by Project Censored
Published: Updated:

It is now estimated that some 500 billion to 1.4 trillion taxpayer dollars will be needed to bail out the savings and loan crisis. One very obvious question, which has not been asked by the major news media, is what happened to so much money?

At least one investigative journalist, Pete Brewton, of the Houston Post, believes he has the answer. On February 4, 1990, Brewton wrote “During an eight-month investigation into the role of fraud in the nation’s savings and loan crisis, The Post has found evidence suggesting a possible link between the Central Intelligence Agency and organized crime in the failure of at least 22 thrifts, including 16 in Texas.”

It was the first in a series of S&L articles by Brewton that found links between S&L’s, organized crime figures, and CIA operatives, including some involved in gun running, drug smuggling, money laundering and covert aid to Nicaraguan contras. If S&L funds went to the contras or other covert operations it would help explain where some of the money went.

In his March 11, 1990, article, Brewton even suggested links between President Bush’s son Neil and the CIA/organized crime figures: “A failed Colorado savings and loan whose board of directors included a son of President Bush was part of an intricate web of federally insured financial institutions that had business links to organized crime figures and CIA operatives, The Houston Post has learned.”

Despite the blockbuster nature of Brewton’s exposes, the major news media have not been quick to follow-up. As Robert Sherrill points out in his extraordinary analysis of the S&L crisis in an unusual single subject issue of The Nation (11/19/90), “Brewton’s stories have not exactly stirred the national press to action.”

The strange silence on the part of the press led Steve Weinberg, former executive direc­tor of Investigative Reporters & Editors, to investigate the accuracy of Brewton’s charges. Weinberg raises two key questions: if Brewton’s information is wrong, what should other journalists be doing to set the record straight, and if he is right, why have most news organiza­tions failed to assign their own reporters to the scandal?

1. David Burgin, The Post’s executive editor, explained why The Post has devoted so much space to such a controversial issue apparently without conclusive proof. “At this juncture, at least, the `smoking gun’ probably will have to be found by Congress or the Justice Depart­ment, which have subpoena power. … Meanwhile, taxpayers somehow will have to foot the bill for these enormous losses. The Post will continue its investigation and hopes at the same time the national press, in the public’s interest, will take a harder look.”

After reviewing Brewton’s documentation and interviewing a number of journalists, some of whom reject Brewton’s thesis totally, and others, mostly alternative journalists, who support it, Weinberg concludes that the national press should take a harder look at his charges. Project Censored also agrees that this undercovered aspect of the S&L issue deserves the na­tional media’s critical attention.


SOURCE: THE HOUSTON POST, 4747 Southwest Freeway, Houston, TX 77001, DATE: Series started 2/4/90

AUTHOR: Pete Brewton

SOURCE: THE NATION, 72 Fifth Ave., New York, NY 10011, DATE: 11/19/90

TITLE: “The Looting Decade”

AUTHOR: Robert Sherrill

SOURCE: COLUMBIA JOURNALISM REVIEW, 700 Journalism Building, Columbia University, New York, NY 10027, DATE: November/December 1990

TITLE: “The Mob, The CIA, and the S&L Scandal”

AUTHOR: Steve Weinberg

COMMENTS: Pete Brewton, the investigative journalist, whose series of articles in The Hous­ton Post were the first to systematically expose the CIA’s role in the S&L scandal, said that his articles received no exposure on network TV or in major daily newspapers and only passing mention in the newsweeklies. He added that wider exposure of this story would let the public know that “operatives of an agency of the executive branch of the government, the CIA, were involved in owning and obtaining loans from savings and loans that later failed.” Robert Sher­rill, whose article appeared in The Nation, said it was not so much a matter of censorship but only insufficient and delayed exposure, but added “Generally speaking, the press has done a very poor job of covering the savings and loan (and bank) scandal for the past three years, not just in 1990. As early as 1988, there was plenty of evidence of the emerging mess, but the press al­lowed the candidates to dodge the subject completely. The mass media’s failure in 1989 and 1990 was that it reported the scandal in dribs and drabs, and rarely tried to put it all together so that the public could understand it in total, could understand the causes and could firmly fix the blame.” Sherrill charged that network TV and the newsweeklies have been particularly reluctant to take on the subject while the New York Times abused the public by relegating most of its S&L coverage to the financial pages. Among newspapers he had seen, Sherrill felt the Washing­ton Post had provided the best coverage of the issue. Steve Weinberg, former executive director of Investigative Reporters & Editors examined Brewton’s evidence in-depth and said he “came down squarely on the fence.”