THE AMERICAN POLITICAL left was ecstatic when Thomas Spiegel, Columbia S&L chairman and major shareholder, was indicted in June 1992. The high-profile case symbolized all the criminality spawned by the "decade of greed" supposed to have caused all the S&L failures and taxpayer bailout of federal deposit insurance.

This propagandistic portrait of the 1980s was shattered on Dec. 12, 1994, along with the credibility of federal prosecutors, with the total courtroom collapse of the case against Spiegel.Assistant U.S. Attorney John Walsh's opening statement at the trial was flamboyant in its rhetoric. He presented the case against Spiegel as one of fraud and embezzlement by a man who abused a position of special trust and whose motive was greed. Walsh painted Spiegel as the epitome of wrongdoing who even had a secret connection to junk-bond king Michael Milken.

But the government's case began collapsing before the inflated rhetoric stopped bouncing off the courtroom walls. The government hurriedly dropped 25 percent of its case in order to avoid censure for suborning the perjury of its chief witness against Spiegel. After listening to the evidence, the presiding judge dismissed another 50 percent of the case as being without merit. The remainder of the case was thrown out by the jury, thus acquitting Spiegel of any wrongdoing.

In October, I predicted that the case against Spiegel would prove to be trumped-up charges brought by a government desperate to blame its own responsibility for the collapse of S&Ls on the victims themselves. No judge or jury would believe the government's argument that Spiegel had destroyed his own multimillion-dollar equity investment in Columbia for the sake of mite-size bribes and insignificant perks.

By monitoring the subsequent performance of Columbia's asset portfolio, we know for a fact that if the government had kept its hands off the S&L, Columbia would today be a profitable thrift providing important financing for the U.S. economy. Columbia was destroyed, at tax-payer cost of $1.1 billion, by the government's hysterical attack on junk bonds that temporarily forced the market down and caused the government to panic. The market later recovered, and junk bonds outperformed all other bonds, producing a 60 percent return from September 1989 to September 1994.

In 1940 Attorney General Robert Jackson warned U.S. attorneys that the impartiality of law was endangered. The law books are filled with such a great assortment of crimes that "a prosecutor stands a fair chance of finding at least a technical violation of some act on the part of almost anyone." He feared that the overabundance of laws would tempt prosecutors to pick defendants from unpopular people and groups and then look for an offense.

"It is here that law enforcement becomes personal, and the real crime becomes that of being unpopular with the predominant or governing group, being attached to the wrong poitical views, or being personally obnoxious to, or in the way of, the prosecutor himself."

The demonization of other failed S&Ls and junk bonds by politicians and the media gave Spiegel a double-barreled dose of unpopular associations - which made him an ideal witch to hunt. The law books, which Jackson thought were too obese for impartial law enforcement 54 years ago, have been stuffed with ill-considered laws in the years that have passed since he gave his warning. The Spiegel case is a perfect example of the personalization of law enforcement that Jackson predicted as the consequence.