Death revives tragic story of Commonwealth

Tuesday, August 19, 2008

The wire story Monday included a name that brought back a lot of memories for longtime Nebraskans.

For residents who didn't live in the state in the early 1980s, the name Marvin Copple and the Commonwealth Savings took some explaining

The name of Copple, who died Saturday at age 79, and the name of his father, S.E. Copple, as well as then-Attorney General Paul Douglas and state banking director Paul Amen were mentioned nearly every day in the state's newspapers and nightly on statewide television broadcasts.

All fell into disgrace with the collapse of Commonwealth Savings, perhaps a bellwether of conditions that led to the savings and loan collapse a few years later.

Depositors in the Nebraska institution, however, had the misfortune of being involved in a smaller financial disaster, one that didn't attract enough attention so that Washington would be forced to use taxpayer money to bail them out

The Legislature only begrudgingly pitched in $8.5 million two years later, for the 6,700 depositors who lost $65 million in the Commonwealth collapse.

They, or their heirs, eventually received 59 cents on the dollar. The personal tragedy was widespread. We knew one lifelong bank employee who retired to Lincoln, only to lose his life savings in the collapse.

Commonwealth depositors placed too much faith in an entity called the Nebraska Depository Institution Guaranty Corp., complete with a logo shaped like the state, which was supposed to guarantee each account up to $30,000.

The problem was, the guaranty corporation had only been funded with some $3 million from Commonwealth and Nebraska's other industrial loan companies.

If they had been involved in a bigger collapse, such as the S&L scandal of the later 1980s or '90s, or even the sub-prime mortgage scandal being played out today, they would have fared much better individually.

Yes, financial regulations and strict oversight are necessary to try to prevent fraud and deceit, and those who commit it must be brought to justice.

But while Nebraska is running a record budget surplus, the federal government is many trillions of dollars in debt.

Commonwealth was only a small example of how a state, through its elected officials, chose to offer some relief while allowing events to follow more closely their natural course. Difficult, even tragic for those trapped by the wrong decisions by themselves or others, but the right course in the long run.

Respond to this story

Posting a comment requires free registration: