Académique Documents
Professionnel Documents
Culture Documents
February 22,
2016
Presented By: (Group
III)
Anoop Kumar Sharma
(420)
Anuj Paul (421)
Apoorva Sharma (422)
Ashish Singh (425)
Agenda
Introduction S & L Crisis
Causes
Government Response
Resolution
Learning's & Conclusion
Agenda
Introduction S & L Crisis
Causes
Government Response
Resolution
Learning's & Conclusion
Definition:
Saving and Loan Associations (thrift institutions)
are deposit-taking institutions initially created
for the purpose of taking in deposits from
private citizens and using them to make home
mortgage loans.
Function:
Intermediation function begins with taking in
deposits & paying interest. A higher return
must come from the lending in the form of
home mortgages. This function works best
when interest rates are low & stable.
4
Timeline
1830s: The first U.S. S&L was founded in 1831
1930s: 11800 S&Ls, more than 12 million member,
600 million dollar of asset size, 22% of all home
mortgages & 10% of entire population
was member of these institutes.
1950s-1960s:
Generally stable interest rates & successful
operation and growth of S&Ls.
1970's: High inflation in the U.S. Regulation Q
Late 1970s: S&L industry starts showing first signs of
buckling and becoming insolvent.
1980: Deregulation
1981-1982: Recession hits the U.S. economy
Mid-1980s: Higher
depositors
interest
rates
to
the
Year
S&L
Failures
Year
S&L
Failures
1980
11
1992
60
1981
28
1993
1982
76
1994
1983
51
1995
1984
24
1996
1985
60
1997
1986
59
1998
1987
60
1999
1988
190
2000
1989
327
2001
1990
214
2002
1991
146
Major Players
Depositors
Markets
FSLIC,
CEBA
Governme
nt
S&L
Associatio
ns
Agenda
Introduction S & L Crisis
Causes
Government Response
Resolution
Learning's & Conclusion
10
What happened ?
11
Causes
12
Causes (contd)
13
14
Agenda
Introduction S & L Crisis
Causes
Government Response
Resolution
Learning's & Conclusion
15
Government Response
16
Agenda
Introduction S & L Crisis
Causes
Government Response
Resolution
Learning's & Conclusion
17
Resolution
Financial Institutions Reform, Recovery, &
Enforcement Act (FIRREA), was signed into law
on August 9, 1989.
Eliminated Federal Home Loan Bank Board &
the FSLIC and enhanced enforcement powers of
thrift regulators.
18
Resolution (contd)
19
Resolution
Trust
Corporation
(RTC),
was
established to sell $450 billion real estate
owned by failed institutions.
Resolution (contd)
20
Federal
Deposit
Insurance
Corporation
Improvement Act (FDICIA) was passed to
recapitalize Bank Insurance Fund by increasing
FDICs ability to borrow from Treasury.
Well
Capitalized,
Undercapitalized,
Adequately
Capitalized,
Significantly
Agenda
Introduction S & L Crisis
Causes
Government Response
Resolution
Learning's & Conclusion
21
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23
24
Thank You
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