From News for Real by Stephen Pizzo
It’s funny how something completely unrelated can inform us on the thought process driving Bush’s decision to double down on his Iraq gamble. Twenty or so years ago I co-authored a book on the S&L crisis. It was back then, and in Texas, I learned something that explains everything about Bush’s “New Way Forward” in Iraq.
Back in the early 1980s when Ronald Reagan deregulated the savings and loan industry, Texas became the nation’s biggest cesspool of S&L crookery.
At the core of their thieving strategy was a little trick they described thusly:
“A rolling loan gathers no loss.”
These wily Texas coyotes had figured out a win/win situation. S&L operators could help their buddies “borrow” money from their S&Ls, not pay it back, and still allow the S&L to book loan fees and other profits, upon which the S&L executives based their salaries and bonuses.
Ah, you say, but wouldn’t bank regulators notice that the loans were in default? No. Because each time a loan came due the S&L would “roll it over” — renew it — adding all interest due into the new loan and booking it as income. The loans got bigger and bigger, and never got paid off. The bankers got rich, the borrowers got rich, American taxpayers got the bill. A classic Texas “win/win” business deal.
The other rule of Texas high-rollers back then was to never place your own money into risky deals. Instead use what they called “OPM,” Other People’s Money. In the case of the S&L debacle, the money stolen and squandered was taxpayer insured savings. .
That’s precisely the kind of deal Bush has had going in Iraq, and wants to extend. He’s not putting his own children’s lives at risk, but OPK – Other People’s Kids. And his rolling deployments gathers no loss. As long as he can keep feeding fresh troops into Iraq his project cannot be proven a failure. If Bush can just keep borrowing other people’s kids to place at risk, and rolling over – renewing — his Iraq policy for just two more years, he’s home free. It’s another Texas “win/win” in which the perp gets away and the American people pay the price.
There are other analogies with the Texas S&L debacle – because this really is almost uniquely a Texas mindset. For example, every single Texas S&L crook I interviewed after the feds closed their bankrupt thrift and/or foreclosed on their projects, made the same claim – almost word for word. It went like this:
“My S&L (or project) would not have failed if the feds had just let me complete my plan. If they had just funded it to completion it would not have failed. They caused the loss by stopping us from seeing the project through.”
And that’s precisely what Bush will claim if can just roll over his Iraq loans for two more years. He will leave office and go back to Crawford. The new administration will be forced to declare his Iraq project in default, bite the bullet and withdraw US troops. The lid will come off the already simmering Sunni/Shia civil war and that’s when we’ll hear from George again. He’s sidle out from this ranch house, cozy up to Fox News microphone and declare:
“See, I warned that’s would happen. I didn’t lose Iraq, the new administration and congress lost Iraq. Had they stuck with my plan and let it run to completion, my Iraq project would not have failed.”
Read the rest here.