Financial Fraud and Crime and Lessons From the American Bank and Thrift Crisis

12.1 This Chapter is based on the thought that a series of acts of government intervention are the origin of the great financial distress which plagued banks in the United States of America during the late 1980s and early 1990s. These acts of intervention fell into a number of categories, including the obvious and well documented policies of ill-timed financial institution deregulation and reregulation, played out against the backdrop of fiscal irresponsibility and opaque, weak and then, heavy-handed reactive monetary policy. ¹ The connection of these actions with the devaluation of bank assets, precipitating the failure or distress of individual financial institutions, however, is not readily apparent. The analysis of the connections presented here began, not with the detailed statistical analyses employed by government agencies such as the Federal Deposit Insurance Corporation (FDIC) and the General Accounting Office (GAO), but rather with a historical look at the long-standing proclivity of governments to interfere in the banking arena as a fundamental element of self-preservation, under the aegis of preserving national sovereignty.