Myth of the 20th Century: The Big Fraud – Savings and Loan Crisis

Savings and Loans were originally designed as community thrift institutions geared towards helping working class American families save for owning a home. As interest rate volatility in the 1970s brought on by rampant inflation caused S&Ls to lose money, pressure mounted to relax regulatory standards and allow riskier, higher yield investment speculation involving high-profile commercial real estate backed by junk bonds. Losses continued to mount, however, and by the 1990s, over 1000 S&Ls had failed (out of a total of about 3000), costing tax payers approximately $160 billion through the Resolution Trust Corporation. Until the financial crisis of 2008, it was the most expensive banking bailout in US history.

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— References —

– Big Money Crime: Fraud and Politics in the Savings and Loan Crisis, Calavita (1999)
– Money for Nothing – Inside the Federal Reserve, Bruce (2013)
– New Economic Perspectives – William K. Black –
– Garn-St Germain Depository Institutions Act of 1982 –
– Organized Crime, The CIA and the Savings and Loan Scandal –