In light of what we now know about the history of banking scandals that lead up to the crash of 2009 (see my previous post The WSJ and Barron’s Apologists for the Banksters Peddle Wallison’s Fables), I thought it might be interesting to look at the Whitewater controversy again.
Excerpting from the above linked WikiPedia article is this explanation of the Whitewater real estate deal.
In spring of 1978, McDougal proposed that Clinton and Rodham join him and his wife Susan in buying 230 acres (0.93 km2) of undeveloped land along the south bank of the White River near Flippin, Arkansas, in the Ozark Mountains. The goal was to subdivide the site into lots for vacation homes,…
This period featured high interest rates in general, and by the time these lots were surveyed and thus available for sale at the end of 1979, rates had climbed to near 20 percent. Prospective buyers could no longer afford to buy vacation homes. Rather than take a loss on the venture, the four decided to hold on, building a model home and hoping for better economic conditions.
This explanation doesn’t give any hint that there is any connection between this specific deal and the type of liar loans that eventually brought down the S&L industry, and years later a repeat of such fraud nearly brought down the whole world economy. Whoever, the Wikipedia article brings up all sorts of history that had passed from my memory. It gets uglier. Nobody involved in the prosecution or the defense at the time had the benefit of the hindsight gained from 2009 and beyond. I don’t know if anyone now, besides me, is going back to see what it looks like from today’s perspective. There may be some kooky conspiracy theorists who are doing this work of which I am unaware. I don’t know if I will be joining them if I find them.