Word: ls
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Dates: during 1980-1989
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...perverse trait among shaky S & Ls has been their tendency to get further and further into what one bank regulator euphemistically calls "deep yogurt," in part because they must offer higher interest rates than their competitors to keep attracting savings. Big-time depositors flock to these S & Ls, knowing that they cannot lose because the Government will guarantee deposits up to $100,000. In that sense, Congress contributed to the FSLIC's liability in 1980, when it raised the coverage limit from...
Troubled S & Ls are heavily concentrated in Texas and California, where state thrift regulations were loose and local economies had booms and busts. Many Texas thrift owners who pumped money into energy ventures when oil sold for $29 per bbl. in 1983 saw their collateral collapse in value when prices plummeted below $10 in 1986. In California some thrifts invested in real estate markets that became glutted, including Los Angeles office towers and Beverly Hills condominiums...
...overall losses would have been vastly smaller if Government regulators had seized control of insolvent S & Ls years ago. In 1983 the cost of the bailouts was estimated at only $10 billion. But the FSLIC never had enough cash simply to close down the thrifts and pay off the depositors. The Bank Board lobbied Congress for more money, but the politically powerful thrift industry consistently opposed such requests, along with almost any proposal to rein in the S & Ls...
Instead of liquidating insolvent S & Ls, regulators decided it would be cheaper and more expedient to sell them to private investors or merge them with healthy thrifts. Bank Board Chairman M. Danny Wall sharply stepped up the tempo of such sales last year, selling or liquidating more than 200 thrifts at an estimated cost to the Government of $39 billion in tax breaks and other incentives extended to the buyers. Critics contend that the regulators were taken for a ride. Fumed Iowa's Leach: "The dealmakers are laughing all the way to the piggy bank." But Wall staunchly defends...
...many banking experts to wonder whether the U.S. needs a separate S & L industry anymore. Thrifts hold about one-third of all U.S. mortgages, down from nearly 60% some 20 years ago. Says Laurence Fink, a partner in the Blackstone Group, an investment firm that is acquiring several S & Ls: "The average homeowner can get a mortgage without stepping inside an S & L. Maybe the thrifts have outlived their usefulness...