CASE ANALYSIS: THE LINCOLN SAVINGS AND LOAN SCANDAL (Lawrence, 1991)
Because the Lincoln Savings and Loan collapse has been (thus far) the most expensive to the federal government of the thrift institution failures in the current savings and loan crisis, and because five sitting United States senators were implicated in attempts to shield Charles Keating (the chief executive officer at Lincoln Savings and Loan) and the institution from federal banking investigators, the case writer implies that the Lincoln Savings and Loan case is somehow different from most of the other thrift institution failures in the current crisis. In fact, in terms of root causes of the problem, the only essential difference between the Lincoln Savings and Loan failure and most of the other thrift institution failures is the monetary magnitude of the loss at Lincoln Savings and Loan. The case writer also displays a naivete and superficiality of analytical approach in the phrasing of the question of responsibility for the failure at Lincoln. The approach is superficial in that contemporary conditions and overt actions are emphasized at the expense of the underlying shift in governmental philosophy that permitted the contemporary conditions and overt actions to occur. The approach is naive because the minimal reference made by the case writer to the underlying shift in governmental philosophy implied that such change could be laid at the doorstep of the Congress, with no mention of the pivotal role played by the Reagan Administration in orchestrating the change in underlying governmental philosophy, nor of the actions of the Bush Administration in attempts to divorce the outcomes of the savings
and loan crisis from that philosophy. In fact, the Lincoln Savings and Loan scandal did not occur within philosophical and policy vacuums, and the structure and regulation of the general economy and more specifically the financial sector of the ec...