Word: fslic
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...made in the 1960s and yield 6% or 7%, S and Ls must pay 15% or more for new deposits. As a result, earnings have been squeezed, and more and more once stout S and Ls have become shaky. As of March, the Federal Savings and Loan Insurance Corporation (FSLIC) regarded 246 of the 4,560 S and Ls as "problem cases," vs. 79 in December 1979. Says H. Brent Beesley, director of the FSLIC : "There's a bad period ahead. Some will make it, while others...
...exactly like the early 1930s, when depositors might have lost their money. H. Brent Beesley, director of the Federal Savings and Loan Insurance Corp. (FSLIC), was on hand last week to reassure the customers personally. Be cause their accounts were protected by the U.S. Government up to a maximum of $100,000, he told them, they would be get ting their money back within ten days...
Economy Savings, a small institution with deposits of $69 million, is the only S and L in a decade to be liquidated by the FSLIC, but it may be only the first of many in the coming months. Like all S and Ls, Economy Savings was trapped in a profit squeeze caused by unrelenting high interest rates. It was forced to pay as much as 15% to attract deposits, while carrying many old mortgages on its books that earned less than...
Unless interest rates drop precipitously, the U.S.'s 4,600 S and Ls are likely to lose $5 billion this year, and scores of weak institutions could easily collapse. In 15 months the number of S and Ls on the FSLIC'S list of "problem cases" has jumped from 79 to 246. Last year the agency saved eleven insolvent S and Ls by ar ranging shotgun mergers with healthier institutions. These rescue operations cost the agency $1.3 billion out of its $6.5 billion reserve fund. The bal ance sheet at Economy Savings, however, was apparently so dismal that...
...their savings and cashing in the $40 billion in uninsured certificates of deposit, which the S and Ls would have to make up through sales of assets or more expensive borrowings. Those S and Ls that cannot make ends meet turn to the Federal Savings and Loan Insurance Corp. (FSLIC), under the supervision of the Federal Home Loan Bank Board, which has only $6.5 billion in funds to support them. In desperation, the S and Ls go to the Federal Reserve. The American central bank responds by pumping billions of dollars into the S and L system, greatly expanding...