The Savings And Loan Crisis

Abstract

The Savings and Loan Industry is fighting for its life as one-third of the industry seems to be having serious financial difficulty. The final cleanup cost for the taxpayers has been estimated by Independent analysts to be at least $100 billion. It was the lack of funds that caused the Federal Savings and Loan Insurance Corporation to keep the doors of insolvent thrifts open. It was this that seems to be the main reason for the high cost, because by keeping these sick thrifts open and by letting them do the same kind of business that caused them to be in that shape, they only put themselves deeper in the red. My sources for the project came from approximately 60 articles from various periodicals. I became very acquainted with the problem and was able to write the paper from what I had learned. My conclusion is that Congress is to take most of the blame because of their deregulation bills allowing thrifts to get out of their traditional role of providing home mortgages and putting them in direct competition with banks. Also Congress's poor funding of FSLIC has allowed them to lose control of the industry.