The party line inside the Bush Administration about the current financial crisis seems to be that it’s not as bad as the S&L Crisis was. Check the following transcript of a press conference this morning with his economic policy minions:
Q You have another major financial firm on the brink, and several other banks have failed in the last few weeks, almost one a week at this rate. Washington Mutual is in a lot of trouble. What does the White House think about this and the state of Wall Street at this period?
MR. FRATTO: I’m not going to try to characterize the state of Wall Street. Obviously, we’re paying very close attention to markets. The President gets regularly briefed, as you would imagine he would. The Treasury Department is closely monitoring the markets, and they stay in contact with market participants. There’s no question that the financial industry is dealing with challenges, and it’s something that we keep an eye on.
Q — that the administration could do to reassure the depositors who have been seeing more of these banks –
MR. FRATTO: Oh, you’re talking about, I think, a number of different things. And you’re talking about — I think you’re talking about financial markets, but you’re also talking about banks. And just to put banks into perspective, when you’re talking about depository institutions like banks, those deposits are federally insured. The FDIC has oversight of the depository and thrift institutions with their insurance, and no depositor who had insured deposits has ever lost a dime since the FDIC was created.
Also, I want to put something into perspective. Also, as people talk about failed depository institutions, they are dealing with a challenging environment, but if you talk about those kinds of institutions, some people try to compare it to the savings and loan crisis.
And I’ll just remind you, the savings and loan crisis was a very different kind of crisis, especially even in scope, in terms of the numbers of banks, where the numbers of banks that were failing on an average year were between 200 and 300, and as high as over 500 banks in a given year that were failing. And that’s not what we’re seeing today.
Anyone else get the distinct whiff of a party line here with the insertion of the S&L Crisis mention? Granted, Fratto is technically correct, nowhere near as many banks have failed (or are likely to fail) in this crisis, that is missing a more important point. The costs in this case are well on their way to being much higher.