Panic in the Loop Chicago's Banking Crisis of 1932

by Vickers, Raymond B.

• ISBN13: 9780739166406
• ISBN10: 0739166409
• Format: Hardcover
• Copyright: 2011-10-24
• Publisher: Lexington Books

Summary

Relying on a broad array of records used together for the first time, Panic in the Loop reveals widespread fraud and insider abuse by bankers - and the complicity of corrupt politicians - that caused the Chicago banking debacle of 1932. It provides a fresh interpretation of the role played by bankers who turned the nation's financial crisis of the early 1930s into the decade-long Great Depression. It also calls for the abolition of secrecy that still permeates the bank regulatory system, which would have prevented the Enron fiasco and the financial meltdown of 2008. During Chicago's panic in June 1932, bank failures reached epidemic proportions when forty-two banks collapsed . Panic in the Loop proves that each and every bank that failed did so because of massive insider abuse and fraud. Bank officers and directors engaged in illegal and unsound practices that encumbered every one of thebanks with reckless loans and unsafe securities investments, which no prudent management would have made. Playing central roles in the banking debacle were Charles Dawes, the former vice-president of the United States, and utility tycoon Samuel Insull, as well as Jesse Jones and other officials of the Reconstruction Finance Corporation who bailed out the Dawes bank. This book focuses on the recurrent failures of the financial system -- the savings and loan crisis of the 1980s, the Enron debacle of the early 2000s, and finally the financial collapse of 2008. Because of regulatory secrecy, knowing what happened in Chicago in 1932 is critical to understanding the glaring problems in the regulation of American finance, in particular the lack of transparency, the abuse of financial institutions by insiders, and the capture of public institutions by those going through the revolving door between the private and public sectors. Eight decades later little has changed. The regulatory failures of the 1930s, especially the pervasive system of secrecy that allowed the fraud and insider abuse to flourish - were repeated during the

Author Biography

Raymond B. Vickers, an attorney and economic historian, is the author of Panic in Paradise: Florida's Banking Crash of 1536. He was formerly the top-appointed banking and securities regulator for the state of Florida. As an attorney, he has represented more than one hundred financial institutions.

Table of Contents

Introduction	p. ix
Insiders of Business and Banking: Samuel Insull and Charles Dawes	p. 1
The Fall of Insull	p. 47
Insiders at the Reconstruction Finance Corporation	p. 87
Insider Abuse at the Dawes Bank	p. 139
Dawes Plays His Hand	p. 181
Playing the Young Card	p. 213
The Winners and Losers	p. 239
Conclusion	p. 267
Bibliographical Essay	p. 285
Abbreviations Used in the Notes	p. 303
Select Bibliography	p. 307
Index	p. 329
About the Author	p. 247
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