What Was the Savings and Loan – S&L – Crisis ? The savings and loan (S&L) crisis was a slow-moving financial disaster that came to a head in the 1980s and 1990s and resulted in the failure of nearly a third of the 3,234 savings and loan associations in the United States between 1986 and 1995. It began during the volatile interest rate climate, stagflation, and slow growth of the 1970s and ended with a total cost of $160 billion—$132 billion of which was borne by taxpayers. Key to the S&L crisis was a mismatch of regulations to market conditions, speculation, as well as outright corruption and fraud, and the implementation of greatly slackened and broadened lending standards that led desperate banks to take far too much risk balanced by far too little capital on hand.
In 1982, in response to the poor prospects for S&Ls under current economic conditions, President Ronald Reagan signed Garn-St. Germain Depository Institutions Act, which eliminated loan-to-value ratios and interest rate caps for S&Ls, and also allowed them to hold 30% of their assets in consumer loans and 40% in commercial loans. No longer were S&Ls governed by Regulation Q, which led to a tightening of the spread between the cost of money and the rate of return on assets.
With reward uncoupled from risk, zombie thrifts began paying higher and higher rates to attract funds. S&Ls also began investing in riskier commercial real estate and even riskier junk bonds. This strategy of investing in riskier and riskier projects and instruments assumed that they would pay off in higher returns. Of course, if those returns didn’t materialize, it would be taxpayers [through the Federal Savings and Loan Insurance Corporation (FSLIC)]—not the banks or S&Ls officials—who would be left holding the bag. That's exactly what eventually happened.
At first, the measures seemed to have done the trick, at least for some S&Ls; by 1985, S&L assets had shot up by over 50% (far faster growth than banks). S&L growth was especially robust in Texas. Some state legislators allowed S&Ls to double down by allowing them to invest in speculative real estate. Still, more than a third of S&Ls were not profitable, as of 1983. Meantime, although pressure was mounting on the FSLIC's coffers, even failing S&Ls were allowed to keep lending. By 1987 the FSLIC had become insolvent. Rather than allowing it and S&Ls to fail as they were destined to do, the federal government recapitalized the FSLIC. For a while longer, the S&Ls were allowed to continue to pile on risk.
During this crisis, five U.S. senators known as the Keating Five were investigated by the Senate Ethics Committee due to the $1.5 million in campaign contributions they accepted from Charles Keating, head of the Lincoln Savings and Loan Association. These senators were accused of pressuring the Federal Home Loan Banking Board to overlook suspicious activities in which Keating had participated. The Keating Five included John McCain (R–Ariz.), Alan Cranston (D–Calif.), Dennis DeConcini (D–Ariz.), John Glenn (D–Ohio), and Donald W. Riegle, Jr. (D–Mich.).
In 1992, the Senate committee determined that Cranston, Riegle, and DeConcini had improperly interfered with the FHLBB's investigation of Lincoln Savings. Cranston received a formal reprimand. When Lincoln failed in 1989, its bailout cost the government $3 billion and left more than 20,000 customers with junk bonds that were worthless. Keating was convicted of conspiracy, racketeering, and fraud, and served time in prison before his conviction was overturned in 1996. In 1999 he pleaded guilty to lesser charges and was sentenced to time served.
What Was the Savings and Loan – S&L – Crisis ? The savings and loan (S&L) crisis was a slow-moving financial disaster that came to a head in the 1980s and 1990s and resulted in the failure of nearly a third of the 3,234 savings and loan associations in the United States between 1986 and 1995. It began during the volatile interest rate climate, stagflation, and slow growth of the 1970s and ended with a total cost of $160 billion—$132 billion of which was borne by taxpayers. Key to the S&L crisis was a mismatch of regulations to market conditions, speculation, as well as outright corruption and fraud, and the implementation of greatly slackened and broadened lending standards that led desperate banks to take far too much risk balanced by far too little capital on hand.
