William K. Black
December 17, 2018 Bloomington, MN
In 1983, Federal Home Loan Bank Board Chairman Richard (Dick) Pratt published his Agenda for Reform about how to deal with the savings and loan debacle. He had just made that debacle inevitable by deregulating and desupervising the industry. In his Agenda, he called for some protective steps (none of which he took or even proposed as rules), but overwhelmingly called for more deregulation and desupervision while promising that the raging fraud epidemic he had super-charged could not occur.
Pratt put three quotations on the front and back covers of his Agenda. Two of the passages admitted his knowledge that deregulating and desupervising the industry at a time when it was endemically insolvent could greatly increase losses. Both of those quotations went on to explain Pratt’s real concern about those increased losses to the public – they might discredit deregulation. The greatly increased losses to the public did not horrify him. The fact that that deregulation would trigger those losses did not horrify him. The thing that horrified him was that the public might realize that deregulation and desupervision caused widespread fraud and losses and this could lead the public to block, or even roll back, dangerous deregulation and desupervision.
