The Kinder, Gentler
S&L Bailout That
Might Have Been

Notes on the Bush Administration's First Proposal

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by Robert Winter

NOTE:  In January, 1989, President Bush defended his proposal to charge customers of all banks and savings and loans 25 to 30 cents for every $100 in their accounts, as a way of raising money to bail out failing thrifts.  When it was pointed out that this might appear to be a new tax, George Herbert Walker No-New-Taxes Bush had a snappy rejoinder:  "Is it a tax when the person pays the fee to go to Yosemite Park?"


I probably shouldn’t have opened the door to the young man in the first place.

True, he had a certain fresh-scrubbed, freckly eagerness.  But what could the pencil behind his ear, the pocket calculator, and the change dispenser at his belt possibly mean?

"Sorry," I said, "but I pay for my newspaper by check."

"I’m not with the paper, sir. Federal Government. F.S.L.I.C."  He flashed an ID that said something about savings deposits and insurance.  "It’s about your account."

My throat tightened slightly.   "Is it in some kind of...ah...trouble?"

He fixed me with a serious gaze.   "I’m afraid it is.  Actually, you might prefer to sit down for this."

I motioned him inside to a seat on the couch.  My wife appeared in the hallway, her hand fidgeting with the button of her sweater.

"It’s about our account, Honey.  Some kind of trouble."

She let out a small gasp, then braced herself.  "I knew it would come to this.  All that wild deregulation.  Living under the same roof with those insurance sharpies.  And that awful travel agency right in the lobby!  What kind of people would have anything to do with shipboard cha-cha lessons?"

"Whoa, hold on, Dear, I said, taking her hand.  "We don’t even know what our account’s done."   I looked the F.S.L.I.C agent solidly in the eye.  "What has it done?"

"Well, sir," said the young man, "It’s not so much what it’s done as the company it’s been keeping."

"You see?" shuddered my wife.

I examined the soles of my shoes.

"Actually, it’s not the travel group, man," said the young man.  "It’s the S&L gang.   We’ve had to put away a bunch of them in Texas.  Found all kinds of questionable practices and shady dealings."

"But what’s my account done?"

"Well, it’s with an S&L, sir."

"But that’s guilt by association.  You can’t do that.  This is America!" I realized my tone was quavering, and managed to change it to peremptory.  "Either your unlock my account immediately, or I’ll have a pack of lawyers on you quicker than you can say ‘U.S. Constitution.’"

The young man widened his eyes. "Uh, actually, sir, there’s nothing to unlock."

"What? Then what are you here about?"

"User fee," he answered crisply.  "President Bush says the only way to protect your account from the consequences of all that bad company is to charge you a fee, and use the money to cover the damages."

"But what about the insurance?" I demanded.  "You know, the ‘Guaranteed Safe Up to $100,000’ business? F.D.U.P., or whatever you call it."

"F.D.I.C.," the young man corrected me.  "But that’s not us. We’re F.S.L.I.C."

"Oh," I rejoined him.

"And policy is policy.   Now, will you be paying by cash, check, or major credit card?"

"Hold on a minute.  What gives you the right to..."

"Same as the entry fee at Yosemite Park.  That’s what the President says.  It’s for a service.   And insurance is a service."  He paused to let this point register.   "If it’s not a service, what is it?  It isn’t exactly manufacturing, is it?  Well, sir?  And aren’t you benefiting from it?"

"Yes, but I..."

"Twenty-five cents per hundred dollars, Sir."  The young man took the pencil from his ear and began pressing buttons on the calculator.  "Let’s see, for your account that comes to a total of seventy-three cents."

"Seventy-three cents?"

"Will that be cash, check, or major credit card?"

I fished in my pocket for three quarters.  The young man took them, briskly clicked out two pennies change from his belt dispenser, and marched out of our living room.

"Dear," my wife began...

I held her softly. "I don’t get it either, Honey.  Let’s just not think about it now. It’s over."


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