In 1982, in response to the poor prospects for S&Ls under current economic conditions, President Ronald Reagan signed Garn-St. Germain Depository Institutions Act, which eliminated loan-to-value ratios and interest rate caps for S&Ls, and also allowed them to hold 30% of their assets in consumer loans and 40% in commercial loans. No longer were S&Ls governed by Regulation Q, which led to a tightening of the spread between the cost of money and the rate of return on assets.
With reward uncoupled from risk, zombie thrifts began paying higher and higher rates to attract funds. S&Ls also began investing in riskier commercial real estate and even riskier junk bonds. This strategy of investing in riskier and riskier projects and instruments assumed that they would pay off in higher returns. Of course, if those returns didn’t materialize, it would be taxpayers [through the Federal Savings and Loan Insurance Corporation (FSLIC)]—not the banks or S&Ls officials—who would be left holding the bag. That's exactly what eventually happened.
At first, the measures seemed to have done the trick, at least for some S&Ls; by 1985, S&L assets had shot up by over 50% (far faster growth than banks). S&L growth was especially robust in Texas. Some state legislators allowed S&Ls to double down by allowing them to invest in speculative real estate. Still, more than a third of S&Ls were not profitable, as of 1983. Meantime, although pressure was mounting on the FSLIC's coffers, even failing S&Ls were allowed to keep lending. By 1987 the FSLIC had become insolvent. Rather than allowing it and S&Ls to fail as they were destined to do, the federal government recapitalized the FSLIC. For a while longer, the S&Ls were allowed to continue to pile on risk.
During this crisis, five U.S. senators known as the Keating Five were investigated by the Senate Ethics Committee due to the $1.5 million in campaign contributions they accepted from Charles Keating, head of the Lincoln Savings and Loan Association. These senators were accused of pressuring the Federal Home Loan Banking Board to overlook suspicious activities in which Keating had participated. The Keating Five included John McCain (R–Ariz.), Alan Cranston (D–Calif.), Dennis DeConcini (D–Ariz.), John Glenn (D–Ohio), and Donald W. Riegle, Jr. (D–Mich.).
In 1992, the Senate committee determined that Cranston, Riegle, and DeConcini had improperly interfered with the FHLBB's investigation of Lincoln Savings. Cranston received a formal reprimand. When Lincoln failed in 1989, its bailout cost the government $3 billion and left more than 20,000 customers with junk bonds that were worthless. Keating was convicted of conspiracy, racketeering, and fraud, and served time in prison before his conviction was overturned in 1996. In 1999 he pleaded guilty to lesser charges and was sentenced to time served.
What Was the Savings and Loan – S&L – Crisis ? The savings and loan (S&L) crisis was a slow-moving financial disaster that came to a head in the 1980s and 1990s and resulted in the failure of nearly a third of the 3,234 savings and loan associations in the United States between 1986 and 1995. It began during the volatile interest rate climate, stagflation, and slow growth of the 1970s and ended with a total cost of $160 billion—$132 billion of which was borne by taxpayers. Key to the S&L crisis was a mismatch of regulations to market conditions, speculation, as well as outright corruption and fraud, and the implementation of greatly slackened and broadened lending standards that led desperate banks to take far too much risk balanced by far too little capital on hand.
In 1982, in response to the poor prospects for S&Ls under current economic conditions, President Ronald Reagan signed Garn-St. Germain Depository Institutions Act, which eliminated loan-to-value ratios and interest rate caps for S&Ls, and also allowed them to hold 30% of their assets in consumer loans and 40% in commercial loans. No longer were S&Ls governed by Regulation Q, which led to a tightening of the spread between the cost of money and the rate of return on assets.
With reward uncoupled from risk, zombie thrifts began paying higher and higher rates to attract funds. S&Ls also began investing in riskier commercial real estate and even riskier junk bonds. This strategy of investing in riskier and riskier projects and instruments assumed that they would pay off in higher returns. Of course, if those returns didn’t materialize, it would be taxpayers [through the Federal Savings and Loan Insurance Corporation (FSLIC)]—not the banks or S&Ls officials—who would be left holding the bag. That's exactly what eventually happened.
