Court Decision on S&L; Accounting

Re “A Costly Lesson for Washington,” editorial, July 3: Bravo for pointing out how Congress’ constant tinkering with financial rules can wreak havoc upon the financial community. This time it’s a potential $15 billion, but the S&L; fiasco, so far, has cost $130 billion. Don’t forget how this happened.

Congress, in its eagerness to support the policies of a popular president, Ronald Reagan, deregulated the savings and loan business, but only partially. They removed the restrictions on S&L; investments and rates of interest paid to customers, but left intact deposit insurance. The result was a bidding war of ever higher interest paid on S&L; savings accounts to fuel expansion. The customers didn’t care about the risk; they switched their accounts to the highest bidder because they were protected by government guarantees. To compound the fiasco, Congress even raised the amount guaranteed from $10,000 to $100,000. The good times rolled, everyone was seemingly making money without risk, and property values soared .J.J. until the S&Ls; started failing.

The arrogance and craven behavior of our elected representatives, and the run for cover and finger-pointing that began when the disaster became apparent, should alert all voters to beware of any elected official who is going to take the risk out of our lives and make us live happily ever after.

WILLIAM BRADSHAW

San Diego