UNIVERSITY of CALIFORNIA Santa Barbara Unleashing the Financial
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UNIVERSITY OF CALIFORNIA Santa Barbara Unleashing the Financial Sector: Home Loan Deregulation and the Savings and Loan Crisis, 1966-1989 A dissertation submitted in partial satisfaction of the requirements for the degree Doctor of Philosophy in History by Dustin Ryan Walker Committee in charge: Professor Mary Furner, Chair Professor Alice O’Connor Professor Nelson Lichtenstein Professor Stephen Weatherford June 2018 The dissertation of Dustin Ryan Walker is approved. _____________________________________________ Stephen Weatherford _____________________________________________ Nelson Lichtenstein _____________________________________________ Alice O’Connor _____________________________________________ Mary Furner, Committee Chair September 2017 Unleashing the Financial Sector: Home Loan Deregulation and the Savings and Loan Crisis, 1966-1989 Copyright © 2018 by Dustin Ryan Walker iii To JP: Sorry you missed this iv ACKNOWLEDGEMENTS This project, quite simply, could not have been completed without the mentorship and guidance of Mary O. Furner. Words cannot accurately convey the appreciation, the admiration, and the respect I have for you as a scholar and a human being. A simple thank you seems woefully inadequate as I gratefully acknowledge the overwhelming support and encouragement and insightful suggestions that you provided me as I analyzed and explained this vitally important, but previously misunderstood, episode in U.S. economic and political history. Nevertheless, I will still try, thank you Mary—for everything. Several grants and fellowships made this project financially feasible. Those funds provided me the opportunity to travel to five different states and the District of Columbia and collect tens of thousands of pages of archival materials. They included: the UC Santa Barbara Graduate Dean’s Dissertation Fellowship, Tobin Project Democracy and Market Fellowship, UC Santa Barbara Gradate Dean’s Advancement Fellowship, UC Regent’s Dissertation Fellowship, UC Santa Barbara Humanities and Social Science Research Grant, UC Santa Barbara Department of History Dissertation Fellowship, All-UC Group in Economic History Research Grant, UC Santa Barbara History Associates Fellowship, UC Santa Barbara History Associates Robert L. Kelley Fellowship, and the UCLA IRLE Collaborative Graduate Student Research Grant. Additionally, I am grateful to Nicole Pacino, Tara Tubb, Colleen Ho, and Rachel Winslow, who regularly provided constructive feedback on my grant and fellowship proposals. I’m grateful for your time and appreciative of the thoughtful historical observations and grammatical corrections. And to Colleen Ho, Shawn Mack, Lindsay and Josh Harris, and Helen-Jane and Russell Abrecht, thank you for opening your homes to me as I archived up and down the East Coast. I appreciate the kindness and generosity. I am also eternally grateful to the many archivists who eagerly and openly shared their institutional expertise and historical knowledge with me. Without Bill Davis and Rod Ross (Center for Legislative Archives at the National Archives), Keith Shuler (Jimmy Carter Presidential Library), Kelly Barton (Ronald Reagan Presidential Library), Robert Beasecker and Nancy Richard (Special Collections and University Archives at Grand Valley State University), Roy Hinojosa (Dolph Briscoe Center for American History at UT Austin), and Nicholas Siekierski (Hoover Institution), this project stalled before it started. Additionally, thank you for the conversation and congeniality, it provided a welcome respite from the monotony of a seven-month archival bender. And to Bill Davis, in particular, a special thank you for the exhilarating trip into the stacks at the National Archives, I honestly felt like a kid on Christmas morning again. As I struggled, throughout every stage in this process, to conceptualize the project, identify the various factors that contributed to the savings and loan industry’s demise, and craft a nuanced narrative that accurately explained this complex moment in U.S. financial and political history, I relied upon so many individuals to offer me writing and research advice, identify previously unknown (to me) historical actors and historical context, suggest additional readings, provide economics tutorials, and pose potential narrative arcs and historiographical re-interpretations. So for all the time you spent reading and commenting on chapter drafts and/or brainstorming with me, I thank Mary Furner, Alice O'Connor, Steve Weatherford, Nelson Lichtenstein, Louis Hyman, Ken Hough, Kit Smemo, Samir Sonti, v Kashia Arnold, Serge Ferrari, Jesse Halvorsen, Cody Stephens, Caitlin Rathe, Tim Paulson, Anita Morgan, Scott Walker, Greg Storen, and Ryan Abman. And