August 24, 2007 (LPAC)--Lyndon LaRouche, in releasing his principles for an emergency action on the foreclosures crisis and growing credit panic--the Homeowners and Bank Protection Act of 2007 --pointed to crucial historical examples. Franklin Roosevelt asked Congress to take comparable action in April 1933. And in the 1980s Savings and Loan collapse/foreclosures crisis, 'Jim was Wright,' LaRouche said.

"Understanding and forbearance from regulators" on foreclosures, and against shutting down troubled banks local, was House Majority Leader James Wright's (D-Tex) approach to the 1986-89 foreclosures crisis triggered by the collapse of traditional Savings and Loan mortgage lending. Wright was hounded out of Congress in 1989 by scandals pushed by Rep. Newt Gingrich (R-Ga.), and charged with "cronyism and corruption" for defending Texas banks from seizure and shutdown.

From 1986-88 the foreclosures crisis in the Southwest, driven by Federal regulators taking over troubled Savings and Loans and pushing them to foreclosure on delinquent borrowers, was evicting 30-40,000 households a year in Texas alone.

Deregulation of banking had damaged the S&L "thrifts." The S&Ls with their traditional 6% fixed-rate mortgages had been squeezed out, in the high-interest-rate 1980s, by money-market funds and other unregulated funds paying 6-7% to investors and selling the first ARM mortgages, that quickly reset to 8-9% or more.

Blackstone Group managing partner Lawrence Fink declared in 1987, "It would appear that the thrifts have outlived their usefulness." Major commercial banks and investment groups like Blackstone bought up S&Ls and local commercial banks to get their deposits, and direct those deposits into commercial real estate deals, foreign investments, corporate takeovers--anything but the steady local mortgage and business lending those banks had done since the New Deal. The Federal Home Loan Bank Board and FDIC seized 225 Texas S&Ls in less than a year, forcing mass foreclosures of their mortgage borrowers and causing the price of home real estate to plunge--and then losing 200% more money on those banks than the banks had been losing before the seizures.

Wright responded to constituents, and in January 1988, said, "It's a natural instinct to want to salvage something rather than see it torn down and destroyed, to protect citizens from unreasonable exercise of power by appointed agents of government." He warned, "I believe I can see a conscious government policy to concentrate wealth in fewer and fewer hands."

Speaking in Houston the following month, Wright said, "What we are seeking is some understanding and forbearance from regulators. Don't be so premeditated that you encourage lending institutions to adopt arbitrary policies that force homeowners to vacate their homes. "People who want to earn their own way should not be forced into bankruptcy."

And on May 5, 1989, Wright spoke on where credit needed to go: "We need to rebuild America and rehabilitate its basic public infrastructure. We need to invest in the modernization of American industry and the education of the skilled American workforce. We need to push forward and stay ahead of the curve in the application of new research and new technology to our nation's commercial advantage."