"By the end of 1981, Beebe was a man to be reckoned with. Beebe was prepared to use everything he had learned over the years about banking and newly deregulated thrifts to build potentially one of the most powerful and corrupt banking networks ever seen in the US."
Stephen Pizzo, Inside Job: The Looting of America's Savings and Loans, page 239.
Why ? 'Cause that's where the money is. Some persons called the Savings and Loan scandal "one of the worst financial disasters of the twentieth century." (Calavita, page 1) To others, it was a a premeditated conspiracy to move funds out of the country for use by the CIA. (Bainerman) The Seattle Times called it the "single greatest case of fraud in the history of crime." (June 11, 1991) Regardless, a lot of money went missing from the S&L's throughout the 1980's. A lot. $20 billion, $50 billion, perhaps more, no one really knows exactly. And whilst much of it disappeared in poor lending and then the deflation of land values, made worse when the real estate market tanked nation-wide after 1988, much of the money was stolen as well.
Some of this stealing was done by some awfully dodgy figures, many of whom it turns out were well connected to Mafia controlled families, the CIA, or both. Readers can make up there own minds by consulting further the extensive reading list below. What follows here though, merely the briefest glimpse of some of the criminal behaviour, is not in dispute and has been well researched and documented by many writers.
Herman K Beebe.
Beebe started his own company, American Motel Industries (later shortened to AMI.) in 1961, based out of Shreveport, Louisiana. (Originally Alexandria.) AMI started investing in hotels, Holiday Inns usually, but soon diversified into banks, thrifts, nursing homes and insurance companies. Beebe's banks would require borrowers to buy their insurance from AMI. "When Congress announced that it intended to deregulate thrifts," wrote Pizzo, (page 236) "Beebe immediately saw the possibilities." Real estate in Texas was white hot, and deregulated thrifts could make more commercial real estate loans than ever before and with fewer restrictions than ever before. "Beebe began to diversify," said Pizzo, "investing in more S&L's, and he helped his friends do the same. Word got around that anyone who needed money to get control of a thrift should see Beebe".
Trouble was, alleged Federal authorities some years later, Beebe was one of his banking conglomerate's biggest customers, "using the network of banks and thrifts to finance ventures in which he held hidden interests... Rather than exert his ownership outright, Beebe often held control behind the scenes." (Time Feb. 20, 1989) As became obvious later, one of Beebe's favorite tactics was to finance friends like Don Dixon, (who relied on Beebe's backing to acquire Texas-based Vernon Savings and Loan in 1982), into ownership of the various thrifts. The Comptroller of the currency listed 55 state banks and 29 thrifts which were all at various times controlled by Beebe and his associates. (Secret Comptroller report dated June 3rd, 1985 and leaked to Pizzo some time later, published by him as Appendix A to the book.)
Living the high life, (Beebe's house in the family compound was described by the Shreveport Times as an 11,000 square foot, $1 million Colonial mansion with swimming pool, tennis courts and private pond, and included seven bedrooms, 24-Carat-gold-leaf Spanish chandeliers, separate smoke-house and six car garage), a deal with a Beebe bank, or one controlled by his network, might look something like this: "Someone who wanted a real estate development loan would be required to borrow more than he needed and to use the excess as Beebe directed (to pay off a loan that Beebe owed or that was owed to him, or to buy stock in a Beebe bank). And once the development was completed, a Beebe associate might buy it with another (over funded) loan from a Beebe controlled institution. The whole process resembled a Ponzi scheme (that could only last as long as real estate values were climbing)." (Pizzo, page 237) The S&L troubles intensified shortly after real estate values stopped climbing.
The Texas energy bust and hence associated decline in land values crystallized the thrift crisis in that state after 1986. Noting something about that crisis, Pizzo wrote (page 246): "The runaway real estate development craze had resulted in such a (real estate) glut that shopping centres and condos stood vacant all over town. Dallas had about 38 million square feet of unused office space (equivalent to 17 Empire State buildings)."
Overall, perhaps as much as $10 billion in reckless loans was eventually handed out. (Time, Feb 20, 1989)
Pizzo alleges a good many Beebe connections to high-placed senior Mafia figures and often the Godfather himself, as does fellow journalist Pete Brewton, describing Beebe as a 'Louisiana organised crime associate'. In scenes reminiscent of the first chapter of Dale Carnegie's How to Win Friends and Influence People (where Carnegie highlights how even gangsters rarely believe they have done anything wrong) Beebe said through his lawyer after being hounded by the IRS, FSLIC and the FDIC for restitution, that: "The FSLIC was encouraging the thrifts to be aggressive. Herman felt he could make money, so he got in. He doesn't feel he did anything wrong." (Time, Feb 20, 1989)
Palmer National Bank.
