Paper Example: Perpetrators' Treatment in the Saving and Loans Scandal in Arkansas

The Savings and Loan Scandal in Arkansas was about a land deal to build and sell holiday homes in the mountainous regions of the Ozark. Hurn (2017) notes that the case aimed to determine the legality of the financing and conduct of the parties involved during the deal. The perpetrators, in this case, included Bill and Hillary Clinton, James and Susan McDougal. In this case, the Clintons and McDougals intended to purchase about 240 hectares of land for the development project (Hurn, 2017). However, the construction project faced several problems, which included difficulties in accessing the property and the perennial flooding in the area.

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The case leaned towards establishing the legality of the financial transactions that financed the deal. The investigations focused on the banking fraud in the trial where James and Susan McDougal were convicted for having participated in financial fraud in the Whitewater deal. McDougals and the Clintons were treated differently. There was a variation in how the prosecutors prosecuted the case to demonstrate that the Clintons were not guilty of wrongdoings. Nonetheless, the ruling proved that they forced David Hale to finance a loan meant for the Whitewater deal.

Additionally, Fiske, the lead prosecutor, urged the court to determine the involvement of the Clintons by asking for the documents relating to the deal. At first, the Clintons reported that the papers were missing. However, after a tracing of the documents, the court cleared the Clintons of any financial fraud. That was not the case for James McDougal, who was convicted of financial fraud in 1997 in a situation related to his financial management company. At the same time, the court determined that David Hale was guilty of financial felonies, some of which included fraud and embezzlement (Rosoff, Pontell, and Tillman, 2002). The criminal charges against David Hale and James McDougal caused them to lose their social credibility. McDougal lost his position as president and chief executive officer of his firm, and David stepped down from his role as president of the financial firm he helped to build.

According to Rosoff et al., (2002), the punishment accorded to the perpetrators did not match the crimes committed. As for the Clintons, the Senate and the court acquitted them of the crimes even though they were determined to be participants in the same deals that saw David and McDougal convicted of fraud and embezzlement. Hurn (2017) opined that the punishments that went to the perpetrators of the saving and loan scandal in Arkansas were disproportionate. The Clintons held influential positions in the present administration, and therefore they were able to influence their fate in the scandal.

On all three counts of financial impropriety that implicated the Clintons, the prosecutions found no evidence to charge them with any crime. However, as for the McDougals, the crime cost them their firms, convictions for fraud, and conspiracy to defraud the government. The fines were upwards of $73 million (Hurn, 2017). The Starr investigation also investigated further into other illegalities, which included the Lewinsky sex scandal. The case led to the impeachment of Clinton for obstructions and perjury after the presidential elections of 1998. However, even though the prosecution presented a substantial amount of evidence, the Senate determined that then-President Clinton was not guilty of the charges leveled against him.

Economic Citizenship

Economic citizenship is a term used to refer to the economic influence of a member of society in determining their citizenship. Besides, it represents a description of an individual's financial contribution in society, which justifies their right for consideration as a citizen. Additionally, the influence of an individual's economic strength in building the economy can also influence their citizenship. According to Rosoff et al., (2002), the economic citizenship model establishes one's participation in civil society through its economic influence. Hurn (2017) observes that this model was used to determine citizenship in ancient Greece.

The concept is used throughout the world to grant civic responsibilities to wealthy citizens based on their economic contributions in society. According to Hill (2016), economic citizenship is used as a method to separate the social influence in wealthy and poor social classes. Dickinson and Anderson (2004) stated that items such as economic citizenship are critical to countries that depend on capitalistic commercial systems for economic prosperity. In this system, the individuals who have more to contribute economically have more rights and privileges as compared to those who lack material wealth and status. The variegated system also offers better representation and access to national resources for those with economic citizenship. It provides an advantage, such as social security against those disturbances that destabilize and create inequality for a majority of other citizens.

Countries issue economic citizenship to benefit from the economic activities and influence of the individuals that can stir economic growth in return (Hill, 2016). The terms issued by countries for economic citizenship are usually determined by an individual's ability to make a financial contribution to the country they seek to reside in or become citizens. In these countries, individuals who try to gain citizenship must be able to contribute to economic development for a specified period. As opposed to development loans, countries that issue economic citizenship rely on the individual's financial ability to spur growth in specific areas of the economy.

