Those Who Had Profited from Bailout in the 90’s Are Hoping to Benefit Again from This Foreclosure Climate

A closely-knit circle of former senior government personnel who were pivotal in the savings and loan bailout of the 90’s are hoping to benefit again from the foreclosure climate of today. Their operations as private legal experts as well as lobbyists have seen a surge in their work.

The $700 billion from the bailout is waiting to be taken, bad debts worth billions are floating around and soured assets are listed for sale or auction. This is the best time for the members of this group to use their expertise to help people get a slice of the bailout pie or clinch a bargain deal at absurdly low prices.

John L. Douglas of a law firm in Atlanta and Paul Hastings who had formerly been a lawyer of bank regulators opine that for them the sun is shining. They were one of the architects of the previous federal bailout programme – The Resolution Corporation.

Other former federal officials like L. William Seidman are powwowing with Treasury Secretary Henry Paulson and also with the transition team of Barack Obama. Simultaneously they are directing investors and financial bodies like banks on how to reap the best harvest in this foreclosure season. Seidman said, “It’s an enormous market. I am enjoying this.”

A former R.T.C. lawyer David B. Iannarone is at present partner of a firm that deals with defaulted commercial property loans. He said, “The people who worked on this back in the early 1990’s are back in vogue.” The government had founded the agency in 1989 to dispose of real estate valued at $450 billion that had come from 747 buckled banks (savings).

To the former personnel of R.T.C. it is obvious that as during the previous crisis, this time too a good chunk of money will be made by a selected batch of investors and entrepreneurs – especially those having intimate contacts with the government. The group members said that what is motivating them is their desire to put the nation back on its feet from the latest blow. But they admit that their intention is to be some of the emerging winners. One of optimistic seniors is Gary J. Silversmith. He said, “Fortunes will be made here, no doubt about it.”

For these alumni people the busiest zone for making money is helping the distressed banks to queue up for being injected with cash from the Treasury.

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