Midwest flood is a raindrop compared to S&L disaster


July 28, 1993|By ROGER SIMON

WASHINGTON -- The press conference had just ended, and Elliott Levitas was still fuming.

A former five-term Democratic congressman from Atlanta, Levitas was once described by the Almanac of American Politics as "prickly, well-informed and a stickler for what he considers the proper course."

Yesterday he seemed determined to prove all three.

Levitas (pronounced Lev-IT-iss) is a member of the National Commission on Financial Institution Reform, Recovery and Enforcement, a semi-obscure federal advisory committee authorized in 1990.

The commission was created by Congress to investigate the causes of the collapse of the savings and loan industry and to suggest reform.

Now, a million dollars later, the commission has come up with a 117-page report elegantly bound in a navy blue cover.

And though he voted for it, Levitas was not pleased with it.

It's not just that he thought the commission had "dimmed" down the language of the report, Levitas didn't even like the look of the report. He hated the cover, the typeface, even the title: "Origins and Causes of the S&L Debacle: A Blueprint for Reform."

Too tame, Levitas felt. Much too tame. "It should have been called 'Blindness, Blunders and Bunko,' " he said.

The blindness was by "S&L managers, regulators and bi-partisan elected and appointed government officials failing to see what was happening to the industry," Levitas said in his own separate report.

The blunders were caused by the "extraordinary pressure applied by the powerful S&L lobby."

And the bunko "was the feeding frenzy of crooks on an industry made vulnerable by lax regulation, 'Mickey Mouse' accounting rules and bi-partisan government failure."

OK, so "Blindness, Blunders and Bunko" would have been a better title. No question. But what else was Levitas steamed about?

"A majority [of the eight-member commission] did not want the work of the commission to attract attention," Levitas said after the news conference. "Look at the physical appearance of the report."

He held up the navy blue booklet as if it were something he had just pulled from the bottom of his shoe.

"It looks like a guide to Washington restaurants!" Levitas said.

Levitas did not say what kind of cover he wanted, but presumably a giant python swallowing up a screaming taxpayer would have done the trick.

"Certain people did not want certain issues reopened," he said. "They didn't want to reopen the failures at the Treasury %o Department and of the last administration. They didn't want a rehashing of the Keating Five. And they slowed things down in a deliberate attempt to make sure the report wasn't released before the November election."

Though there are few surprises in the report, it does provide an unsparing list of those sharing blame: Congress, the presidency, federal and state regulators, "pernicious" lobbyists, the thrift industry and news media that "were largely silent during the period when most of the damage was being done."

But even this was not enough for Levitas: Everybody was missing the point. The point is that nobody cares about the S&L crisis anymore. It is yesterday's crisis. And nothing will be done to prevent another crisis tomorrow, Levitas believes, unless people get really angry today.

"In the next few days, Congress is going to be appropriating substantial sums of money -- in the billions -- for flood disaster," he said. "The cost of the disaster may be $15 [billion]-$20 billion, the largest disaster cost in American history. But this is a pittance, a fraction of the cost of the S&L debacle!

"And this was not done just by crooks, swindlers and high-fliers, but by people who were supposed to be guardians of the public. They failed more monumentally than the failure of levees on the Mississippi!"

Levitas believes that the true cost of the debacle will be around a half-trillion dollars and that another collapse could come unless reforms are undertaken.

"But I think there is a potential that substantial improvement will be made," Levitas said.

Considering, however, he is taking on such entrenched institutions as the presidency, the Congress and the media, why does he think any reforms will be made at all?

"I am a born optimist," he said.

I knew there had to be a reason.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.