The Savings and Loan Crisis of the 1980s

The Savings and Loan Crisis refers to a series of failing savings and loan institutions (S&Ls) in the late 1980s. The failure of hundreds of S&Ls in 1988 hurt investors and caused the U.S. government to bail out the industry with public funds. A policy set by the federal government before 1980 was one of the root causes of the Savings and Loan Crisis--federal deposit insurance. It was an unsound …

…passed a 50-billion-dollar package that over the next ten years would be the largest federal rescue in U.S. history. The bill created the Resolution Trust Corporation, which got rid of ailing thrifts and transferred their assets to new institutions. By early 1990, only 1,991 S&L institutions were healthy; 400 were sick, 157 were bankrupt, 393 had been seized, and the estimated cost of the bail out by the government had risen to more than 350 billion dollars.