Wikipedia's sobering view of 1980's bail-outs: Moral Bankruptcy

http://www.youtube.com/watch?v=vM4Lak_11eQ

Or, W.C. Fields' "Bank Dick" is looking prescient right now...

Lincoln Savings and Loan

The Lincoln Savings led to the Keating Five political scandal, in which five U.S. senators (Alan Cranston, Don Riegle, Dennis DeConcini, John Glenn & John McCain) were implicated in an influence-peddling scheme. It was named for Charles Keating, who headed Lincoln Savings and made $300,000 as political contributions to them in the 1980s. Three of those senators – Alan Cranston (D-CA), Don Riegle (D-MI), and Dennis DeConcini (D-AZ) – found their political careers cut short as a result. Two others – John Glenn (D-OH) and John McCain (R-AZ) – were rebuked by the Senate Ethics Committee for exercising "poor judgment" for intervening with the federal regulators on behalf of Keating.^[10]

Silverado Savings and Loan

Silverado Savings and Loan collapsed in 1988, costing taxpayers $1.3 billion. Neil Bush, son of then Vice President of the United States George H. W. Bush, was Director of Silverado at the time. Neil Bush was accused of giving himself a loan from Silverado, but he denied all wrongdoing.[2]

The US Office of Thrift Supervision investigated Silverado's failure and determined that Neil Bush had engaged in numerous "breaches of his fiduciary duties involving multiple conflicts of interest." Although Bush was not indicted on criminal charges, a civil action was brought against him and the other Silverado directors by the Federal Deposit Insurance Corporation; it was eventually settled out of court, with Bush paying $50,000 as part of the settlement, the Washington Post reported.^[11]

As a director of a failing thrift, Bush voted to approve $100 million in what were ultimately bad loans to two of his business partners. And in voting for the loans, he failed to inform fellow board members at Silverado Savings & Loan that the loan applicants were his business partners.^{[citation needed]}

Neil Bush paid a $50,000 fine and was banned from banking activities for his role in taking down Silverado, which cost taxpayers $1.3 billion. A Resolution Trust Corporation Suit against Bush and other officers of Silverado was settled in 1991 for $26.5 million.

Consequences

A taxpayer funded government bailout related to mortgages during the savings and loan crisis may have created a moral hazard and acted as encouragement to lenders to make similar higher risk loans during the 2007 subprime mortgage financial crisis.^[15]