In addition to the economic growth caused by economic citizenship, countries that issue individuals with economic citizenship tend to benefit from integrated economic growth. According to Rosoff et al. (2002), economic growth as a result of economic citizenship attracts similar investments from other such individuals and companies. This kind of influence can help to propel the country's economic impact in the long run. Furthermore, according to Dickinson and Anderson (2004), financial control from economic citizens supports many sectors of the economy in that their influence employs other citizens in the countries they choose to settle in. For example, the United States harbors millions of economic citizens who end up paying for expensive private schools, and they develop high-end real estate projects and contribute to the cultural diversity of the regions they immigrate to or reside.

Besides the advantages of economic citizenship, there are several inherent disadvantages from the model. The process of application is one of the main hindrances of the success of acquiring economic citizenship (Hurn, 2017). It takes a long time to become a citizen by investment in countries such as Canada and Malta, where individuals take from six months to six years to become economic citizens. Furthermore, depending on the region and the individual's financial capabilities, some of the officials involved in the registration take corrupt money to hasten the process for some individuals and delay applications for others.

Further, the investments required by countries to become a citizen vary depending on the region an individual desires (Fleitas et al., 2018). According to Wells (2016), in areas such as the Caribbean and South America, becoming a citizen by investment programs would cost less than the plans in the European Union. Furthermore, even after acquiring economic citizenship, governments could change their program policies as they please. The changes can include increments in investment capital or other changes in the current documentation procedures. The uncertainty could change the plans for an individual's investment plans and the cost implications.

Another negative side of economic citizenship is the lack of transparency from the governments that encourage this kind of citizenship. Rosoff et al. (2002) opine that this model of citizenship causes social segregation and divisions in the social structure. Furthermore, the effects of citizenship-by-investment endear some citizens to the government as opposed to equal treatment in the provision of public goods and services. Dickinson and Anderson (2004) also explain that some governments do not allow for dual citizenship. Those hindrances may hamper those individuals who would want to invest as part of their nationality to look elsewhere for opportunities

Roles Played by the FDIC and RTC in Solving the S&L Crisis

In the early 1980s, the United States experienced an economic revolution from the development of saving and loan operations (Hill, 2016). The Savings and Loans otherwise known as the S&L was a concept where financial institutions would register members interested in developing their economic and social stand by saving a certain amount of money, and then borrow a specified amount more than their savings. This model was successful where members of S&Ls would lend money to finance their mortgage, car, and even political payments and debts.

In the late 1980s and early 90s, the United States government faced one of the biggest S&L meltdowns of all time. More than 700 S&L institutions failed to meet their financial obligations. According to Hill (2016), the Resolution Trust Corporation (RTC) and the Federal Loans and Savings Insurance Corporation (FSLIC) resolved and closed more than three-quarters of all S&L institutions in America.

To resolve the S&L financial crisis, the Federal Deposit Insurance Corporation (FDIC) and the RTC decided to raise the discount rate charged to members to 12% from 9.5%. This move aimed to reduce the inflation that had plagued the S&L industry at the time. The FDIC and RTC argued that the dissolved institutions would incorporate some of the financial responsibilities that arose from the payments demanded by the insurers. According to Wells (2016), these economic responsibilities would be shared between the RTC, FDIC, and individual savings and loan institutions that invested in speculative investments without proper insurance.

On August 9, 1989, Congress enacted the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), which stipulated the roles played by both the FDIC and RTC in the resolution of the S&L crisis, which ended in 1994 (Hill, 2016). According to the ACT, the Federal Home Loan Bank Board and the National Savings And Loan Insurance Corporation would be disbanded. The disbandment would reduce the number of insurers active in the industry (Fleitas et al., 2018). The Act also abolished other home loan banks, which were replaced by organizations such as the Savings Association Insurance Fund (SAIF).

Furthermore, the savings and loan institutions were required to justify the minimum amount of capital they were willing to invest (Wells, 2016). Also, these regulatory bodies would have to vet some of the investments made by financial institutions before they insured them. Also, the FDIC and the RTC were mandated to disclose the financial obligations of the savings and loan institutions to the government once they suspected corruption and over-priced investments.