The S&L; Crisis: A Chrono-Bibliography Page 1 of 12
The S&L; Crisis: A Chrono-Bibliography
[NOTE: This chronology and bibliography is provided solely for informational purposes. The
inclusion or exclusion of a source constitutes neither an endorsement nor a rejection by the
FDIC of the opinions expressed in that source.]
General Books and Articles A basic bibliography to provide an overview of the S&L;
Crisis.
Causes of the S&L; Crisis Background materials for understanding what led to the
S&L; Crisis.
Charles Keating and Lincoln Savings and
Loan
Details on one of the costliest S&L; failures that involved
5 U.S. Senators.
Criminal Activity Associated with S&L;
Failures
The goods on specific criminal investigations of S&L;
owners and directors.
Depository Institutions Deregulation and
Monetary Control Act of 1980
Details on the 1980 law (DIDMCA) that eased the
distinctions among savings institutions.
Deregulation of the S&Ls; Working papers and analysis covering the deregulation
of the S&L; industry that led to the crisis.
Financial Institutions Reform Recovery
and Enforcement Act (FIRREA)
The law enacted in August, 1989, to bail out the S&L;
crisis and create the Resolution Trust Corporation.
Garn - St. Germain Depository Institutions
Act of 1982
Analyses of the 1982 law that allowed S&L;'s to diversify
their activities with the view of increasing profits.
Interest Rate Vulnerability Bibliography for understanding S&L; interest rates, and
S&L; vulnerability during this time period.
Southwest Plan The plan to consolidate and package insolvent Texas
S&Ls; and sell them to the highest bidder.
State Deposit Insurance Funds - Ohio and
Maryland
S&L; failures in Ohio and Maryland and the end of the
State Deposit Insurance Funds/
Taxation and Accounting bibliography Understanding the tax and accounting rules for S&L;'s
1966-1979 Market interest rates fluctuate with increasing intensity and S&Ls; experience difficulty
with each interest rate rise. Interest rate ceilings prevent S&Ls; from paying competitive interest rates
on deposits. Thus, every time the market interest rates rise, substantial amounts of funds are
withdrawn by consumers for placement in instruments with higher rates of return. This process of
deposit withdrawal ("disintermediation") and the subsequent deposit influx when rates rise
("reintermediation") leaves S&Ls; highly vulnerable. Concurrently, money market funds become a
source of competition for S&L; deposits. S&Ls; are additionally restricted by not being allowed to enter
into business other than accepting deposits and granting home mortgage loans.
1967--State of Texas approves major liberalization of S&L; powers. Property development
loans of up to 50% of net worth are allowed.
1972--Hunt Commission recommendations would have created federal savings banks to
replace S&Ls.; The banks would have had additional authority to make commercial loans and
invest in commercial paper.
1973--FINE Study would have granted same powers for S&Ls; as for banks, including
checking accounts. Also recommends consolidation of the regulators. Interest rate insurance
was recommended if S&Ls; are to remain primarily involved in housing finance.
The S&L; Crisis: A Chrono-Bibliography
[NOTE: This chronology and bibliography is provided solely for informational purposes. The
inclusion or exclusion of a source constitutes neither an endorsement nor a rejection by the
FDIC of the opinions expressed in that source.]
General Books and Articles A basic bibliography to provide an overview of the S&L;
Crisis.
Causes of the S&L; Crisis Background materials for understanding what led to the
S&L; Crisis.
Charles Keating and Lincoln Savings and
Loan
Details on one of the costliest S&L; failures that involved
5 U.S. Senators.
Criminal Activity Associated with S&L;
Failures
The goods on specific criminal investigations of S&L;
owners and directors.
Depository Institutions Deregulation and
Monetary Control Act of 1980
Details on the 1980 law (DIDMCA) that eased the
distinctions among savings institutions.
Deregulation of the S&Ls; Working papers and analysis covering the deregulation
of the S&L; industry that led to the crisis.
Financial Institutions Reform Recovery
and Enforcement Act (FIRREA)
The law enacted in August, 1989, to bail out the S&L;
crisis and create the Resolution Trust Corporation.
