Word: ls
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Dates: during 1980-1989
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American Savings (assets: $30 billion), which was once the largest thrift in the U.S., had got into the same trouble as many other go-go S & Ls. During the early 1980s its maverick chairman, Charles Knapp, furiously pumped up the company's growth with brokered deposits and high-risk loans. When the thrift suffered a run on deposits in 1984, the Federal Home Loan Bank Board seized American and installed fresh management. But the new team gambled and failed in a multibillion-dollar investment in mortgage-backed securities. When the Bank Board went looking for help again, it eventually decided...
Last week President Bush came forward with a long-awaited bailout plan in which he sought to spread around the unhappiness in an evenhanded way. Said Bush: "Nothing is without pain when you come to solve a problem of this magnitude." His program will require taxpayers and S & Ls to share the burden of a rescue that will cost an estimated $126 billion during the next decade. The taxpayer portion would amount to about $60 billion, which would be contained in the federal budget over the next ten years. The Government would borrow $50 billion by issuing 30-year bonds...
...chairman who will answer to the Treasury Secretary. The exhausted Federal Savings and Loan Insurance Corp., which guarantees deposits, will be overseen by its healthier and better-staffed counterpart for the banking industry, the Federal Deposit Insurance Corp. Banks and thrifts have traditionally had separate regulators and roles: S & Ls specialized in taking long-term savings deposits and issuing residential mortgages, while banks typically held shorter-term accounts and concentrated on making commercial loans...
...thrift industry seemed to meet the proposal with grudging acceptance but a fair amount of grumbling. Healthy S & Ls object philosophically to paying excessive cleanup costs for their fraudulent and incompetent brethren. Says Adam Jahns, chairman of Chicago's Craigin Federal Savings & Loan: "I don't think we should have to pay for serious crimes committed by others." Another complaint by S & Ls is that by combining thrift and banking supervision, the Bush plan may blur the distinction between the two and eventually remove any competitive advantage the thrifts still have, principally the ability to borrow long-term funds from...
Bankers were miffed too about being tied up with the S & Ls. The symbolic point of contention was the trusted FDIC decal that banks display prominently on their premises and in their advertising. The Administration at first told thrift owners that they would be able to display the symbol under the new plan. To many depositors, the seal represents greater safety and security than the thrift industry's own logo. Bankers therefore vociferously oppose sharing the FDIC seal, maintaining that it would be effectively tarnished if given to the thrifts and would lead to the complete merging...