I would also like to extend a heartfelt thank you to Senate Historian Betty Coed, former Senate Historian Donald Ritchie, House of Representatives Historian Matthew Wasniewski and Associate Historian Kenneth Kato, and Center for Legislative Archives Historian Richard McCulley, who graciously spent countless hours with me sharing your unique perspectives and experiences as congressional insiders. The insights I gleaned from you proved invaluable to the completion of this work. Additionally, I presented aspects of my research at several conferences and workshops, including the Tobin Project’s Democracy and Market Workshop, the National Archives Brown Bag Lunch Series, the All-UC Group in Economic History student workshop and conference, the Center for the Study of Work, Labor, and Democracy at UC Santa Barbara, the UC Washington Center, the Histories of American Capitalism Conference at Cornell University, and the Third Biennial Conference of the ECPR Standing Group on Regulatory Governance at University College Dublin. These sessions with archivists, historians, political scientists, and economists, among others, forced me to not only re-evaluate the tone and accessibility of my narrative and argumentation, but also the inter-disciplinary potential of my research. I am beyond grateful for all of this input and advice. This project details the twenty-five-year transformation, decline, and death of the savings and loan industry. To both tell this story accurately and provide the necessary evidence to justify my claims, I incorporated copious amounts of U.S. financial and housing data into my analysis. I would have been unable to do so, however, without Louis Hyman and his History of Capitalism Summer Camp. Those two jam-packed weeks I spent at Cornell during the summer of 2013 provided me with the knowledge, tools, and training necessary to confidently identify, analyze, and explain the various and often competing micro- and macro- economic factors that influence economic growth and corporate decision-making. Just as important, I learned how to evaluate and understand financial statements, a skillset that proved invaluable as I detailed the slow demise of savings and loan institutions across the United States. So Louis, a hearty thank you! A special thank you to Jill Jensen, who not only helped make my transition into the graduate program at UC Santa Barbara seamless and exciting, but also provided me critical mentorship and guidance as I looked for teaching assistantships, completed course requirements, prepared for my qualifying exams, applied for grants and fellowships, and drafted this manuscript. Thanks for your willingness to openly share your experiences and insights with me, it made all the difference in the world. To Darcy Ritzau, thank you for ALL of the things. You are the backbone of UC Santa Barbara's Department of History. A smile and "hey hon," accompanied by your patience and compassion, always immediately eased the worst of anxieties. I am eternally grateful for the work you did on my behalf, specifically, and for the department in general. You're truly an angel. vi For helping me maintain my sanity and sense of humor as I completed this journey, I thank Ryan Abrecht, Nate Bullock, Chuck Yahara, Mehgan and Dave Tanner, Malek Guerbaoui, Colleen Ho, Shawn Mack, the Hough and Briggs-Campbell clans, Jeff and Sarah Dinkler, Elijah Bender, Nicole Pacino, Tara Tubb, Don Lubach, Rosella Faye, Chris Keggereis, Sarah Hanson-Keggereis, Sasha Coles, Laura Moore, Chris Nofziger, Brian Tyrrell, James and Rachel Winslow, Jason Ebin, Richard Espinoza, Dave Beltz, Brittney Walker, Noah Faulkner, Alex and Caden Whitehead, and Drew Storen. To the many individuals who helped ignite and flame my passions for historical inquiry, critical analysis, and intellectual debate, especially during my formative high school and undergraduate years, I thank Dee Tidball, Noel Schaak, Carl Louden, Kevin C. Robbins, Anita (Ashendel) Morgan, Kevin Cramer, Marianne Wokeck, Philip Scarpino, Fred Witzig, Nathan Ringham, Nate Bullock, Mark Lee, and Tim Moriarty. To my parents, Grandma Edie, and JP, thanks for the genes. Your constant love and support has been foundational as I pursued my dream over the last decade. And to Grandma Edie and Carl, thanks for all the laughs, stories, and card games. Vanessa and I cherish our time with you, whether it's in person, over the phone, or on Skype. As we age hopefully with the grace and excitement for life that you both have, Vanessa and I hope to emulate your sense of adventure and story-telling abilities. And last, but certainly not least, thank you to my amazing wife Vanessa. Pursuing a PhD can be a very alienating process personally as it requires a dedication and focus that many non- academics may not understand. But you openly embraced me and my