the causes and implications of the thrift debacle, it re- mains a disaster with a continuing capacity to surprise and confound. Several hundred savings and loan as- sociations (S&Ls) considered likely to survive just a year ago are now failing or distressed. Reliable esti- mates of the total 10-year cost of resolving failed S&Ls are now more than double the $157 billion predicted in August 1989. There is a widespread misunderstanding of the history and future of this financially cataclysmic event, partly because those responsible for it-thrift opera- tors, regulators, accountants, and politicians, among others-have assiduously sought to minimize and misrepresent their contributions to the problem. They have tended to blame each other-accurately as it turns out-for negligence, delay, and deferral. But this invidious process has obscured the more fundamental flaws, in the way our financial system operates and the way it is politically administered, that fostered the thrift debacle. Because several of the Mr. HiU is the San Francisco Bureat Chief of The Wall Street Jourmal. He has covered thrift issues since 1979. root causes of the debacle have not been addressed, the intended solution to the crisis, the Financial Re- form, Recovery, and Enforcement Act of 1989 (FIRREA), is no more than a stop-gap measure. More- over, it falls far short of paying for the losses that will actually be incurred over the next decade. FIRREA II is apt to be near the top of Congress's political agenda by fall 1991. Thus, the Stanford Law & Policy Review's sympo- sium on the thrift debacle is a particularly timely and useful exercise. Much remains to be done in terms of policy making and assessing causes and costs. Many of the articles assembled here illuminate the likely problems of the future by distinguishing between sec- ondary and primary causes of the thrift crisis. There is common agreement that the biggest mis- takes leading to the thrift crisis were the decisions by the Federal Home Loan Bank Board (FHLBB), from 1980 to 1989, to allow savings and loan associations to operate with little or no capital, and the FHLBB's inability to supervise these institutions as they ran amuck. The amazing and perverse history of capital forbearance is well summarized in the presentation of William Black, general counsel for the Federal Home SPRING 1990

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