At first, the measures seemed to have done the trick, at least for some S&Ls; by 1985, S&L assets had shot up by over 50% (far faster growth than banks). S&L growth was especially robust in Texas. Some state legislators allowed S&Ls to double down by allowing them to invest in speculative real estate. Still, more than a third of S&Ls were not profitable, as of 1983. Meantime, although pressure was mounting on the FSLIC's coffers, even failing S&Ls were allowed to keep lending. By 1987 the FSLIC had become insolvent. Rather than allowing it and S&Ls to fail as they were destined to do, the federal government recapitalized the FSLIC. For a while longer, the S&Ls were allowed to continue to pile on risk.
During this crisis, five U.S. senators known as the Keating Five were investigated by the Senate Ethics Committee due to the $1.5 million in campaign contributions they accepted from Charles Keating, head of the Lincoln Savings and Loan Association. These senators were accused of pressuring the Federal Home Loan Banking Board to overlook suspicious activities in which Keating had participated. The Keating Five included John McCain (R–Ariz.), Alan Cranston (D–Calif.), Dennis DeConcini (D–Ariz.), John Glenn (D–Ohio), and Donald W. Riegle, Jr. (D–Mich.).
In 1992, the Senate committee determined that Cranston, Riegle, and DeConcini had improperly interfered with the FHLBB's investigation of Lincoln Savings. Cranston received a formal reprimand. When Lincoln failed in 1989, its bailout cost the government $3 billion and left more than 20,000 customers with junk bonds that were worthless. Keating was convicted of conspiracy, racketeering, and fraud, and served time in prison before his conviction was overturned in 1996. In 1999 he pleaded guilty to lesser charges and was sentenced to time served.
Race blames Nixon for the S&L crisis. Nice work.
Carter but your decent into insanity is noted. Buck up maybe some bad news for America will come your way
It began during the volatile interest rate climate, stagflation, and slow growth of the 1970s
You can give Ford some credit if it makes you feel better
Bottom line is you lied for a year about tax cuts and Trump is vastly out performing Obama on the economy and things are really looking up
Maybe you should kill yourself or keep deflecting and dodging but but but but
Labor shortages increase labor prices? Economists should really look into this!
Or we could import millions of more illegals and drive wages down which is what you've been wanting O'Keefed.
Increasing wages is a good thing for workers many of who have been hurt by the massive influx of foreign labor. Liberals like yourself used to pride yourself on increasing the wages for workers.
You used to be pro-growth. What changed?
I am pro-growth. 3% last quarter. You're the one who voted anemic economic growth O'Keefed. What do you think all of those regulations and high taxes do to an economy? You want even higher taxes and even more regulations.
I was unaware that Daddy had put an end to business cycles. I'm sure piling up deficits during the good times is not a problem.
You're fucking murder on claims I never made Kunt. I recall a group that was all in favor of cutting Federal spending. You shit all over them. Your only answer to deficits it raising taxes, you don't support cutting anything.
You're just making shit up again, blob.
There's no political will on the left or right to cut anything of consequence, i.e. entitlements. You've admitted that. So I propose we pay for more stuff in real time. You propose we cut stuff--but admit it won't happen. The real world is a frustrating place, ain't it?
Fucking liar. You shit all over the Tea Party you pathological lying piece of shit. No wonder you and Hondo have hit it off so well. I want to cut spending and support people who want to cut spending. You shit all over people who want to cut spending and vote for people who want to increase spending.
I did shit all over the Tea Party. A know nothing movement filled with teat suckers who want to balance the budget by cutting everything except their entitlements.
Your fucking GOP is now joined at the hip with those assholes. Good luck cutting spending!
Labor shortages increase labor prices? Economists should really look into this!
Or we could import millions of more illegals and drive wages down which is what you've been wanting O'Keefed.
Increasing wages is a good thing for workers many of who have been hurt by the massive influx of foreign labor. Liberals like yourself used to pride yourself on increasing the wages for workers.
You used to be pro-growth. What changed?
