Anybody who has paid the slightest attention to the savings-and-loan crisis will tell you that Reagan-era deregulation, which threw the door open to super-risky investment practices and illegal financial cronyism, was the key factor triggering the industry's collapse in the late 1980s.

But that's not how the keynote speaker at the recent annual meeting of the Federal Home Loan Bank of Seattle remembers it. Richard Kovacevich, who runs a $46 billion bank holding company, told a crowd of more than 200 at the Westin Hotel May 21 that S&Ls have suffered and continue to suffer from too many regulations.

"We are drowning in paper. Regulation simply has gone too far, and we resent the assumption of Congress that, because of the S&L problems, more regulation is required," said Kovacevich, president and CEO of the Norwest Corp. of Minneapolis. "Regulations are keeping us from making good loans."

While at the podium, Kovacevich seemed to have forgotten that, while operating under fewer regulations during the 1980s, hundreds of thrifts nationwide made billions of dollars in bad loans, which led to the $500 billion-plus taxpayer-funded bailout. Kovacevich tried to explain that by eliminating regulations, and thereby reducing compliance costs, thrifts would be free to make more loans. He said $20 million to $100 million more a year could be loaned if regulatory costs incurred by S&Ls were reduced by a fourth.

"Regulations today often impede the goal of efficiency," Kovacevich said, though he failed to make assurances that those new loans would be good ones, not bad.

It is important to note that Kovacevich made his comments at a meeting held by an institution that acts as a central bank for S&Ls, commercial banks and credit unions throughout the Northwest. With banking executives in the audience, Kovacevich's apologetic speech served to comfort executives still looking for a shoulder to cry on and absolve those still in need of a scapegoat for their own failures.

One has to wonder why - with commercial banks and S&Ls collectively enjoying a record year for profits in 1992 - industry types feel as though they need more freedom to do their business.

The Federal Home Loan Bank of Seattle, one of 12 regional branches of the Federal Home Loan System, also reaped record profits last year - $92.7 million, according to its annual report. What that means is that the 171 financial institutions to whom the bank loans money were able to make enough money off of their customers - you and me - to ring up its highest profits ever. Because those financial institutions technically are stockholders of the Seattle central bank, they shared in the wealth through big dividend checks.

The annual meeting, where bank leaders repeatedly boasted of their record profits, was part stockholder pep rally, part regulation-bashing and excuse-making session.

While avoiding an admission of shoddy banking practices, Norwest's Kovacevich attacked the Federal Deposit Insurance Corporation's $100,000 limit on account-holder protection as being too generous. The problem, apparently, is that insuring such a large portion of the country's deposits only encourages risky bank loans: if they are defaulted upon, big deal; the government will insure the deposits off of which those loans were made. So the bank gets off the hook.

"The savings and loan problems never would have occurred if it were not for [the current system of] deposit insurance," Kovacevich said.

By calling for a reduction in the FDIC's insurance limit, to $100,000 in deposits for a person's entire lifetime, Kovacevich completes a beautiful irony: that a regulation extending more freedom to banks actually proved to be too "oppressive." There's modern banker logic for you.

Apparently forgetting about another contributor to the S&L collapse - that thrifts were permitted to speculate in new markets about which they knew little, such as real estate development - Kovacevich called for federal regulators to allow banks to deal in mutual funds.

"Customers want to buy mutual funds from banks," he explained, citing an industry poll. Kovacevich said people "trust" banks more than investment houses, where they normally buy shares in mutual funds.

We wonder how much information those questioned in the poll had about the causes of the S&L crisis - specifically, where thrifts have been investing their money and to whom they have been loaning it. With disinformation specialists like Kovacevich at work, no wonder the poll results came out that way.

- Eugene Chadbourne's 1986 album release, "Corpses of Foreign War"

A 10-year-old schoolgirl ate a hamburger contaminated with E. coli bacteria, got sick and nearly died. Her kidneys failed, so she was on dialysis and was in a coma for about a month. After more than a month in the hospital - and weeks of physical therapy because she had to learn to walk all over again - the little girl was allowed to go home.

According to local TV news coverage, the girl's parents took her to a park to celebrate her homecoming. Surprise: her classmates were all there to greet her and welcome her back. At the party, a cookout. At the cookout, hamburgers.

The little girl, who had come so close to dying, ate a hamburger at her homecoming that was held because she was in the hospital after nearly dying after eating a hamburger contaminated with E. coli bacteria.

E. coli comes from, well, excrement. Cow excrement, or the contents of contaminated intestines that gets ground up with all the tumors and cysts and other forms of cow-body nastiness that makes up hamburgers.

I was appalled that the kid's parents let her eat a hamburger on the very damn day she was released from the hospital. My stomach had been churning at the thought of eating a hamburger (all the while CRAVING a Dick's Deluxe) since the E. coli outbreak, and hearing about that kid eating another hamburger sickened me further. It really bothered me,

and I thought about it and discussed it with friends to see if it bothered them (which it did) until I came to the realization that the thing that bothered me more than anything is that we all eat shit all the time, disguised as something good and tasty, and don't even know it.

We eat shit to keep our trivial, unproductive jobs so we can pay the bills. We eat shit from friends, sometimes, or from family members, or every time some corporate public relations team tells us that we are unable to be happy citizens without their product. We take shit, Shinola the hell out of it, polish it and make it appear to be gold.

Ultimately, that's what disturbs me so about the whole sick-girl-eats-hamburger episode: a collective societal denial. At my new, sparkling-clean and bright Safeway down on Broadway, the little deli baggie that wraps up your animal-part purchase has a picture of a big chunk of ham surrounded by the words "Nature's Gift."

It's not cow; it's beef. It's not pig; it's ham. It's not chicken; it's poultry. It's not shit; it's food.

The governmental agency responsible for protecting our food supply, the U.S. Department of Agriculture, recently buckled to meat-industry lobbyists who pressured the agency to back off from proposed, stricter rules governing meat processing. And the line at the neighborhood hamburger joint is longer than ever.

Shit.

Free Thoughts compiled and written by Free Press staff

---

[Home] [This Issue's Directory] [WFP Index] [WFP Back Issues] [E-Mail WFP]

---

Contents on this page were published in the June, 1993 edition of the Washington Free Press.
WFP, 1463 E. Republican #178, Seattle, WA -USA, 98112. -- WAfreepress@gmail.com
Copyright © 1993 WFP Collective, Inc.