My Dad Died Fighting
My father spent the last twenty months of his life fighting the federal government in court. I've always believed it contributed heavily to his early death. He spent most of my life traveling to and from Washington to fight for the small businessman, education, or the state of Mississippi; it was difficult knowing he was now flying to Washington to defend himself and his friends, including General Louis Wilson. Still, though, it was my dad; how could he not win?
The Resolution Trust Corporation was a legal entity created by the federal government to try to win back money lost by the Federal Savings and Loan Insurance Corporation in the Savings and Loan crisis. This was a nationwide crisis. A woman I'd been talking to on the fledgling Internet had a father with a fairly large S&L based in Los Angeles. She was freaking out because he was being sued for several times what he was actually worth. This was common.
The FSLIC was created in the wake of the banking failures of the great depression. So was the FDIC. Their purpose was to guarantee the deposits in the banks in case there was another collapse or run on the bank. If you've ever seen "It's A Wonderful Life," that's what a run on an S&L looks like. In the movie, Jimmy Stewart talked depositors out of their panic. That was pretty rare in real life.
Under Franklin Roosevelt's leadership, Congress passed several laws that made it very difficult for banks to fail. They were far less profitable, but they were much safer. The average American benefited, but the banker didn't, at least not as much.
In places like Mississippi, the local banks were protected from carnivorous out of state banks, and for the first time since the civil war, money quit flowing out of Mississippi and there was unprescidented capital growth in Mississippi, including companies like Mississippi School Supply, McRaes, McCarty Holeman, Thomas Dry Goods Wholesale and more.
Stagflation in the seventies led Ronald Reagan to experiment with the economy. He said he would balance the budget, but that never happened. What he did do was cut taxes for people far too rich to live in Mississippi and eliminate Depression Era banking regulations, thinking if banks were more profitable, then that would lower interest rates, which it did do, but there was a cost. Carnivorous banking was back bigger than ever, and their first target was the Savings and Loan banks. In Mississippi, their target was all the banks, even the largest.
Taking advantage of the new rules on financial instruments, Michael Milken and people like him started selling literally insane financial instruments to the floundering S&Ls. Junk Bonds and Junk Stocks were heavily involved in the 1929 Stock Market Crash, so FDR and Congress passed laws prohibiting them. Reagan removed these laws, so questionable financial instruments were back. It didn’t take long for them to start doing damage.
Around the country. S&L's scrambled to save themselves from Armageddon, but it was too late. As the Savings banks failed, bigger banks gobbled up their assets (loans). In Jackson, DGB bought up the assets from Unifirst. They won the bid over Trustmark, which was a challenge for my dad as he was on the board of both Trustmark and Unifirst. Having coffee after opening the company mail, he explained the details to me, and laughed that somehow his personal mortgage that was with Unifirst was then with DGB. Trustmark and Deposit Guaranty Banks weren’t enemies, but they were competitors. We were Trustmark. Some of my dad’s friends and friendly competitors at DGB got a laugh out of holding his mortgage.
My dad considered his work with Unifirst to be part of his service to his community. Thrift institutions like Unifirst provided homes to Mississippians at rates they could afford, so they could build lives, raise families, and make Mississippi a place to live. Two or three times a year, Unifirst would rent a freshly harvested soybean field for what they called the “White Feather Hunting Club” so board members and their awkward sons could shoot birds. Normastel Mosby, who was also on the board, declined to attend. It’s a shame. She was athletic, and it’s been my experience that women are often a better shot than men. Shooting doves was the only compensation my dad ever received for serving on the Unifirst Board.
I'd have to check, but I'm pretty sure that the boards of every S&L in Mississippi were sued for whatever the FSLIC had to pay out, plus triple damages, even though nobody could point to what they had done wrong. The Resolution Trust Corporation’s idea of “damages” could be quite shocking.
The best legal advice anybody could get was that you can't win against the federal government, so the best you can do is settle. Separated from the management of Unifirst because of a conflict of interest, my dad and Louis Wilson flew to Washington to defend the board. Triple damages meant the RTC was suing my dad, General Wilson and the rest of the Unifirst board for sixty million dollars each.
Like me, my father believed he was created to defend the people around him from disaster. He spent his last days trying to defend his friends from lawyers hired by the government.
While everyone else was trying to settle for as little as they could, Buster Bailey figured he hadn't done a goddamn thing wrong. He cooperated entirely with the FSLIC and did everything they said, and if his S&L didn't make it, it was their fault for making him absorb failing banks. Despite the fact that the entire world thought he was right, nobody thought he could win against the feds. At this point, George W Bush was in office.
It was painful, but we settled. My father was dead and unable to defend himself. I wanted to fly to Washington and have it out with these guys like men, but my mom was against it.
The strangest thing happened. The bad press regarding the Resolution Trust Corporation kept growing, so when it came time to renew their contract, Congress said "no". In the final accounting, the RTC only netted the federal government around ten million dollars. The rest went to highly padded legal fees for law firms working under a federal contract.
He may not have felt like it because of what he had to pay his lawyers, but Buster Bailey won. He outlasted them. That provided a fair amount of satisfaction for the rest of us sweltering under this lawsuit.
Michael Milken was sentenced to ten years in prison, but spent less than two. Part of his parole contract was that he had to give lectures on safe financial practices. He added to that how he found Jesus in prison. I doubt if he did.
I tell this long, not terribly interesting story because President Trump's crypto scam is so much more illegal, so much more immoral, and so much more fiscally irresponsible than anything Michael Milken or anybody involved in the S&L crisis was involved with, but I promise you, he's going to get away with it. The best we can possibly do is stop him from doing more damaging shit.
I'm convinced that sooner or later this crypto shit will crash so bad that congress will make it illegal, just like junk bonds, then one day in the future, some idiot will lift those restrictions and it will all happen again. In 2020, Donald Trump issued a presidential pardon for Michael Milken.
A lot of you thought I slept through economics and finance. Fooled you. It just looked like I was sleeping because I was studying what Buss Dean was wearing.