I am pro-growth. 3% last quarter. You're the one who voted anemic economic growth O'Keefed. What do you think all of those regulations and high taxes do to an economy? You want even higher taxes and even more regulations.
I was unaware that Daddy had put an end to business cycles. I'm sure piling up deficits during the good times is not a problem.
You're fucking murder on claims I never made Kunt. I recall a group that was all in favor of cutting Federal spending. You shit all over them. Your only answer to deficits it raising taxes, you don't support cutting anything.
You're just making shit up again, blob.
There's no political will on the left or right to cut anything of consequence, i.e. entitlements. You've admitted that. So I propose we pay for more stuff in real time. You propose we cut stuff--but admit it won't happen. The real world is a frustrating place, ain't it?
Fucking liar. You shit all over the Tea Party you pathological lying piece of shit. No wonder you and Hondo have hit it off so well. I want to cut spending and support people who want to cut spending. You shit all over people who want to cut spending and vote for people who want to increase spending.
I did shit all over the Tea Party. A know nothing movement filled with teat suckers who want to balance the budget by cutting everything except their entitlements.
Your fucking GOP is now joined at the hip with those assholes. Good luck cutting spending!
I’m for cutting everything including their entitlements. How about them apples?
Labor shortages increase labor prices? Economists should really look into this!
Or we could import millions of more illegals and drive wages down which is what you've been wanting O'Keefed.
Increasing wages is a good thing for workers many of who have been hurt by the massive influx of foreign labor. Liberals like yourself used to pride yourself on increasing the wages for workers.
You used to be pro-growth. What changed?
I am pro-growth. 3% last quarter. You're the one who voted anemic economic growth O'Keefed. What do you think all of those regulations and high taxes do to an economy? You want even higher taxes and even more regulations.
I was unaware that Daddy had put an end to business cycles. I'm sure piling up deficits during the good times is not a problem.
You're fucking murder on claims I never made Kunt. I recall a group that was all in favor of cutting Federal spending. You shit all over them. Your only answer to deficits it raising taxes, you don't support cutting anything.
You're just making shit up again, blob.
There's no political will on the left or right to cut anything of consequence, i.e. entitlements. You've admitted that. So I propose we pay for more stuff in real time. You propose we cut stuff--but admit it won't happen. The real world is a frustrating place, ain't it?
Fucking liar. You shit all over the Tea Party you pathological lying piece of shit. No wonder you and Hondo have hit it off so well. I want to cut spending and support people who want to cut spending. You shit all over people who want to cut spending and vote for people who want to increase spending.
I did shit all over the Tea Party. A know nothing movement filled with teat suckers who want to balance the budget by cutting everything except their entitlements.
Your fucking GOP is now joined at the hip with those assholes. Good luck cutting spending!
I’m for cutting everything including their entitlements. How about them apples?
Labor shortages increase labor prices? Economists should really look into this!
Or we could import millions of more illegals and drive wages down which is what you've been wanting O'Keefed.
Increasing wages is a good thing for workers many of who have been hurt by the massive influx of foreign labor. Liberals like yourself used to pride yourself on increasing the wages for workers.
You used to be pro-growth. What changed?
I am pro-growth. 3% last quarter. You're the one who voted anemic economic growth O'Keefed. What do you think all of those regulations and high taxes do to an economy? You want even higher taxes and even more regulations.
I was unaware that Daddy had put an end to business cycles. I'm sure piling up deficits during the good times is not a problem.
You're fucking murder on claims I never made Kunt. I recall a group that was all in favor of cutting Federal spending. You shit all over them. Your only answer to deficits it raising taxes, you don't support cutting anything.
You're just making shit up again, blob.
There's no political will on the left or right to cut anything of consequence, i.e. entitlements. You've admitted that. So I propose we pay for more stuff in real time. You propose we cut stuff--but admit it won't happen. The real world is a frustrating place, ain't it?
Fucking liar. You shit all over the Tea Party you pathological lying piece of shit. No wonder you and Hondo have hit it off so well. I want to cut spending and support people who want to cut spending. You shit all over people who want to cut spending and vote for people who want to increase spending.
