'Frontline' sheds new light on S&L; crisis

In Japan there is a still-strong tradition of top-level executives in corporations and government taking responsibility for the failures of their institutions. Usually they resign in disgrace.

This comes to mind while watching "The Great American Bailout," a fascinating, stomach-turning hour on "Frontline" tonight that examines the savings and loans crisis.


Hosted by Robert Krulwich, "The Great American Bailout," which will be on Maryland Public Television, channels 22 and 67, at 9 o'clock, can be faulted at times for lacking focus. But it seems this can be attributed to the "Frontline" investigators stumbling into an embarrassment of riches. Wherever they looked, it seems, they found outrageous actions.

"Frontline" has done a great deal of original reporting in this documentary and thus has embargoed the material until after its broadcast. Much of this is the focus of the latter part of the program, which looks at the political sensitivities of the year 1988, when the savings and loan crisis went from bad to ridiculous. Many have pointed to political pressure to keep the lid on during an election year -- "Frontline" finds evidence.


"The Great American Bailout" catalogs one outrage after another. There's the small-time real estate speculator who moved from California to Dallas because he smelled money when the government began unloading properties from the failed thrift institutions. Wait until he shows you what $1,750 will buy.

There are the numerous Texas real estate transactions in which the government sellers -- acting on behalf of the taxpayers -- took less money than was offered for properties. And there's the new computer system designed to help the government's bailout bank, Resolution Trust Corporation, keep track of all the properties it owns. But a terminal in Dallas can't even find a trace of the building it is sitting in.

However outrageous the specifics in the foreground, notice the background, for instance, when Krulwich interviews M. Danny Wall, who was the chief S & L regulator in that crucial year of 1988. This is the man who told us just before a presidential election that the bailout would cost $15 billion (the tab is now expected to top out at $250 billion) and who, along with his bosses in the Reagan administration, assured us that no taxpayer money need be involved.

Wall sits there wearing an expensive-looking tie, an impeccably tailored suit, talking in an office that is immaculately decorated. It's disgusting! This guy should be in sackcloth and ashes, begging the forgiveness of the American people.

He was in charge when things went wrong and he should live with that disgrace. But, since this scandal involves just a couple hundred billion dollars, and not something important like sex, we're willing to forgive and forget. We don't have a tradition like the one in Japan. Ironically, our version seems more Eastern. As a cleaned-up version of the bumper sticker would put it, stuff happens.

Wall isn't the only one. All these guys, Republicans and Democrats, bankers and bureaucrats, who have taken money from the taxpayers -- often handing it over to ridiculously wealthy Americans -- appear financially and psychologically prosperous.

The inability to take responsibility seen throughout this scandal is endemic in the country. Consider the fact that the S & L woes actually won't cost current taxpayers a penny because the huge cost will simply be added to the national debt. Indeed, with interest payments, that $250 billion tab will rise to $750 billion.

So it will just be part of the burden we pass on to our children and grandchildren, $750 billion that will pay interest to wealthy investors, not subsidize a tuition loan for a college-bound youngster, not pay for Headstart for a deprived 4-year-old, not support schools or libraries or repair roads and bridges.


And the reason is that almost any politician who stands up and says that collectively we should take responsibility and pay for this by raising taxes will immediately be voted out of office by us, the taxpayers.