Word: ls
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Dates: during 1980-1989
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...federally insured savings and loan associations and the 449 mutual savings banks last week received another dose of bad news. The Federal Home Loan Bank Board reported that the net worth of S and Ls fell by $636 million in November, to $28 billion. That brought losses for the first eleven months of 1981 to $4.3 billion, which was more than in any year since the Great Depression. The new year does not promise to be much better. Says James Christian, chief economist of the U.S. League of Savings Association: "This will be another period of losses and accelerated mergers...
...Ls and mutual savings banks, which have long been the backbone of America's housing industry, have been caught in a profit squeeze caused by lending long at low interest rates and borrowing short at much higher ones. Al. though they were often earning 9% or less on 20- or 30-year mortgages that were created years ago, the savings institutions were sometimes paying customers 16% or more for new two- or three-year deposits. Making matters worse was the fact that as interest rates have risen during the past two years, many investors have pulled their cash...
These problems have been too much for many thrifts. During 1981 a record 256 S and Ls and savings banks slid into mergers with other institutions. Last month, for example, the Harlem Savings Bank announced its union with the Central Savings Bank on the other side of Manhattan. The marriage had been arranged by federal banking authorities to save failing Central, which had a third-quarter operating loss of $8.3 million against a net worth of $17.7 million. To bring off the merger with Harlem, the Federal Deposit Insurance Corporation took over a package of Central's weak loans...
...plunge in interest levels has long been seen as just what the thrifts needed. But now that rates are falling, many S and Ls are not much better off. The declines are too small, come too late, and will probably not last long enough to help institutions already seriously endangered. Says David Levine, an analyst with Sanford C. Bernstein & Co.: "Rates have not dropped far enough to save the industry...
...thrifts have not been helped much either by the new All Savers Certificates created by Congress last summer. The new savings instruments, which the industry had lobbied to have included in the Reagan Administration's tax-cut package, were supposed to lure money to the S and Ls by allowing couples to earn up to $2,000 in tax-free interest...