In the 1960’s commercial banks financed infrastructure projects in underdeveloped countries by syndicating revenue loans, that is, selling parcels to smaller banks. Theory was, most of the parcel holders couldn’t otherwise participate in this exciting new opportunity. By the 70’s much of the money had been pocketed by overdeveloped politicians, projects went bust, revenue bonds had no revenue, and small banks got left holding the bag.
In the 80’s the nation’s savings & loan industry fell into a crisis spawned by politicians tinkering with that business after industry executives paid them to, with even more devastating results.
During the first decade of this century, in the mother of all politically-generated banking catastrophes, bondholders the world over got crushed by securitized toxic mortgage loans packaged by investment bankers because politicians incentivized commercial bankers into lending money to people who couldn’t afford the monthly payments.
Hardly anybody has ever been arrested for any of this. As a fascinating footnote to that point, both the father and a brother of one perp, Neil Bush, fined for his part in the Savings & Loan debacle, later became Presidents of the United States.
This morning it was reported that politicians have some Federal Agency busting major banks with big lawsuits over each institution’s part in the securitized toxic mortgage loan thing.
How come nobody is busting the politicians?
