Savings and Loan Crisis (S&L) Crisis

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Definition of 'Savings and Loan Crisis (S&L) Crisis'

The Savings and Loan Crisis, also known as the S&L Crisis, was a financial crisis in the United States that occurred in the late 1980s and early 1990s. It was caused by a combination of factors, including deregulation of the financial industry, excessive risk-taking by S&Ls, and a decline in the real estate market.

The crisis began in the late 1970s, when the government began to deregulate the financial industry. This allowed S&Ls to take on more risk, which they did by investing in risky assets, such as real estate. The real estate market boomed in the 1980s, which allowed S&Ls to make large profits. However, the real estate market crashed in the early 1990s, which caused S&Ls to lose billions of dollars.

In order to save the S&L industry, the government created the Resolution Trust Corporation (RTC). The RTC was responsible for liquidating the assets of failed S&Ls and paying off their depositors. The RTC cost taxpayers over $125 billion.

The Savings and Loan Crisis had a number of negative consequences. It caused a loss of confidence in the financial system, and it led to higher interest rates. The crisis also contributed to the recession of the early 1990s.

The Savings and Loan Crisis was a major financial crisis that had a significant impact on the United States economy. The crisis was caused by a combination of factors, including deregulation of the financial industry, excessive risk-taking by S&Ls, and a decline in the real estate market. The crisis led to the creation of the Resolution Trust Corporation (RTC), which was responsible for liquidating the assets of failed S&Ls and paying off their depositors. The RTC cost taxpayers over $125 billion. The crisis also caused a loss of confidence in the financial system, and it led to higher interest rates. The crisis also contributed to the recession of the early 1990s.

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