This bank was a Washington-based institution set up in 1983 by Stefan Halper, Policy Director for George Bush's 1980 presidential bid and Harvey McLean Jnr., Southern Finance Chairman for Bush on the same campaign as Halper, and himself a former Dallas real estate developer. The seed money came from Herman K. Beebe, $2.8 million. (Bush had been CIA Director from January 1976 to January 1977 and eventually campaigned in 1980 as Reagan's running mate.)
One of the established accounts at Palmer was for the National Endowment for the Preservation of Liberty (NEPL), eventually found to be the front organisation for Oliver North, the man who helped run the Iran / Contra arms funding deal under the nose of President Reagan and Congress. It was through Palmer that money was channelled to North's Swiss bank account and through Palmer that Carl Channell, one of the few private citizens convicted in the scandal, gained a $650,000 'loan' to purchase weapons for the Nicaraguan Contras. (Remember, bank deposits are insured, so the ultimate risk lies with the federal government.)
The NEPL raised over $10 million to assist the Contras. Many writers and authors allege that the CIA used the thrift deregulation process to help pay for covert operations and other activities Congress would not, or could not support. (Despite the fact that Republican right-wingers had majority support of the government anyway.) After the thrift in question collapsed, 'obstacles' might sometimes miraculously appear in the way of follow up FBI investigations.
Vision Banc Savings.
Here is what Robert Sherrill (The Nation, Nov 19, 1990) wrote about Vision, quoting the work of Pete Brewton and the Houston Post: "In March 1986, Houston developer Robert Corson bought the Kleberg County (Texas) Savings and Loan for $6 million and changed the name to Vision Banc Savings. To get his thrift, Corson reportedly used a letter of recommendation from a judge who in 1988 would head George Bush's campaign in Harris County (Houston). Later, the judge said he hardly knew Corson... Brewton claims Corson is identified in federal law enforcement records as a known money launderer and says that one former CIA operative told him that Corson frequently transported large sums of cash... for the agency. At the time of purchase, the thrift had assets of $70 million. Four months later it was insolvent. How come ? Partly, says Brewton, because of a $20 million loan to help finance a Florida land deal. Corson's thrift lost $17 million of the $20 million. Another thrift, Hill Financial Savings in Red Hill, Pennsylvania, put up $80 million to seal the land deal; it lost $40 million. Something fishy ? Brewton says the Pennsylvania thrift, which has since gone bankrupt, had ties to the CIA and organised crime, as did one of the men who put the land deal together, Miami Lawyer Lawrence Freeman, a convicted money launderer for drug runners."
Renda's techniques to rob the banks have been described somewhat, elsewhere. The Nation (Nov 19, 1990) put it succinctly about what Renda was engaged in by saying: "If you... make loans to certain borrowers that I send you, I will supply the money to lend to them." As it turned out, a decent proportion of the borrowers Renda sent to collect the loan proceeds were in fact Mafia connected. Renda was in effect laundering Mafia money clean. All up, Renda directed about $5 billion per year of deposits into 130 thrifts, every single one of which later failed, (Kwitny, 1992) with the depositors having to be paid back their federally insured deposits soon after.
Renda did eventually go to prison (perhaps he found work washing real laundry) but no government agency ever made any attempt to follow up what happened to all the washing that Renda's borrowers took with them, nor sue to get some of it back.
Indian Springs Bank.
Here is what transpired at Indian Springs Bank, as noted by Gary W. Potter, Professor, Criminal Justice and Police Studies at Eastern Kentucky University. (Details can also be found in Bainerman, pages 279 – 280, and Brewton, pages 197 – 200.
"The fourth largest stockholder in Indian Springs was Iranian expatriate Farhad Azima, who was also the owner of an air charter company called Global International Air. The Indian Springs bank had made several unsecured loans to Global International Air, totalling $600,000 in violation of the bank's $349,00 borrower limit. In 1983 Global International filed for bankruptcy, and Indian Springs followed suit in 1984. The president of Indiana Springs was killed in 1983 in a car fire that started in the vehicle's back seat and was regarded by law enforcement officials as of suspicious origins.
Global International Air was part of Oliver North's logistical network which shipped arms for the U.S. government on several occasions, including a shipment of 23 tons of TOW missiles to Iran by Race Aviation, another company owned by Azima. Pete Brewton, in his investigation of the Indian Springs bank collapse was told that FBI had not followed up on Indian Springs because the CIA informed them that Azima was 'off limits' (Houston Post, February 8, 1990). Similarly the assistant U.S. Attorney handling the Indian Springs investigation was told to 'back off from a key figure in the collapse because he had ties to the CIA.'
Azima did indeed have ties to the CIA. His relationship with the agency goes back to the late 1970s when he supplied air and logistical support to EATSCO (Egyptian American Transport and Services Corporation), a company owned by former CIA agents Thomas Clines, Theodore Shackley, and Richard Secord. EATSCO was prominently involved in the activities of former CIA agent Edwin Wilson, who shipped arms illegally to Libya. Azima was also closely tied to the Republican party. He had contributed $81,000 to the Reagan campaign.
