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Accredited directors were once S&L regulators

By Gary Jacobson

August 23, 2007 at 4:14pm

Accredited Home Lenders Holding Co., a major subprime lender, said Wednesday it would close 65 branches around the country and fire 1,600 workers as the mortgage meltdown continues to spread.

For at least two of the company’s directors, it must have seemed like deja vu all over again.

Richard Pratt and Bowers Espy were S&L regulators in the early 1980s as that industry was in crisis.

Pratt was Chairman of the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation. Espy was deputy director of financial analysis and policy research at the Federal Home Loan Bank Board. In 1981, Pratt predicted that an average of one S&L per day would hit zero net worth.

The government bailout of the thrift industry, which extended well into the 1990s, eventually cost taxpayers more than $100 billion. Both the FSLIC, which insured deposits, and the FHLBB were abolished in 1989.

After Espy went to work for Merrill Lynch, he acquired assets from the Resolution Trust Corporation, which disposed of properties held by failed S&Ls.

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