Full Faith and Credit: The Great S & L Debacle and Other Washington Sagas
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List Price:
$34.95
Hungary Hotels Travel Price: $34.95
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Manufacturer: Beard Books
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Average Customer Rating:  
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Binding: Paperback
Dewey Decimal Number: 332.320973
EAN: 9781893122499
ISBN: 1893122492
Label: Beard Books
Manufacturer: Beard Books
Number Of Items: 1
Number Of Pages: 320
Publication Date: 2000-09-01
Publisher: Beard Books
Studio: Beard Books
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Editorial Reviews:
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A colorful and insightful memoir on the creation and nurturing of the S& L debacle.
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Spotlight customer reviews:
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Customer Rating:
Summary: Systematic Collapse
Comment: 1. Systematic bank collapse is a failure of one bank transmitted by a chain reaction among interconnected institutions, both financial and non-financial, the domino affect.
2. Systematic bank collapse can be aided by the failure of one bank can causing a reassessment evaluation of other similar institutions, the spillover affect.
3. Systematic bank collapse can be the result of oxogenous shock, such as, natural disease or disaster, of such magnitude; the large scale events disrupt all production processes.
4. It is important to distinguish between insolvent banks from those with temporary liquidity problems.
5. Systematic risk refers to the risk or probability of breakdowns in the entire system. Profile of a breakdown involves a clustering of bank failure due to high correlation; an event having an affect on the entire system; and risk associated with banks loaning money to other banks and these loans not being publicly known. Banks are interconnected through inte-rbank loans, loans, and payment system clearings. The losses may exceed the capital of the associated bank. Collectively, it may exceed the capital of the FDIC insurance. The complexity of the unknown creates panic where the investor starts to speculate on what other unknown he is not aware. Rather than identify the real risk he assumes all parties are guilty and sacrifices the innocent banks.
6. The smaller a bank, the more leveraged it's capital asset ratio becomes, and the more likely that it is to be driven into insolvency. The smaller bank fails earlier on the transmission change and transmits the losses located later on the chain. The speed of the domino affect is fast.
7. Spillover beings as the failure of one large financial institution or non financial firm and generates uncertainty about the values of other units potentially subject to the same shock. The risk potential is scrutinized more carefully to determine the potential for loss. Similar profiles are reevaluated and suffer reassessment shock. The banks may temporarily suspend all loans and not loan at any rate, an action representing runaway from any unit with potential risk. This is herd mentality. During the sorting out period, there will be fire-sale driven changes in quantities (flows) and interest rates are likely to overshoot the equilibrium levels, intensifying the liquidity problem.
8. Banks manage risk by increasing interest rates, monitor counter-parties more closely, accept better collateral, and having sufficient collateral to absorb risk shock.
9. US Banks have had minimal government ownership.
10. The loss of the largest two banks would cause 15 bank failures with 3% of the total banks assets, if the loss rate exceeded 65%. 65% is exceeding high for resolved banks in the US.
11. When Illinois Continental defaulted, it had 2,300 other banks holding deposits at or loaned funds to Continental, FDIC fully protected all the creditors.
12. Macro failures in banking are usually due to shortcomings in government monetary or fiscal policy. The FDIC has proven effective to preventing runs on the bank.
13. It has been the practice of the FDIC to rescue big banks. The depositors are held harmless for loss. The "too big" to fail doctrine applied when banks failure would jeopardize the entire financial system. The FDIC attempts to protect small depositors at small banks by selling them to bigger banks. Small banks could not be rescued as they did not fit the "too big" to fail classification.14. During the Continental Illinois bank rescue, regulators paid off depositors and bondholders fearing, not to do so, would cause loss of confidence in the American Financial system. "Too Big" to fail financial or non financial institutions had to be determined by the FDIC, Fed, and Treasury.
14. In 1984, there were eighty bank failures. Hundreds of millions of dollars in loans were stuck in Latin America (Brazil and Argentina) The worst banking crisis since the great depression.
15. All the S&L in Arizona had failed by 1990.
16. Interstate banking legislation may have helped banking in Arizona. Initially, small banks in Arizona were opposed. They argued that bankers from California and New York would come into their state, take out the local deposits, and ship the money to Brazil and Argentia. Real Estate was moving higher. Five out six of the largest banks received buyout offers.
Customer Rating:
Summary: New Release: RTC II ...the TARP Monster!
Comment: Now that the USA is starting up RTC II (named TARP), this treasure is sure to rise on AMAZON's sales list (those who know nothing of the past are doomed to repeat it). Sure to be on every Beltway Wonk's bedside shortly.
Seidman's excellent explication of the S&L crisis and the activities of the Resolution Trust Corporation are filled with wonderful wry observations, like this:
"My friends, there is good news and bad news. The good news is that the full faith and credit of the FDIC and the U.S. government stands behind your money at the bank. But the bad news is that you, my fellow taxpayers, stand behind the U.S. government."
The whole RTC game was simply a duration play, unwinding short (less than 30 years) and borrowing long (issuing 30 year US bonds), and Seidman walks us through the technicals of that obvious play.
Seidman is not as bad as Larry Summers in the smug-self-satisfied brilliant observer, but at times he is pretty close. He is certain of his analysis, but truth is the daughter of time and some of his observations have since been proven to be opinion, not fact.
Still, an excellent read in these bizarre times.
Customer Rating:
Summary: If you don't have anything nice to say, come sit next to me
Comment: Seidman uses the above quote in the chapter where he apportions blame for the S&L fiasco. This book contains a lot of entertaining passages, and considering it is a book about finance written by an accountant, that in itself makes the book unusual.I found the book to be well written, and very up-front about the authors biases. It was refreshing that the hidden agenda was right out in the open for everyone to inspect, just the way the author maintains that good government should operate. As Seidman states in his introduction: "Why write about these experiences?" Of course, I share the goals of most memoirists: to immortalize my contribution to society; even scores with my enemies; provide financial security for my old age, confirm the taxpayers worst suspicions about their government; and generally leave a record of my adventures for the benefit of future historians".
Customer Rating:
Summary: Total garbage
Comment: Thinks he knows everything. Full of hot air.
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