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- Title
The Savings and Loan Insurance Mess.
- Authors
Kane, Edward J.
- Abstract
This article discusses the savings and loan (S&L) debacle in the U.S. Authorities have been letting insolvent S&Ls play in financial markets for twenty-five years. The first stage of the problem traces to the sharp run-up in interest rates induced in the mid-1960s by the Vietnam War. The second stage occurred around 1979 and 1980 when monetary policy was drastically tightened to reduce inflation. This policy produced a second rapid increase in interest rates from 1979 to 1982. This interest-rate spike exacerbated preexisting insolvencies and spread zombieness to more and more institutions. The primary macroeconomic result of the S&L decline is a misshapen capital stock. The nation's many empty buildings and half-finished real estate projects represent wasted investments.
- Subjects
UNITED States; SAVINGS &; loan association failures; SAVINGS bank failures; BANK failures; SAVINGS &; loan associations; FINANCE
- Publication
Society, 1992, Vol 29, Issue 3, p4
- ISSN
0147-2011
- Publication type
Article
- DOI
10.1007/BF02695291