Global International also had other unsavory connections. In 1981, Global International made a payment to organized crime figure Anthony Russo, a convicted felon with a record that included conspiracy, bribery, and prostitution charges. Russo was the lawyer of Kansas City organized crime figures, an employee of Indian Springs, and a member of the board of Global International... Global International's planes based in Miami were maintained by Southern Air Transport, another CIA proprietary company. According to Franck Van Geyso, an employee of Global International, pilots for Global International ferried arms into South and Central America and returned to Florida with drugs. Indian Springs also made a loan of $400,000 to Morris Shenker, owner of the Dunes Hotel in Las Vegas, former attorney for Jimmy Hoffa, and close associate of Nick Civella and other Kansas City organized crime figures. At the time the loan to Shenker was made, he, Civella, and other Kansas City mobsters were under indictment for skimming $280,000 from Las Vegas' Tropicana Casino."
As the eighties roared on, the man Reagan appointed to the post of Comptroller of the Currency, i.e. the government man in charge of all the banks, was a Bush colleague, Robert L. Clarke. Jonathon Kwitny reported that Clarke had once helped organise a bank that laundered thrift money into an overseas account. Clarke, according to Kwitny, was a also shareholder in a bank the government found to be under the 'influence or control' of a Mob figure. (Kwitney died in 1998 of cancer, aged 57. His bio reads, in part, "an award-winning journalist whose career spanned more than thirty years on three continents; best known for his 17 years of investigative reporting at the Wall Street Journal and for his critically acclaimed national television news program The Kwitny Report, which aired on PBS.")
The official OCC (comptroller) site says of Robert L Clarke: "...a Texas banking attorney, was named Comptroller by President Reagan. His tenure coincided with an era of extraordinary turbulence in financial institutions and the financial marketplace in the United States. Under Clarke, the agency strengthened its managerial and supervisory capabilities to deal with changes and stresses in the national banking system. Clarke led the effort to expand the national bank powers in order to better meet the competition from non bank providers of financial services. His leadership helped to reduce the costs of bank failures and to restore the safety and soundness of the national banking system."
1980's banking events would seem to indicate otherwise.
Only a fraction of the moneys lost in the whole S&L scandal have ever been documented – at least publicly anyway.
Journalist Pete Brewton, at the Houston Post, documented 22 thrifts and two banks eventually bailed out by the Bush Administration that had links with the CIA, 16 of them in Texas. Bainerman concluded that hundreds of billions of dollars was moved offshore by the CIA and others within the government by looting S&L's and via budget deficits and Star War myths in an effort to fund covert operations aimed at toppling communism. (A read of In God's Name suggests the Catholic church used a number of Italian banks for the same purpose - toppling communism, by getting funds to the Polish Solidarity movement.)
But, having described all this, it must not allow us to be deflected from the main game. Most of the S&L looting was done by supposedly respectable businessmen, often former real estate men, loaning other people's money - often to themselves - for their pie in the sky dreams. Much of it was like a pyramid scheme that could last only as long as land values kept rising. The cycle turned eventually. Falling real estate values in the late 1980's finally brought an end to the partying, after which the usual hangover lasted the usual couple of years.
Signs Point to Mob Involvement in Savings and loan mess, Jonathon Kwitny, Editorial, Seattle Post Intelligencer. Available at freerepublic.com/forum/a389b6b6e3fd7.htm
Oval Office Secrets Revealed in New Book, Filipino Reporter, October 14, 1993 and available at Highbeam Research, highbeam.com
Thompson's Supporting Role, The Nation, July 21, 1997
Organized Crime, the CIA and the Savings and Loan Scandal, Gary W. Potter, Eastern Kentucky University, available on-line at thirdworldtraveler.com/CIA/S&L_Scandal_CIA.html and also at btinternet.com/~nlpwessex/Documents/Kentuckystatecrime.htm
Dad Would Make a Deal with the Devil, Richard Woodbury, Time Magazine, Feb. 20, 1989.
The Looting Decade: S&L's, Big Banks and other Triumphs of Capitalism, Robert Sherrill, The Nation, Nov 19th, 1990. (Cover story)
Minority Report, The Nation, July 9, 1990.
The Real S&L Scandal: How Bush's Pals Broke the Banks, Jonathon Kwitny, Village Voice, October 20, 1992.
Bainerman, Joel. The Crimes of a President: New Revelations on Conspiracy and Cover-up in the Bush and Reagan Administrations.
Brewton, Pete. The Mafia, the CIA and George Bush. (And various Houston Post Articles)
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.
Yallop, David A. In God's Name, Johnathon Cape Ltd, 1984.
Copyright: Phil Anderson, 2004