The Dialectics of White-Collar Crime: The Anatomy of the Savings and Loan Crisis and the Case of Silverado Banking, Savings and Loan Association

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The savings and loan bailout stands out as the first time in U.S. history that Congress agreed to bail out an entire industry as opposed to a single corporation. It is by far the most expensive bailout to which Congress has ever agreed, and the first time a bailout has been underwritten with a blank check rather than a specified dollar amount. It is costing the United States taxpayers $200 billion and counting to bail out the S&L industry from the crisis of the 1980s (Bradsher, 1994; see also Bater, 1994). Estimates are that the savings and loan bailout will total more than $500 billion over the next forty years (with some experts insisting that the cost may total more than $1 trillion over the next thirty years; Hays & Hornik, 1990, p. 50). The sticker shock of that cost tends to invite simplified analyses of the cause of the crisis. Two competing perspectives prevail: on one hand are stories of individual fraud and greed that dominate the popular press; on the other are arguments focusing on organizational factors that differentiate white-collar crime from other crimes, an analysis that tends to receive favor in sociological studies of the crisis.

Fraud remains an intriguing focus of media examinations of the S&L crisis. The popular press continues to emphasize fraud as the major culprit in the S&L crisis. In 1991 alone, the FBI budgeted more than $125 million to pursue cases of fraud in the industry (U.S. Congress: Senate, 1992, p. 45), resulting in 6,405 indictments for bank-related crimes; 96.5 percent of the resolved cases resulted in convictions of S&L violators by the end of 1995, with more than three-quarters of those convicted going to prison (Singletary, 1995, p. A10; U.S. Department of Justice, 1992, p. 66).

Many scholars (cf. Barth, 1991; Barth, Batholomew, & Labich, 1989) counter that fraud accounted for very little of the dollar value lost in the crisis. Although half of the insolvent thrifts have been found to involve elements of fraud in 1988 (Barth, 1991), observers have estimated that fraud accounts for as little as 3 percent of the cost of the bailout (cf. Barth, 1991, p. 44; Ely, 1990). Others offered a more conservative estimate of 10 percent (Barth, Bartholomew, & Labich, 1989).

On the other hand, Galavita and Pontell (1990, 1991, 1993, 1997) note that the measures used by observers like Ely and Barth et al. were seriously flawed and grossly underestimated the amount of fraud involved in the crisis. They argue instead that deregulation, coupled with the banks' structural role as trustees of other people's money, facilitated what they termed "collective embezzelment" in the industry as standard operating procedure. Under bank deregulation, there were far fewer field supervisors and auditors, and consequently much less oversight of the financial status and practices of the savings and loans. In the absence of adequate and regular oversight, fraud became not only possible but standard operating procedure. Deregulation of banking (both de facto with early, unofficial relaxations of regulations, and later, de jure in formal legislation) created conditions that made regular fraudulent practices the norm (see also Zimring & Hawkins, 1993). Thus, even in some fraud-based analyses, deregulation emerges as a critical factor in the savings and loan industry's crisis.

This brief introduction to the debate concerning the nature of the S&L crisis points to theoretical difficulties with the very conceptualization of white-collar occupational and organizational crime. Conceptualizations of white-collar crime have been preoccupied typically with identifying the unique characteristics that differentiate it from other crimes, "rather [than] to search for interactions along different dimensions and between multiple components that make up crime and societal reaction to crime" (Schlegel & Weisburd, 1993, p. 4). …