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The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&l Industry

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An expert insider's account of how financial super predators brought down an industry by massive accounting fraud.

352 pages, Hardcover

First published December 6, 1995

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William K. Black

3 books12 followers

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5 stars
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Displaying 1 - 20 of 20 reviews
Profile Image for David.
643 reviews234 followers
February 14, 2014
An hour-long interview with the author about this book is available here.

An important book, but damned difficult to read. It probably needs to be studied with an guiding expert in white-collar criminality rather than read for the pleasure of being informed. There are a bewildering array of abbreviations and names, which is understandable. The helpful index of abbreviations is in the front of the book; the helpful index of names is in the back of the book – this is somewhat more difficult to understand.

I read it because I always want to know about Rollo Tomassi -- the guy who gets away with it. OK, so, in the end, Charles Keating didn't get away with it, but he spent a long time getting away with it and his eventual downfall was a near-run thing, based somewhat on (for him) bad luck.

I know that small-time con artists make their crust by convincing some poor sap they are a Nigerian prince or some-such, but how do you steal millions of dollars? I mean, doesn't the millions of dollars belong to someone before it goes missing? Does the previous owner of the millions of dollars keep a tight watch, and get all bent out of shape when his/her pile goes missing?

Well, in addition to convincing naive elderly widows to part with their life savings (something that actually happens in this book), there are also cleverer ways to create money from nothing. I still don't understand them completely, though. For example, in this book, Black gives an example like this: an entrepreneur wants to borrow $2 million. He asks the crooked S&L for a loan. The crooked S&L says to him: we will NOT loan you $2 million. However, we will loan you $52 million if you buy this piece of property for $50 million.

The property is owned by the bank. They bought it for, say, $25 million. Now, they can show regulators and auditors that they “sold” it at a 100% markup, evidence of great business savvy. Regulators and auditors who dig deep enough to discover this find themselves, at worst, the subject of vilification, harassment, and lawsuits, or, at best, never employed by the crooked S&L again. The latter is probably a blessing in disguise, but, at the moment it happens, it feels like you've done the wrong thing and served yourself a mess of trouble.

So, here's my question: doesn't the sham buyer ever worry about the inevitable day when he/she is asked to pony up $50 million for a $25 million property? Is bankruptcy in the US that easy, that painless, that free of consequence? I don't know, because I was raised to think of bankruptcy as something deeply shameful, probably ruining my prospective career as an entrepreneur.

I also learned how to bribe an appraiser (see p. 39). You never know when knowledge like that will come in handy.

Back to the book: it is a long, deep-in-the-weeds description of trying to do the right thing, being consistently kicked in the head for your troubles, and persevering most out of sheer unadulterated cussedness. In other words, I admired the author. He probably impressed Charles Keating and other opponents as an bearded pushover at first, but he turns out to be someone you don't mess with, because he's probably smarter than you.

There's a certain amount of score-settling, only only with crooked S&L frauds but with fellow bureaucrats, in the book. Normally this would make the author seem somewhat petty and vindictive, but given the serious and well-document nature of the wrongs done to him, it seems reasonable to give him a pass, just as you might to a homeowner who vents his aggravation at the person who broke into his home.

This book on its surface should appeal to a left-wing sensibility, because (somewhat oversimplified) it is the story of a humble public servant doing battle with a bunch of breast-beating big business Pharisees. It certainly runs contrary to the standard right-wing narrative about time-serving government clock-watchers dragging down the entrepreneurial free spirits that made America great. But one of the book's unlikely heroes is a life-long Republican who knows a crime when he sees it; one of its villains is a powerful Democrat who doesn't.

My take away: it is important to remember among the legions of people who sincerely and correctly believe big government is a threat to our liberty lurk a number of unprincipled thieves who use ideology as a cloak and just want government dismantled so it's easier to steal.
Profile Image for Jeremiah.
151 reviews4 followers
February 7, 2011
Well done, highlights what really happened in the S&L crisis of the 80's. And how both democrats and republicans covered up, blocked and tried to prevent anything that would stop people like Don Dixon and Charles Keating.
Profile Image for David Hill.
511 reviews11 followers
November 12, 2021
This book is about the S&L fiasco of the 1980s and focuses primarily on Charles Keating, Lincoln Savings & Loan, and the American Continental Corporation. The author was a key figure in the investigations of the failing (and ultimately failed) S&Ls and the criminals who led them.

I sometimes struggle with applying ratings to the books I read. I try to assign a rating based on the book itself and not its subject: that is, is it well-written, easy to understand, coherent, engaging, and so on. On those bases, this is a 2-star book. I'm afraid that this low rating ("it was ok") may discourage potential readers. This book has some significant problems, but that doesn't mean it's not a worthwhile read.

