NCJ Number
147158
Date Published
1993
Length
44 pages
Annotation
Fraud in the savings and loan industry is discussed.
Abstract
This essay examines the origins of the thrift crisis, focusing on the impact of deregulation and the Federal deposit insurance system, traces the essential forms of thrift crimes, and examines government responses to this type of fraud. The authors argue that insider abuse was in large part a product of the organizational environment within which thrifts operated in the 1980s. Thrift deregulation in the early 1980s, in conjunction with Federal insurance on thrift deposits, produced a criminogenic environment in which opportunities for fraud were extensive and risks were minimal. Various common patterns of fraud, including illegal risk taking, collective embezzlement, and covering-up, can be attributed to the economic and regulatory structure of the deregulated savings and loan industry. The authors caution that, if a recurrence of the savings and loan debacle is to be avoided, the chartering and licensing of new financial institutions must be strictly supervised, diffuse ownership and control structures must be encouraged and investment risk tightly regulated, and oversight of these financial institutions must be rigorous. References