Remember the S&L Bailout like You Remember the Alamo

Westside Bubble recommended the LA Times article "Sweeping mortgage bailout unlikely."

The first problem is that these types of headlines are supposed to put us to sleep so a later massive bailout can be excused as "less than sweeping."

Remember that the 1980-90s Savings & Loan (S&L) bailout threw budget deficit concerns aside and exceeded the official federal guarantee by waiving the FSLIC $100,000 deposit limit.

The government bailout's Resolution Trust Corporation (RTC) failed to follow its own contracting procedures, mis-selected loans for auction, and provided inaccurate information to investors.

United States General Accounting Office (GAO), "Report to the Deputy and Acting Chief Executive Officer, Resolution Trust Corporation," Resolution Trust Corporation: Better Data Could Improve Effectiveness of Nonperforming Loan Auctions, GGD-95-1, B-257808, November 14, 1994

PDF version of GAO RTC report

Update: The government loves to provide bad information to consumers: SEC NRSRO Causes Asset Mispricing?