Garn - St. Germain Depository Institutions
Act of 1982
Analyses of the 1982 law that allowed S&L;'s to diversify
their activities with the view of increasing profits.
Interest Rate Vulnerability Bibliography for understanding S&L; interest rates, and
S&L; vulnerability during this time period.
Southwest Plan The plan to consolidate and package insolvent Texas
S&Ls; and sell them to the highest bidder.
State Deposit Insurance Funds - Ohio and
Maryland
S&L; failures in Ohio and Maryland and the end of the
State Deposit Insurance Funds/
Taxation and Accounting bibliography Understanding the tax and accounting rules for S&L;'s
1966-1979 Market interest rates fluctuate with increasing intensity and S&Ls; experience difficulty
with each interest rate rise. Interest rate ceilings prevent S&Ls; from paying competitive interest rates
on deposits. Thus, every time the market interest rates rise, substantial amounts of funds are
withdrawn by consumers for placement in instruments with higher rates of return. This process of
deposit withdrawal ("disintermediation") and the subsequent deposit influx when rates rise
("reintermediation") leaves S&Ls; highly vulnerable. Concurrently, money market funds become a
source of competition for S&L; deposits. S&Ls; are additionally restricted by not being allowed to enter
into business other than accepting deposits and granting home mortgage loans.
1967--State of Texas approves major liberalization of S&L; powers. Property development
loans of up to 50% of net worth are allowed.
1972--Hunt Commission recommendations would have created federal savings banks to
replace S&Ls.; The banks would have had additional authority to make commercial loans and
invest in commercial paper.
1973--FINE Study would have granted same powers for S&Ls; as for banks, including
checking accounts. Also recommends consolidation of the regulators. Interest rate insurance
was recommended if S&Ls; are to remain primarily involved in housing finance.
The S&L; Crisis: A Chrono-Bibliography Page 2 of 12
1978--Financial Institutions Regulatory and Interest Rate Control Act of 1978 enacted. Weak
version of previous recommendations. Allows S&Ls; to invest up 5% of assets in each of land
development, construction, and education loans.
1979--Doubling of oil prices. Inflation moves into double digits for second time in five years.
1980-1982 Statutory and regulatory changes give the S&L; industry new powers in the hopes of their
entering new areas of business and subsequently returning to profitability. For the first time, the
government approves measures intended to increase S&L; profits as opposed to promoting housing
and homeownership.
March, 1980--Depository Institutions Deregulation and Monetary Control Act
(DIDMCA) enacted. The law is a Carter Administration initiative aimed at eliminating many of
the distinctions among different types of depository institutions and ultimately removing interest
rate ceiling on deposit accounts. Authority for federal S&Ls; to make ADC (acquisition,
development, construction) loans is expanded. Deposit insurance limit raised to $100,000 from
$40,000. This last provision is added without debate.
November, 1980--Federal Home Loan Bank Board reduces net worth requirement for insured
S&Ls; from 5 to 4 percent of total deposits. Bank Board also removes limits on the amounts of
brokered deposits an S&L; can hold.
August, 1981--Tax Reform Act of 1981 enacted. Provides powerful tax incentives for real-
estate investment by individuals. This legislation helps create a "boom" in real estate and
contributes to over-building.
September, 1981--Federal Home Loan Bank Board permits troubled S&Ls; to issue "income
capital certificates" that are purchased by FSLIC and included as capital. Rather than showing
that an institution is insolvent, the certificates make it appear solvent.
1982-1985 Reductions in the Bank Board's regulatory and supervisory staff. In 1983, a starting S&L;
examiner is paid $14,000 a year. The average examiner has only two years on the job. Examiner
salaries are paid through OMB, not the Bank Board. During this period of supervisory and examination
retraction, industry growth increases. Industry assets increase by 56% between 1982 and 1985. 40
Texas S&Ls; triple in size between 1982 and 1986; many of them grow by 100% each year. California
S&Ls; follow a similar pattern.
