The analysis argues that the problems were preventable and resulted from a combination greed in the private sector and government neglect and mismanagement of problems in the banking system. The author explains how bankers made increasingly risky loans while spending large amounts of money on personal luxuries. These practices were made possible by an outdated governmental regulatory structure and a powerful lobby that may have deliberately sabotaged early efforts to bring the problem under control, hoping that if the situation deteriorated sufficiently the government would be forced to finance a rescue operation. The discussion also notes that although much of the worst fraud and mismanagement have been brought under control, many portfolios of savings and loan institutions include large amounts of junk bonds. It argues that the government also made inappropriate agreements that allowed private investors to take over failed institutions at low costs and with government guarantees of covering any future losses at the expense of taxpayers. The authors are the managing partner of a real estate investment company and a university professor and advisor to the Reagan and Bush administrations. Notes, index, and 17 references.