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Mon Sep 28, 2020, 12:38 PM

Does anyone remember the "House banking scandal" from the early 90s?

This happened right before the Republicans won control of the House for the first time in 40 years, in 1994. Gingrich and his buddies elevated this to a "scandal" even though it had been going on for years, and wasn't much of a scandal, really. Gingrich himself had bounced some checks with the House bank, but it was mainly Democrats who got in trouble.

The reason why it resonated so much with the public was because it was an issue that the public could understand. It didn't involve arcane congressional rules or governmental double-talk. The average person knew what it meant to bounce a check, and they were angry that House members could get away with that.

In a similar way, the fact that Trump only paid $750 in taxes will resonate with people. Most people can wrap their heads around $750. It's not some ridiculous millionaire-only number.

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Reply Does anyone remember the "House banking scandal" from the early 90s? (Original post)
moose65 Sep 28 OP
Sherman A1 Sep 28 #1
stillcool Sep 28 #2
Sneederbunk Sep 28 #3
stillcool Sep 28 #4
obamanut2012 Sep 28 #7
JHB Sep 28 #5
stillcool Sep 28 #9
moose65 Sep 28 #6
stillcool Sep 28 #8
FBaggins Sep 28 #10
moose65 Sep 28 #11

Response to moose65 (Original post)

Mon Sep 28, 2020, 12:44 PM

1. I recall the scandal

not all the specifics.

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Response to moose65 (Original post)

Mon Sep 28, 2020, 12:57 PM

2. was this the one with "Silverado" bank

that Neil Bush was involved in...savings and loan thing? Happened around the time of the BCCI thing. What a wicked web that one weaved.

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Response to stillcool (Reply #2)

Mon Sep 28, 2020, 01:06 PM

3. No.

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Response to Sneederbunk (Reply #3)

Mon Sep 28, 2020, 01:14 PM

4. Do you know what the OP

is referring to? You obviously 'know' it has nothing to do with the two banking scandals of the early 90's that I recall, so what is it?

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Response to stillcool (Reply #4)

Mon Sep 28, 2020, 01:28 PM

7. It is the House Banking Scandal

The literal bank in the House.

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Response to stillcool (Reply #2)

Mon Sep 28, 2020, 01:16 PM

5. No, it was the House Bank. It effectively gave members free overdraft protection...

...so that their checks would not bounce, at a time when overdraft protection of any kind was rare to non-existent for regular people.

Gingrich leaned on it heavily, calling it a "check-kiting scam", to do what he always does, get people red-eyed angry so they'll stampede in a direction he wants. He wanted to paint Democrats as cheating, criminal elitists, and worked this hard toward painting that picture.

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Response to JHB (Reply #5)

Mon Sep 28, 2020, 01:30 PM

9. thank you!

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Response to stillcool (Reply #2)

Mon Sep 28, 2020, 01:24 PM

6. No, this was different

I just looked it up again, and the House bank had existed for 150 years before it was shut down in 1991. It wasn't really a bank in the strictest sense of the word - it was only for House members (not sure about the Senate), and it was really just another perk of office. House members could have their paychecks deposited there, and they could write checks from the account, but the money earned no interest. There was also no penalty for insufficient funds, so members could bounce a check without penalty, and the House bank would cover the check using other member's deposits.

It really wasn't much of a scandal, and it seems almost quaint in the Trump era. But back then, I can remember people really being upset about it, and it played right into Republican hands, even though many Republicans had used the House bank and bounced checks themselves. Gingrich and Company used it against Democrats during the 1992 and 1994 elections, and it became sort of a symbol of how out-of-touch House members were, not having to follow rules that everyone else followed.

After the House bank was shut down, Congress members had to use the Federal Credit Unions that were already available to them, but they couldn't bounce checks any more!

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Response to moose65 (Reply #6)

Mon Sep 28, 2020, 01:29 PM

8. thank you so much...

I get heartburn at the mention of Newt..no wonder I don't remember.

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Response to moose65 (Original post)

Mon Sep 28, 2020, 01:48 PM

10. I do... but it wasn't as bipartisan as you remember

There were hundreds of members who had overdrawn their accounts at least once... and yes, for most Americans, that's enough of a scandal (WE didn't have the option of interest-free loans).

But to be fair, it was "mainly Democrats who got in trouble" because they were the worst offenders with just a few exceptions. We had controlled the House for decades and some members really did start treating it as something they were entitled to.

It's a big part of why we lost control of the House for the first time that most could remember... AND it woke many Democrats up in a way that brought control of the House back to us (as it is today)



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Response to FBaggins (Reply #10)

Mon Sep 28, 2020, 02:04 PM

11. True, and I didn't mean to imply otherwise

Yes, because the Democrats had controlled the House for 40 years, there were more of them who used the House Bank, and they got used to having the choice to bounce checks.

I also read that the House bank did not send out monthly statements, and that all of their bookkeeping was done by hand in ledgers. Nothing was computerized. A lot of members probably didn't even know that they were bouncing checks!

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