The biggest problem I have with this book fits in a category I call "assumed knowledge". I would expect that a book about the S&L crisis would start with a chapter describing the problem in an overall, general way. That is, describe the S&L crisis itself (when did it start and end, how big was it, what were the general effects on the economy, etc.). The author seems to assume the reader knows all this. I was an adult when this happened, and I think I was paying attention to the news, but such an introductory chapter would have been quite helpful to me. How can a reader who didn't live through those times, or one who didn't follow the news, properly put these events in context?

Perhaps the most common term used in the book is "control fraud". Control fraud is never defined and no specific examples of control fraud are given. It is assumed the reader understands the term. All I know after reading this book is that control fraud is fraud related to control. Not very helpful.

Finally, throughout the text, we read references to various terms, people, studies, and theories. We learn in the summary that there were too many consent decrees. What is a consent decree? We are told that Henry Pontell's systems-capacity theory can help. The theory is described in a single sentence. Is that sufficient?

Okay, so there are weaknesses. Had these weaknesses been addressed, this might be a 5-star book.

Black (the author) was a key figure in the investigations and prosecutions of the "control frauds" that this book is about. He had interactions with all the key figures in the story: Charles Keating (who sued Black for $400 million), Speaker of the House Jim Wright, Bank Board chairmen Edwin Gray and Danny Wall, the Keating Five (Senators Cranston, DiConcini, Glenn, McCain, and Riegel), and many others. So he had excellent first-hand knowledge of the events, and he does a great job of citing sources that support his text.

The text is sometimes dry (like textbooks are dry). And the author often doesn't provide enough context. But the content is solid. And infuriating.

So... on to the politics of the situation.

Many of the nation's S&Ls were insolvent when Ronald Reagan took office. This was due to quickly increasing interest rates of the day. Adjustable-rate mortgages weren't legal at the time, and it seems that allowing ARMs (which eventually did happen) would have corrected the problem. Instead, the core of Reagan's philosophy was that government is evil (i.e. Reagan famously said, "The nine most terrifying words in the English language are: I'm from the Government, and I'm here to help."). Reagan ran (and won) on a platform of deregulation.

But it wasn't just deregulation. Deregulation goes hand-in-glove with desupervision. Reagan in particular, and "conservatives" in general trumpet that regulation is costly to business and to the economy. By removing regulation and supervision, the S&L crisis blew up. S&Ls were allowed to be owned by single individuals, they were allowed to deal with assets that weren't easily valued, and capital requirements were reduced. At the same time, regulatory staffs were cut. The government saved a few dollars and the taxpayers benefited. Wait - that's wrong. The government saved a few dollars and the taxpayers were on the hook for $150 billion in losses.

Deregulation and desupervision weren't the only political aspects. There was also corruption. The Keating Five were the most visible, but it went deeper than that. I'll digress a bit here and discuss the way political corruption is dealt with by our two-party system. The Keating Five were 4 Democrats and one Republican. All finished their terms, but only McCain and Glenn ran for reelection (and retained their seats). All were disgraced. Well, the Democrats were disgraced. The Republican went on to lead his party and was nearly elected President. I find it ironic that the event that prevented McCain's election as President was a financial crisis (caused by another round of deregulation and desupervision) and McCain's reaction to it ("The fundamentals of our economy are sound!" while the system was crashing around his head). What sort of party rewards proudly unethical men with leadership roles and the support required to become the most powerful person in the world? There is a pattern here, for those who care to look.

It wasn't just the Keating Five and Ronald Reagan. George H. W. Bush deserves blame as well. As vice-president under Reagan, he was tasked with financial "reform". One of my favorite stories of the S&L crisis involves Neil Bush (who gets only brief mention in this book). He was instrumental in the failure of Silverado Savings and Loan (as a board member who approved loans to his oil and gas exploration firm that magically never managed to find either oil or gas, which seems to defy probability.) He proudly testified before Congress that "daddy didn't teach me about conflict of interest." A cynic might suggest that daddy did, indeed, teach sonny about conflict of interest and how it could benefit him.

It wasn't just the S&Ls, either. The major accounting firms (e.g. Arthur Anderson) were deeply involved in the scandal as well. They were hired as auditors with the task of illuminating irregularities to the shareholders and other stakeholders. Instead, they aided and abetted the fraud by forging documents. We should have learned lessons from this, but, instead, Arthur Anderson was allowed to continue their criminal behavior which ultimately led to the Enron scandal. (Conflict of interest again. Who pays the auditor's fees?)

To follow that thread another step: George W. Bush sought to install Ken Lay (criminal in chief at Enron) as either Treasury Secretary or Energy Secretary. I would say that Enron's failure averted the disaster of having Lay as Treasury Secretary by his conviction in the Enron trial, but the Bush administration managed to push through another round of financial deregulation and desupervision which ultimately resulted in the financial crisis of 2008, a worldwide disaster.

But I digress...

In the end, I think someone interested in learning about the S&L crisis in general and Charles Keating in particular would find this to be a good second book to read on the subject. I don't know what a good first book would be, though.
Profile Image for Charles Allan.
22 reviews3 followers
January 15, 2013
Today's book is William Black's The Best Way to Rob a Bank is To Own One: How Corporate Executives and Politicians Looted the S & L Industry.

The savings and loan crisis of the late 1980s and 1990s has now passed into history but seems a precursor to today's crisis of financialization. Investigator William Black is a favorite of many observers for his tough, common sense insights and refusal to kowtow to conventional wisdom and platitudes.

The savings and loan crisis features many of the familiar culprits behind today's bank problems: banks being allowed to invest capital in risky areas, low requirements for reserves, overextension, and understaffed government regulatory agencies (among other). This crisis particularly affected the Southwest and you need to read this if you plan to be a businessperson here (it's part of our history).

William Black's book is an interesting read for banking junkies and accounting students and includes copious nitty gritty details.

This could be your introduction to the concept of control fraud: where the company executives knowingly misstate numbers and mislead investors (see Enron).

I prefer to think of control fraud as creating conceptual frameworks that make the reckless seem viable and logical. Spotting control fraud is very hard because of the accompanying social acceptance and official approval. It pays to think for yourself.
Profile Image for The Pfaeffle Journal (Diane).
156 reviews11 followers
September 24, 2015
I vaguely remember the S&L crisis of the 80's. The Keating 5 were, Alan Cranston (D-Calif), Dennis CeConcini (D-Ariz), John Glenn (D-Ohio), John McCain (R-Ariz) and Donal W. Riegle (D-Mich.) were accused of covering for Charles Keating, Chairman of the Lincoln Saving and Loan Association when the Federal Home Loan Bank Board tried to investigate the S&L. Today, all I remember is that that criminal John McCain is still in office.

William Black was a bank regulator at the time and a central figure in exposing the congressional corruption, his insights on the scandal and those that perpetuated it was very interesting, although some of it was out of my depth. This review was originally posted on THE PFAEFFLE JOURNAL
Profile Image for Tina.
35 reviews1 follower
September 2, 2012
Absolutely needed to be read by every thinking person. The economic and financial crisis of today will change our lives forever, and this book adds personal experience and insider information to the well-known aspects of the banking industry misbehavior.
12 reviews
March 27, 2018
Bar none this provides the most thorough analysis of the S&L debacle in the 1980's and also gives insight into how to control & financial fraud destroyed directly and indirectly the economy, jobs, and pensions etc. It provides simple recommendations at the end of what wasn't learned and how to prevent and detect fraud. I love listening to Bill on the Real News Network where he is a regular contributor. This guy should be head of the SEC.
Profile Image for Tanya Hurst.
217 reviews19 followers
February 16, 2023
The topic is interesting, and I really wanted to get into it, but I just couldn't stick with it. I hate to ever say a book is boring, because most of the stuff I read is "boring" to a lot of people, but I barely got to Chapter 4 without my mind wandering off to a million places. I usually try to finish a book no matter what, but I just couldn't. I'll need to find another book about the fall of the S & L industry.
Profile Image for Denny Troncoso.
261 reviews1 follower
September 29, 2022
Good book on history of Bank savings and loan crisis in the 1980s. It’s a little boring at times but a good piece of history from the eyes of a regulator. In the USA if you have money and power or know powerful people you can get away with a lot. Unfortunate but true.
Profile Image for Anthony Fiedler.
96 reviews1 follower
March 21, 2021
Painfully long slog through Savings and Loans industry fraud in the 1980s and early 1990s. I'm sure there were lessons but it's a literal account without much story.
22 reviews3 followers
January 7, 2013
Today's book is William Black's The Best Way to Rob a Bank is To Own One: How Corporate Executives and Politicians Looted the S & L Industry.

The savings and loan crisis of the late 1980s and 1990s has now passed into history but seems a precursor to today's crisis of financialization. Investigator William Black is a favorite of many observers for his tough, common sense insights and refusal to kowtow to conventional wisdom and platitudes.

The savings and loan crisis features many of the familiar culprits behind today's bank problems: banks being allowed to invest capital in risky areas, low requirements for reserves, overextension, and understaffed government regulatory agencies (among other). This crisis particularly affected the Southwest and you need to read this if you plan to be a businessperson here (it's part of our history).

William Black's book is an interesting read for banking junkies and accounting students and includes copious nitty gritty details.

This could be your introduction to the concept of control fraud: where the company executives knowingly misstate numbers and mislead investors (see Enron).

