Savings and Loan Crisis Detail
About Savings and Loan Crisis Detail
The savings and loan crisis of the 1980s and early 1990s resulted from a combination of deregulation, rising interest rates, fraud, and poor supervision. Savings and loans had made long term mortgages funded by short term deposits. When interest rates rose in the early 1980s, S and Ls were paying more on deposits than they earned on mortgages. Deregulation allowed them to make riskier investments, which compounded the problem. Over 1,000 S and Ls failed. Charles Keatings Lincoln Savings became the symbol of S and L fraud. Five US senators, the Keating Five, were investigated for intervening with regulators on Keatings behalf. Senator John McCain was one of the five, cleared of wrongdoing but criticized for poor judgment.
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