The Bush family and
the S&L Scandal
Neil, George W.,
George H.W.., and Jeb Bush
The Savings and Loan
industry had been experiencing major problems through the late 60s and 70s due
to rising inflation and rising interest rates. Because of this there was
a move in the 1970s to replace the role of S&L institutions with banks.
In the early 1980s,
under Reagan, regulatory changes took place that gave the S&L industry new
powers and for the first time in history measures were taken to increase the
profitability of S&Ls at the expense of promoting home ownership.
A history of the
S&L situation can be found here:
What is important to
note about the S&L scandal is that it was the largest theft in the history
of the world and US tax payers are who was robbed.
The problems occurred
in the Savings and Loan industry as they relate to theft because the industry
was deregulated under the Reagan/Bush administration and restrictions were
eased on the industry so much that abuse and misuse of funds became easy,
rampant, and went unchecked.
Additional facts on
the Savings and Loan Scandal can be found here:
There are several
ways in which the Bush family plays into the Savings and Loan scandal, which
involves not only many members of the Bush family but also many other
politicians that are still in office and still part of the Bush Jr.
administration today. Jeb Bush, George Bush Sr., and his son Neil Bush
have all been implicated in the Savings and Loan Scandal, which cost American
tax payers over $1.4 TRILLION dollars (note that this is about
one quarter of our national debt).
Between 1981 and
1989, when George Bush finally announced that there was a Savings and Loan
Crisis to the world, the Reagan/Bush administration worked to cover up Savings
and Loan problems by reducing the number and depth of examinations required of
S&Ls as well as attacking political opponents who were sounding early
alarms about the S&L industry. Industry insiders were aware of
significant S&L problems as early 1986 that they felt would require a
bailout. This information was kept from the media until after Bush had
won the 1988 elections.
Jeb Bush defaulted on
a $4.56 million loan from Broward Federal Savings in Sunrise, Florida. After
federal regulators closed the S&L, the office building that Jeb used the
$4.56 million to finance was reappraised by the regulators at $500,000,
which Bush and his partners paid. The taxpayers had to pay back the remaining 4
million plus dollars.
Neil Bush was the
most widely targeted member of the Bush family by the press in the S&L
scandal. Neil became director of Silverado Savings and Loan at the age of
30 in 1985. Three years later the institution was belly up at a cost of
$1.6 billion to tax payers to bail out.
The basic actions of
Neil Bush in the S&L scandal are as follows:
Neil received a
$100,000 "loan" from Ken Good, of Good International, with no
obligation to pay any of the money back.
Good was a large
shareholder in JNB Explorations, Neil Bush's oil-exploration company.
Neil failed to
disclose this conflict-of-interest when loans were given to Good from
Silverado, because the money was to be used in joint venture with his own
JNB. This was in essence giving himself a loan from Silverado through a
third party.
Neil then helped
Silverado S&L approve Good International for a $900,000 line of
credit.
Good defaulted on a
total $32 million in loans from Silverado.
During this time Neil
Bush did not disclose that $3 million of the $32 million that Good was
defaulting on was actually for investment in JNB, his own company.
Good subsequently
raised Bush's JNB salary from $75,000 to $125,000 and granted him a $22,500
bonus.
Neil Bush maintained
that he did not see how this constituted a conflict of interest.
Neil approved $106
million in Silverado loans to another JNB investor, Bill Walters.
Neil also never
formally disclosed his relationship with Walters and Walters also defaulted on
his loans, all $106 million of them.
Neil Bush was charged
with criminal wrongdoing in the case and ended up paying $50,000 to settle out
of court. The chief of Silverado S&L was sentenced to 3.5 years in
jail for pleading guilty to $8.7 million in theft. (Keep in mind that you can
get more jail time for holding up a gas station for $50.)
Neil Bush worked on
closing a deal in Florida, where his brother Jeb was governor, to sell a
software package to schools with his startup company Ignite.
Update 11/28/2003: Some of Neil
Bush's business deals have been exposed in his recent divorce case. For more on
this see:
It should also be
noted that shortly after news of Neil Bush’s involvement in the S&L scandal
hit the press his father, George Bush Sr., announced the Desert Storm campaign
in Iraq, which subsequently had the result of making Neil’s name quickly fade
from the headlines. In addition, while Neil Bush's divorce proceeding were
exposing more backroom Bush dealings, America was once again bombarded with war
propaganda for Operation Iraq Freedom.
The S&L scandal
is by no means the only incident of questionable, and actually illegal,
financial activity that the Bush family has been involved in. The line of
questionable, illegal, and unethical businesses practices goes back at least to
Prescott Bush Sr., George Bush Sr.’s father. Prescott Bush was a Senator
from 1952 – 1963. Previous to his time as a Senator Prescott was a banker
and businessman. Prior to the American entry into WWII Prescott Bush was
director of Union Banking Corporation. Union Banking Corporation helped to
finance Hitler’s regime. The Concentration Camps of Nazi Germany were
labor camps that the Nazis used to make products for their regime as well as
for sale to raise money. Prescott profited directly from the Auschwitz
labor camp.
In 1942, after Hitler
declared war on America the United States government seized the Union Banking
Corporation under the Trading with the Enemy Act as a front operation that was
supporting the Nazis. Much of the profits from the operation were already
pocketed by Prescott however, and $1.5 million was put in a trust fund for
George Bush Sr.
For more on Prescott
Bush's ties to the Nazis see:
The issues of WWII
will be revisited again later.
This is actually just
the tip of the iceberg as far as the Bush family and business dealings are
concerned, the topic is a book in itself. In the interest of brevity I
invite you to research the Bush family business ties yourself, including those
in Saudi Arabia, where George Bush made millions as an oil well developer, and
George Bush’s $14 million deal when he sold the Texas Rangers, while leaving
tax payers footing the bill.
For information on
Prescott Bush Jr.'s economic ties to China see:
