It's also the day the McDougalls were convicted of fraud in the Whitewater scandal.
That's like a Throw Back Thursday Two-Fur.
I'm loving these little history lessons cause it makes me go back and relearn a pieces of a history that I'd either all but forgotten or never really understood in the first place. For instance, I know the word Watergate, and that it had something to do with Nixon doing bad stuff, lying or whatever, and that there were missing tapes, and a Deep Throat, and that the jig was up as soon as Robert Redford and Dustin Hoffman got involved, but that's about it.
I also knew the word Whitewater, which had something to do with the Clintons being . . . well . . . the Clintons.
Like . . . you know something shady went down, but you really can't put your finger on it.
Don't feel bad. Kenneth Starr couldn't put his finger on it either.
That's all I'm gonna say about where Kenny puts his finger.
And whole thing was overshadowed by where Bill puts his cigars.
So on this day, 1972, a couple of guys break into a hotel room, which happens to be the headquarters of the Democratic National Campaign, take some blurry photos, and install some listening devices.
Okay . . . that's bad.
But the funny part, is those particular listening devices don't work and need to be reinstalled, confirming what my dad always says about "Never going cheap on three things: Alcohol, Electronics, and Women."
Tricky Dick and Slippery Bill should really take my dad's advice.
Anyway, its funny because they broke in again a few weeks later and got caught.
And, seriously, they got caught with cashier's checks from Nixon's reelection campaign fund.
Oops.
Word to the wise, if you're gonna do stuff like that, take your $25,000 check to the bank first.
It's just common sense.
And speaking of $25,000, that just happens to be Bill Clinton's yearly salary (as Attorney General of Arkansas) when he and his wife and their pals, John and Susan Mcdougall invest in a little creekside property called Whitewater.
It actually was a pretty good investment, seeing as how there were tons of white people migrating out of MotorCity Land, and heading south to NASCAR country.
How could you go wrong selling water front vacation homes to to displaced white people who don't want to pay high property taxes?
Deregulation is the answer to that question my friends, deregulation, and a whole lotta fraud.
Okay, so this is gonna get tricky, but stick with it, I promise I'll make this fun for everyone.
Lets start with my second favorite movie "It's A Wonderful Life."
Remember how Jimmy Stewart got stuck running the boring old Building and Loan?
That sucked.
Banking sucked.
But Building and Loans (which eventually became Saving and Loans) were pretty much the back bone of the post WWII America. The greatest economic expansion ever seen by any country that didn't have 'Empire' as it's last name.
But it was like super boring.
Basically, a Savings and Loan (S&L for short) would loan people money to buy houses, for which they would collect a modest interest rate, and then they would open savings accounts, for which they would pay even more modest interest rates and use the difference to pay for ZuZu's cough medicine.
(That was an It's A Wonderful Life reference . . . try to keep up.)
Anyway, it's literally the financial version of watching paint dry.
And it was really hard. There were so many rules. Like, they couldn't invest in commercial real estate, and they had to get all kinds of approvals for things, and there were actual people paid to make sure that the S&Ls weren't selling properties back and forth to jack up the prices and cash in on commissions.
But the 70's was like totally the "Hey man, let's chill out" decade.
Let's give small business owner Jimmy Stewart a leg up. Maybe give him chance for him to insulate that drafty old house of his.
So we chilled with the regulations a bit. Thanks Carter.
And okay, so yeah, there were a few bad apples. The kind of people that would sell properties back and forth jacking up the prices and cashing in on the commissions. But you know . . . things happen.
Now if you don't know what that last paragraph means, it's actually not that complicated:
Say I buy a house for $10,000.
Cool. I gotta house.
But instead of paying my first mortgage payment, I sell it to my brother for $15,000.
That's cool. I give my agent $1,000 and keep the remaining $4,000.
Except my brother is now paying $15,000 for a house that's really only worth $10,000.
And I feel bad about that cause I'm a good brother.
So the next month, before he makes his first payment, I buy it back from him for $20,000.
His agent is also my agent, so he gets another $1,000 and my brother gets $4,000 for all his trouble.
Now for a while I can use my $4,000 to pay the mortgage payments on a $20,000 dollar house that's really only worth $10,000, so in a year or two I run out of money and my brother agrees to buy the place for $25,000.
Now banking becomes exciting! My agent is making $1,000 a month and my brother and i are each making $4,000 every two months.
And so on and so on.
And, even better, if everybody does it, well, then all the values of all our houses go up.
Woo . . . freakin . . . hoo!
Unfortunately, we call that rapid inflation.
Which is bad.
So to slow that down, the Money People decide to increase interest rates.
The modest interest rates that the S&L's were charging go up, as do the more modest interest rates that they are paying out, and hopefully ZuZu's cough gets better.
Except, because people and corporations are cheap bastards, now everyone wants to save and nobody wants to buy, and the S&L's income is far less than it's payment obligations and after a few years . . . whammo!
Everything drops like a rock and the S&Ls fold. Costing the taxpayers billions.
Ooops.
Okay, so back to the creekside property called Whitewater (see, I told you this would be fun). The Clintons and the McDougall's buy the place assuming that property values are gonna rise and they can supplement Bill's meager $25,000 income by selling the land off bit by bit.
Unfortunately, they sorta missed that window between relaxation and increased rates, and ended up losing their investment.
Or did they?
See the McDougalls weren't quitters. And they happened to own a few S&Ls. But even though regulations were relaxed, it wasn't like the government totally repealed the entire Glass-Steagal Act.
That wouldn't happen for another fifteen years. Thanks Bill.
John McDougall couldn't actually borrow more than $600,000 from his own S&L, so he kinda sorta funneled money from his "friends" to make it all look legal as he traded properties back forth to himself.
It only gets sticky because the Clintons were "friends" and Hilary was the lawyer would handled those contracts.
Her part was essentially sorta kinda legal. But John's wasn't.
So he went to jail.
But don't worry . . . Bill pardoned him on his last day in office . . . so everybody wins.
Now the moral of the story might be that there are cheaters everywhere. But if that in anyway surprises you, I'm actually astonished you were able to read this far without visual aids.
Nope, the parallel between these stories is that the guilty parties weren't the perpetrators. The Clintons weren't actively defrauding the financial institutions any more than Nixon donned a ski mask and broke into a hotel.
But when the light shined down, they shredded papers and burned evidence, erased tapes, and back pedaled away from the truth for years, in the Clinton's case, decades.
Yet, if you follow the trajectory you'll notice that Watergate lead to Nixon's complete downfall, while Whitewater got smoothed over and essentially forgotten about.
See, we're getting much better at hiding our frauds and the people paid to pay attention are getting worse at finding them. And it doesn't mean the end of all civilization, though it's hard to ignore the Doomsayers, I just think it's important to go back and look once in a while. A reminder of the past so that we're not collectively doing the same stupid stuff all the time.
Throw Back Thursday shouldn't just be all about mullets and denim jackets.
It's your civic duty.
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