I did shit all over the Tea Party. A know nothing movement filled with teat suckers who want to balance the budget by cutting everything except their entitlements.
Your fucking GOP is now joined at the hip with those assholes. Good luck cutting spending!
I’m for cutting everything including their entitlements. How about them apples?
Comments
If it stays this way or 8 years we can talk
Obama never hit 2.9 even
What a meltdown
What Was the Savings and Loan – S&L – Crisis ?
The savings and loan (S&L) crisis was a slow-moving financial disaster that came to a head in the 1980s and 1990s and resulted in the failure of nearly a third of the 3,234 savings and loan associations in the United States between 1986 and 1995. It began during the volatile interest rate climate, stagflation, and slow growth of the 1970s and ended with a total cost of $160 billion—$132 billion of which was borne by taxpayers. Key to the S&L crisis was a mismatch of regulations to market conditions, speculation, as well as outright corruption and fraud, and the implementation of greatly slackened and broadened lending standards that led desperate banks to take far too much risk balanced by far too little capital on hand.
In 1982, in response to the poor prospects for S&Ls under current economic conditions, President Ronald Reagan signed Garn-St. Germain Depository Institutions Act, which eliminated loan-to-value ratios and interest rate caps for S&Ls, and also allowed them to hold 30% of their assets in consumer loans and 40% in commercial loans. No longer were S&Ls governed by Regulation Q, which led to a tightening of the spread between the cost of money and the rate of return on assets.
With reward uncoupled from risk, zombie thrifts began paying higher and higher rates to attract funds. S&Ls also began investing in riskier commercial real estate and even riskier junk bonds. This strategy of investing in riskier and riskier projects and instruments assumed that they would pay off in higher returns. Of course, if those returns didn’t materialize, it would be taxpayers [through the Federal Savings and Loan Insurance Corporation (FSLIC)]—not the banks or S&Ls officials—who would be left holding the bag. That's exactly what eventually happened.
At first, the measures seemed to have done the trick, at least for some S&Ls; by 1985, S&L assets had shot up by over 50% (far faster growth than banks). S&L growth was especially robust in Texas. Some state legislators allowed S&Ls to double down by allowing them to invest in speculative real estate. Still, more than a third of S&Ls were not profitable, as of 1983. Meantime, although pressure was mounting on the FSLIC's coffers, even failing S&Ls were allowed to keep lending. By 1987 the FSLIC had become insolvent. Rather than allowing it and S&Ls to fail as they were destined to do, the federal government recapitalized the FSLIC. For a while longer, the S&Ls were allowed to continue to pile on risk.
During this crisis, five U.S. senators known as the Keating Five were investigated by the Senate Ethics Committee due to the $1.5 million in campaign contributions they accepted from Charles Keating, head of the Lincoln Savings and Loan Association. These senators were accused of pressuring the Federal Home Loan Banking Board to overlook suspicious activities in which Keating had participated. The Keating Five included John McCain (R–Ariz.), Alan Cranston (D–Calif.), Dennis DeConcini (D–Ariz.), John Glenn (D–Ohio), and Donald W. Riegle, Jr. (D–Mich.).
In 1992, the Senate committee determined that Cranston, Riegle, and DeConcini had improperly interfered with the FHLBB's investigation of Lincoln Savings. Cranston received a formal reprimand. When Lincoln failed in 1989, its bailout cost the government $3 billion and left more than 20,000 customers with junk bonds that were worthless. Keating was convicted of conspiracy, racketeering, and fraud, and served time in prison before his conviction was overturned in 1996. In 1999 he pleaded guilty to lesser charges and was sentenced to time served.
It began during the volatile interest rate climate, stagflation, and slow growth of the 1970s
You can give Ford some credit if it makes you feel better
Bottom line is you lied for a year about tax cuts and Trump is vastly out performing Obama on the economy and things are really looking up
Maybe you should kill yourself or keep deflecting and dodging but but but but
Your fucking GOP is now joined at the hip with those assholes. Good luck cutting spending!
Case fucking closed on that.