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Savings and Loan Crisis


In the 1980s, the financial sector suffered through a period of distress that was focused on the nation's savings and loan industry.

Depositors Waiting in Line at Bank (Photo: Bettmann/Bettmann/Getty Images)

by Kenneth J. Robinson, Federal Reserve Bank of Dallas
Condominium Destruction (Dallas Morning News Staff Photo by Ken Geiger)


By the late 1980s, Congress decided to address the thrift industry’s problems. In 1989 it passed the Financial Institutions Reform, Recovery and Enforcement Act of 1989 that instituted a number of reforms of the industry. The main S&L regulator (the Federal Home Loan Bank Board) was abolished, as was the bankrupt FSLIC. In their place, Congress created the Office of Thrift Supervision and placed thrifts’ insurance under the FDIC. In addition, the Resolution Trust Corporation (RTC) was established and funded to resolve the remaining troubled S&Ls. The RTC closed 747 S&Ls with assets of over $407 billion. The thrift crisis came to its end when the RTC was eventually closed on December 31, 1995. The ultimate cost to taxpayers was estimated to be as high as $124 billion. Unfortunately, the commercial banking industry also suffered its own set of problems over this period, both in Texas and elsewhere. This banking crisis also resulted in major reform legislation that paved the way for a period of stability and profitability…until 2008.


Board of Governors of the Federal Reserve System. “Z.1 Financial Accounts of the United States, Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts: Historical Annual Tables 1975-1984.” September 25, 2013.

Curry, Timothy, and Lynn Shibut. “The Cost of the Savings and Loan Crisis: Truth and Consequences.” FDIC Banking Review 13, no. 2 (2000).

Dallas Morning News. “Condo Rubble Burned.” March 25, 1987.

Federal Deposit Insurance Corporation. History of the Eighties, Lessons for the Future, Volume 1. Washington, DC: FDIC, 1997.

Kane, Edward J. The S&L Insurance Mess: How did it Happen? Washington, DC: The Urban Institute Press, 1989.

National Commission on Financial Institution Reform, Recovery, and Enforcement. Origins and Causes of the S&L Debacle: A Blueprint for Reform: A Report to the President and Congress of the United States. Washington, DC: The Commission, 1993.

Short, Genie D., and Jeffery W. Gunther. The Texas Thrift Situation: Implications for the Texas Financial Industry. Dallas: Financial Industry Studies Department, Federal Reserve Bank of Dallas, 1988.

Written as of November 22, 2013. See disclaimer.