January, 1982--Federal Home Loan Bank Board reduces net worth requirement for insured
S&Ls; from 4 to 3 percent of total deposits. Additionally, S&Ls; are allowed to meet the low net
worth standard not in terms of generally accepted accounting principles (GAAP), but of even
more liberal regulatory accounting principles (RAP).
April, 1982--Bank Board eliminates restrictions on minimum numbers of S&L; stock holders.
Previously, it required at least 400 stock holders of which at least 125 had to be from "local
community", with no individual owning more than 10% of stock and no "controlling group" more
than 25%. Bank Board's new ownership regulation would allow a single owner. Purchases of
S&Ls; were made easier by allowing buyers to put up land and other real estate, as opposed
to cash.
December, 1982--Garn - St. Germain Depository Institutions Act of 1982 enacted. This
Reagan Administration initiative is designed to complete the process of giving expanded
powers to federally chartered S&Ls; and enables them to diversify their activities with the view
of increasing profits. Major provisions include: elimination of deposit interest rate ceilings;
1978--Financial Institutions Regulatory and Interest Rate Control Act of 1978 enacted. Weak
version of previous recommendations. Allows S&Ls; to invest up 5% of assets in each of land
development, construction, and education loans.
1979--Doubling of oil prices. Inflation moves into double digits for second time in five years.
1980-1982 Statutory and regulatory changes give the S&L; industry new powers in the hopes of their
entering new areas of business and subsequently returning to profitability. For the first time, the
government approves measures intended to increase S&L; profits as opposed to promoting housing
and homeownership.
March, 1980--Depository Institutions Deregulation and Monetary Control Act
(DIDMCA) enacted. The law is a Carter Administration initiative aimed at eliminating many of
the distinctions among different types of depository institutions and ultimately removing interest
rate ceiling on deposit accounts. Authority for federal S&Ls; to make ADC (acquisition,
development, construction) loans is expanded. Deposit insurance limit raised to $100,000 from
$40,000. This last provision is added without debate.
November, 1980--Federal Home Loan Bank Board reduces net worth requirement for insured
S&Ls; from 5 to 4 percent of total deposits. Bank Board also removes limits on the amounts of
brokered deposits an S&L; can hold.
August, 1981--Tax Reform Act of 1981 enacted. Provides powerful tax incentives for real-
estate investment by individuals. This legislation helps create a "boom" in real estate and
contributes to over-building.
September, 1981--Federal Home Loan Bank Board permits troubled S&Ls; to issue "income
capital certificates" that are purchased by FSLIC and included as capital. Rather than showing
that an institution is insolvent, the certificates make it appear solvent.
1982-1985 Reductions in the Bank Board's regulatory and supervisory staff. In 1983, a starting S&L;
examiner is paid $14,000 a year. The average examiner has only two years on the job. Examiner
salaries are paid through OMB, not the Bank Board. During this period of supervisory and examination
retraction, industry growth increases. Industry assets increase by 56% between 1982 and 1985. 40
Texas S&Ls; triple in size between 1982 and 1986; many of them grow by 100% each year. California
S&Ls; follow a similar pattern.
January, 1982--Federal Home Loan Bank Board reduces net worth requirement for insured
S&Ls; from 4 to 3 percent of total deposits. Additionally, S&Ls; are allowed to meet the low net
worth standard not in terms of generally accepted accounting principles (GAAP), but of even
more liberal regulatory accounting principles (RAP).
April, 1982--Bank Board eliminates restrictions on minimum numbers of S&L; stock holders.
Previously, it required at least 400 stock holders of which at least 125 had to be from "local
community", with no individual owning more than 10% of stock and no "controlling group" more
than 25%. Bank Board's new ownership regulation would allow a single owner. Purchases of
S&Ls; were made easier by allowing buyers to put up land and other real estate, as opposed
to cash.
December, 1982--Garn - St. Germain Depository Institutions Act of 1982 enacted. This
Reagan Administration initiative is designed to complete the process of giving expanded
powers to federally chartered S&Ls; and enables them to diversify their activities with the view
of increasing profits. Major provisions include: elimination of deposit interest rate ceilings;