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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...
Problems for S and Ls are serious elsewhere too. A list kept by the Home Loan Bank Board shows that 200 S and Ls could be close to reaching the point where their liabilities exceed their assets and wipe out their net worth. Hundreds more may be in that position within a year...
...fears that any new surge in interest rates, which many economists predict will occur perhaps as early as the summer, could eliminate one-third of the U.S. thrift industry. That would strain the Government's capacity to engineer the rescue mergers needed to absorb insolvent S and Ls. Says an official at the Federal Reserve: "If rates start to turn up again, then 1982 will be the crunch year. A lot of existing thrifts simply won't make...