Does anyone remember the "savings and loan crisis" from the 1990s?

Question

What was that all about?

How much money did people lose?

Answer 1

Actually it was during the Reagan administration. The Bush family was/is still involved.

Neil Bush in particular made a killing. Jeb Bush made a bundle, the other members of that family covered their tracks better.

What it involves is saving and loan companies making huge loans on properties that were pretty much worthless (one of them the infamous "chicken manure mine"), like a trailer on a patch of weeds for several thousands of dollars. Then the borrower would default, take his money and run while the seller pocketed a nice profit, and the S&L ended up in possession of a worthless property.

The U.S. Government stepped in and made the S&Ls whole at taxpayer expense. The expense is on-going and has exceeded $1 trillion so far (U.S.A.C.). Estimates range as high as $8trillion with creative bookkeeping hiding the true cost. Cost the first year exceeded $150 billion.

So the companies were saved, their executives didn't go to jail, many people made a real killing and the investors were absolutelt screwed.

The Federal Gov't. took posession of properties that could not be sold to recoup a percentage of the loss (like properties with toxic contamination).

Answer 2

Banks lent money on speculative land deals. The deals went bad so the borrowers didn't repay. The banks foreclosed but the properties weren't worth enough to cover the loans so the banks began to default. After the govt took control of some of these defaulting banks, it set up the RTC (Resolution Trust Corporation) to dispose of all this excess property.

Answer 3

It happened in the 1980's as a result of the deregulation of Savings and Loan institutions, speculative investments by the S & Ls and rising interest rates. The government wound up paying out about $150 billion. It's too complicated to describe adequately in one or two paragraphs, but here's a really good explanation:

http://www.erisk.com/Learning/CaseStudies/USSavingsLoanCrisis.asp

Answer 4

People did NOT lose any money. All deposits are guaranteed by the FDIC. The banks were making all kinds of loans that were risky and lost their shirts, the government ended up bailing most banks out. That means the tax payer funded their bailouts. It was hundreds of billions of dollars, and its something that we as taxpayers will be paying for, for many years. But no, nobody personally lost any $$.

Answer 5

It was all about greed and corruption of the people in control of the S&L's, much like the Enron thing. The FDIC insured a certain amount of money on deposit for customers, but in many cases, it did not nearly cover dollar for dollar. Hundreds of millions were lost.

Answer 6

I don't remember that at all. Thank God we had all our cash stashed at home. I hate banks! I bet sometime in the near future the banks will all crash, just like the stock market once did. Banks are so damn money hungry! And they use your money for investments and building all their fancy buildings. What would the banks all do if suddenly everyone pulled their savings and whatnot?? Everyone in the country should do that at the same time, everyone should get together on a website and plan it. Just to see what happens.....

Answer 7

Yes
None the senate and congress bailed them out

Answer 8

i thought that was the mid / late 80's i was just a snot nosed little brat back then

my family lost a lot but learned just how good a bread and water sandwich was

Answer 9

Yes, some lost everything

Answer 10

I recall Saturday Night Live making fun of it, but I don't recall what it was really about.