The authors faced a difficult problem in structuring the book. Most people do not have sufficient technical knowledge about banking and its regulations to understand how changes in the law and regulatory officials affects the incentives for S&L owners. Similarly, many important political decisions that led to the new laws occurred in committee markup or in other places where knowledge of the legislative procedures and process is necessary to understand how such perverse rules became law. In the absence of being able to assume either that readers have the requisite knowledge or are willing to learn such information, the authors relied more on explanations based on personalities than on institutional structures. This decision, though perhaps necessary, was regrettable.
For the readers of this journal, perhaps the most fascinating chapters are chapters three and five. Chapter three shows how partial deregulation can be the worst of all possible worlds because it can reward risk without punishing failure. Chapter five shows the difficulty of prosecuting white-collar crime because of its complexity. Investigators, prosecutors, and juries all must know a great deal if prosecution is to be successful. Seeing the stark statistical data on how few white-collar criminals were prosecuted and on how many activities were legal despite their immorality is a sobering experience.
This book is important reading as Congress currently seems to be heading toward making similar mistakes.
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Copyright 1998 by the author