“Heads I Win, Tails You Lose”: Deregulation, Crime, and Crisis in the Savings and Loan Industry

TLDR

Savings and loan crime, a relatively new form of white‑collar crime, is largely driven by “collective embezzlement” that permeates the thrift industry. This study examines fraud in the savings and loan industry as a case study of white‑collar crime. By drawing on government reports, Congressional hearings, and media accounts, the authors categorize three types of savings and loan crime, trace them to deregulation‑induced competitive pressures, and delineate enforcement limitations imposed by ideological, political, and structural forces. The study links the proliferation of collective embezzlement and other thrift crimes, along with enforcement constraints, to the distinctive qualities of finance capitalism.

Abstract

This study examines fraud in the savings and loan industry as a case study of white-collar crime. Drawing from extensive government reports, Congressional hearings, and media accounts, the study categorizes three types of savings and loan crime and traces them to the competitive pressures unleashed by deregulation in the early 1980s, within the context of a federally protected, insured industry. In addition, the study delineates the limitations of the enforcement process, focusing on the ideological, political, and structural forces constraining regulators. Although savings and loan crime is in many respects similar to corporate crime in the manufacturing sector, a relatively new form of white-collar crime, referred to as “collective embezzlement,” permeates the thrift industry. The study links the proliferation of collective embezzlement and other forms of thrift crime, as well as the structural dilemmas that constrain the enforcement process, to the distinctive qualities of finance capitalism.