I prefer to think of control fraud as creating conceptual frameworks that make the reckless seem viable and logical. Spotting control fraud is very hard because of the accompanying social acceptance and official approval. It pays to think for yourself.
25 reviews4 followers
November 21, 2016
Interesting case study of a regulator nearly being taken over by those who it is supposed to regulate. Thank God for some honest and hard-working people sticking by their guns at the regulatory agencies that were getting pummeled by criminals, ideologues, lobbyists, and corrupt or misguided politicians. The book is a bit dense and spares no details, so at times seems to read like a lecture... but the lessons and history are valuable enough to overcome those stylistic shortcomings.

My big takeaway is that once you have set the game rules and picked the refs, don't let the worst players replace the refs when a new league ownership comes to town. My other takeaway is when criminals and facilitators are caught, then prosecute and put them behind bars, which did in fact happen after the S&L crises. Unfortunately, the same cannot be said about the 2007-9 mortgage fiasco. These people are still in the financial services industry and learned the exact opposite lessons.

I fear that after 8 years of Fed inflating asset bubbles, we are ostensibly going to embark on a wave of financial deregulation under the Trump administration (read ineffective regulation). It cannot end well, especially with the 2007-9 criminals still at large. There may be quite a few parallels to draw -- and only time will tell. I hope that I'm wrong.
45 reviews1 follower
November 7, 2016
SO IMPORTANT for everyone to read who still isn't sure the U.S.A. is now run by a deeply corrupt bunch of insiders for their own benefit at the expense of everyone else.

Makes it clear that (1) preventing this kind of fraud is NOT rocket science, and (2) nonetheless, the only lessons our leaders learned from the Savings & Loan crisis were how to help each other get away with fraud on a grand scale - the mortgage crisis - WITHOUT any risk of being thrown in jail or forced to give up a penny of one's unearned riches.

On a side note: this book shed light on the likely answer to my biggest burning question about the mortgage crisis: who BOUGHT all those junk mortgage-backed securities, and WHY? If the S&L crisis is any clue, it's probably people who were in some form or another managing OPM (Other People's Money) under an incentive-pay structure that rewarded them handsomely for raking in outsized (but completely fake) nominal profits/returns. When the bubble burst, far from suing the charlatans who sold them the stuff and risk having to perjure themselves claiming to be innocent victims, they quietly disappeared under the radar.

Profile Image for YNOT.
16 reviews3 followers
January 21, 2011
wish i read this when i furst saw wm k. black...
reading fum it on c-span back in '05...

i had been x-tremely skeptical of housing bubble
( PfLiP This haus was PRiMe PRoPaGaNda i sed then )
in correlation to war economy / foreign debts...
nassim taleb's 'bLaCk SWaN' in early '07...
was, phor me, an exposition on...
'market analysis psycho-babble'...
but /w/ wm. k black's book...
the 2 ARe complimentary / a road-map...

on th' down-side, wm. k. black's book is...
kinda hard t' follow because it iS...
ALSo EXTReMeLy 'PeRSoNaL'...
i'm not knocking it,
because what is V.V.V. ReLeVaNT iS...
th' TiMe-LiNe & EXPLaNaTiON oF...
CoNTRoL-fRaud...
which is in essence, the HEaRT oF Th' SCaM...

iF a V. PoWeRfuL PeRSoN ALoNG /w/ Toadies / CRoNies...
CoNTRoL Th' fLoW...
be it oF iNfoRMaTiON ANd/OR ASSeTs...
ANd be iT A PfiNaNCiaL / PoLiTiCkaL-Media / oR EVeN iN a...
PeRSoNaL ReLaTiONShiP CoNTeXT...
PfRaud iS LikeLy AN [ iNTeNded] ENd-'PRoduCT' / ReSuLT...

Profile Image for Juston Fenton.
155 reviews5 followers
November 29, 2016
Control fraud is endemic throughout all levels of the United States legislature and judiciary.

Despite Dr. Black's fantastic book and well documented account of the mechanics of the Savings and Loans scandal, an even greater and more destructive Control Fraud was able to occur resulting in the 2007/2008 Global Financial Crisis and subsequent European Banking Crisis.

He mihi nui tenei ki Ta Takuta Black. Tena ra koe e pa.
Profile Image for Robert.
116 reviews41 followers
August 23, 2012
An excellent book about the S&L frauds of the 1980s. What I find particularly useful is Black's treatment of irrationality on the part of many fellow regulators and government officials. As he puts it, we are disinclined to believe well-respected people are lying to us, and it is important to emphasize how many people continued to parrot the propaganda of frauds even after they were exposed.
Profile Image for Rogier.
Author 6 books23 followers
December 5, 2014
Fraud distorts a system, and in the economy it undermines legitimate business. The growing tsunami of s & l fraud made intervention increasingly necessary, simply to limit the damage. like Madoff, the fraudsters are often hoisted on their own petard, when their runaway success begins to threaten the very system they are defrauding.
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