Wasn't the real reason behind the S&L mess the general mania in the public for real estate in the late 80's and secondly, the mania for unrealistic CD interest rates expected by S&L depositors...
I don't know if this is a serious query or not. There were bad loans, high interest rates, deregulation, and that $100k guarantee, which ended up meaning $100k/CD. The problems were known pretty early on, but the bad S&L's could keep piling on bad debt by issuing higher and higher rates to keep afloat. As for S&L depositors, this is way off base. Weren't many "depositors", in the sense of normal banking style customers, buying the $99k CD's that were stock and trade of the failing S&L's. Lots of money market funds, though. In general, the $100k limit ended up being meaningless, everybody got their money back. Except the U.S.
Again, the problems were known long before anything was done about it, and the estimates of the cost of delay were astonishing. But delay they did. |
