The savings and loan crisis of the 1980s and 1990s (commonly dubbed the S&L crisis) was the failure of 1,043 out of the 3,234 savings and loan associations in the United States from 1986 to 1995. In the late 70s, the Federal Reserve Chairman, Paul Volcker, let banks treat the liabilities they were required to keep from depositors (savings, and to a greater extent the mortgaged loans everybody had out on their houses) as assets, and to invest, sell ownership of and sell the "dividends" from (in the form of mortgage payments).
Banks basically got greedy and were eaten alive by firms like Salomon Brothers, who treated them like the Fool On The Market they were. In sort of a prelude to the housing crises 20 years later, the banks and Wall Street firms overextended, couldn't meet obligations, doubled down knowing the government would bail them out rather than let millions of constituents lose their homes, and they ran the whole train into the ground. In the end, everyone paid out of the taxpayer's wallet, and the small time banks got shut down.
In 1996, the General Accounting Office estimated the total cost to be $160 billion, including $132.1 billion taken from taxpayers.Previous Fact Next Fact