33 year old Edwin T. McBirney – 'Fast Eddy' to friends – grew Sunbelt Savings and Loan in Texas from a one time obscure $90 million S&L into one with, just four years later, $3.2 billion in assets. McBirney was able to do this, as were other thrift owners, using unlimited access to brokered deposits, now being very courteously 'packaged' in parcels of $100k lots by deposit brokers since the new 1982 Garn-St Germain Act. Once the deposits were in, the money could be loaned out, for any purpose.

"I remember one closing we had," said a real estate sales person, describing how they flipped land to raise its value. "It was in the hall of an office building. The tables were lined all the way down the hall. The investors were lined up in front of the tables. The loan officers would close one sale and pass the papers to the next guy. It looked like kids registering for college. If any investor raised a question, someone would come over and tell them to leave, they were out of the deal." At the end of the day's flipping, huge loans, based on the inflated values created by the flip sales, would be taken out on the properties. (Pizzo, page 207.)

Regulators were apparently shocked by this prevailing Texan thrift mentality. As one regulator told it: "I went down there and this Texan showed me this piece of land and told me how this guy had sold it to that guy, and that guy had sold it again, until it had been sold about six times, and I said, 'Oh my God, that's terrible,' and he said, 'Only if your sixth.' " (Calavita, page 51) Some unfortunate thrift was usually sixth.

Fast Eddy was best known for his parties however – wild and crazy. According to one regulator, Sunbelt (known in the industry as Gunbelt in recognition of its quick-draw approach to loan deals) spent $1.3 million, perhaps more, on Halloween and Christmas digs in 1984 and 1985, including a $32,000 payment to Fast Eddy's wife for having organised them. Sunbelt also later sued McBirney for return of sums spent on him in those two years including $61,800 for Christmas gifts, $15,000 on accommodation, $100,000 for meals and $70,000 in limousine service. (Pizzo page 206.)

In 1993, according to the Department of Justice, (DoJ), McBirney settled with the FDIC in the amount of $8.5 million to be paid back at an agreed schedule for actions committed at Sunbelt, but then soon after entered into a trust scheme designed to defraud the FDIC of its right to restitution. In 2004, the DoJ announced a 21 count indictment (an indictment is an accusation by a federal grand jury – the defendant is innocent until proven guilty) for mail fraud, making false statements, concealing assets and money laundering. The case is pending.

Follow up references:

Calavita K., Henry Pontell and Robert Tillman, Big Money Crime: Fraud and Politics in the Savings and Loan Crisis, University of California Press, 1997.

Pizzo, Stephen, Inside Job: The Looting of America's Savings and Loans, McGraw Hill Publishing Company, 1989.

Copyright: Phil Anderson, 2004