Somewhere, coursing through the international money laundering networks that stretch from Houston to Hong Kong, stashed away in numbered Swiss bank accounts, are billions of dollars siphoned form U.S. savings and loan (S&L) institutions.
How much money has been stolen and where it may be is anybody's guess. "In a lot of these cases, the assets have been dissipated through laundering schemes or have been taken out of the country and are beyond the reach of federal authorities," said Attorney General Dick Thornburgh.
"I think we're fooling ourselves to think any substantial portions of those assets are going to be recovered, notwithstanding our best efforts," Thornburgh told a Senate committee investigating the S&L crisis. Fraud and insider abuse accounted for 25 to 30 percent of the more than 500 savings and loan failures to date. Losses from fraud and embezzlement, Thornburgh added, totaled more than $2 billion in 1988 alone.
Privately, officials speculate that the actual figure may be far greater--as much as 80 percent of the $90 billion in estimated losses may be due to outright fraud. The Bush administration estimates that it will cost more than $157 billion to make the S&L industry once again solvent.
"There was a lot of front-end looting, with the crooks taking their fees and profits at the beginning of the deal," said Sen. Donald Riegle, Michigan Democrat and chairman of the Senate Banking Committee. "It's only later that the losses show up and the depositors have to be paid off" with taxpayer supplied funds.
There is no question that organized crime is responsible for a certain percentage of all the money siphoned away. While officials are unable to estimate the extent, they note that bank fraud, along with a range of white-collar criminal activity, is of growing interest to the Mafia. William Weld, former head of the Justice Department's Criminal Division, told a House Government Operations subcommittee in 1987, "We even have organized crime types taking a look at the thinly capitalized financial institutions that are candidates for takeover, and then using [various fraudulent schemes] to create a false paper asset which they can then pull the plug on… and leave the FDIC or FSLIC, i.e., the taxpayers, holding the bag."
The S&L crisis, officials agree, can be largely attributed to simple greed: The opportunity to steal was abundant and the chances of being caught and punished are relatively negligible. As one congressional investigator put it, "I think you'll find that it was pretty much a free-for-all. Everyone was in it because it was so easy to do. Certainly organized crime is there, but it will be hard to quantify. There are so many cross-connections and fuzzy areas. [The corrupt bankers and businessmen] would do business with anybody," the investigator said.
Congress investigates
The General Accounting Office (GAO), the investigative arm of Congress, has been examining organized crime's involvement in the S&L crisis for several months. GAO's probe was prompted, in part, by reports that reputed mob associates had been responsible for a string of failed S&Ls throughout the Southwest. The reports, initially published
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