The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was created by the Banking Act of 1933,enacted during the Great Depression to restore trust in the American banking system. More than one-third of banks failed in the years before the FDIC's creation,and bank runs were common. The insurance limit was initially US$2,500 per ownership category,and this has been increased several times over the years. Since the enactment of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010,the FDIC insures deposits in member banks up to $250,000 per ownership category. FDIC insurance is backed by the full faith and credit of the government of the United States,and according to the FDIC,"since its start in 1933 no depositor has ever lost a penny of FDIC-insured funds".
A savings and loan association (S&L),or thrift institution,is a financial institution that specializes in accepting savings deposits and making mortgage and other loans. While the terms "S&L" and "thrift" are mainly used in the United States,similar institutions in the United Kingdom,Ireland and some Commonwealth countries include building societies and trustee savings banks. They are often mutually held,meaning that the depositors and borrowers are members with voting rights,and have the ability to direct the financial and managerial goals of the organization like the members of a credit union or the policyholders of a mutual insurance company. While it is possible for an S&L to be a joint-stock company,and even publicly traded,in such instances it is no longer truly a mutual association,and depositors and borrowers no longer have membership rights and managerial control. By law,thrifts can have no more than 20 percent of their lending in commercial loans—their focus on mortgage and consumer loans makes them particularly vulnerable to housing downturns such as the deep one the U.S. experienced in 2007.
The savings and loan crisis of the 1980s and 1990s was the failure of approximately a third of the savings and loan associations in the United States between 1986 and 1995. These thrifts were banks that historically specialized in fixed-rate mortgage lending. The Federal Savings and Loan Insurance Corporation (FSLIC) closed or otherwise resolved 296 thrifts from 1986 to 1989,whereupon the newly established Resolution Trust Corporation (RTC) took up these responsibilities. The two agencies closed 1,043 banks that held $519 billion in assets. The total cost of taxpayers by the end of 1999 was $123.8 billion with an additional $29.1 billion of losses imposed onto the thrift industry.
The Community Reinvestment Act is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities,including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods,a practice known as redlining.
The Federal Home Loan Banks are 11 U.S. government-sponsored banks that provide liquidity to financial institutions to support housing finance and community investment.
The Federal Home Loan Bank Board (FHLBB) was a U.S. board created by the Federal Home Loan Bank Act in 1932 that governed the Federal Home Loan Banks,also created by the act;the Federal Savings and Loan Insurance Corporation (FSLIC);and nationally-chartered thrifts. It was abolished and superseded by the Federal Housing Finance Board and the Office of Thrift Supervision in 1989 due to the savings and loan crisis of the 1980s,as Federal Home Loan Banks gave favorable lending to the thrifts it regulated,leading to regulatory capture.
The Office of Thrift Supervision (OTS) was a United States federal agency under the Department of the Treasury that chartered,supervised,and regulated all federally chartered and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of the Federal Home Loan Bank Board,another federal agency. Like other U.S. federal bank regulators,it was paid by the banks it regulated. The OTS was initially seen as an aggressive regulator,but was later lax. Declining revenues and staff led the OTS to market itself to companies as a lax regulator in order to get revenue.
The Financial Institutions Reform,Recovery,and Enforcement Act of 1989 (FIRREA),is a United States federal law enacted in the wake of the savings and loan crisis of the 1980s.
The Federal Savings and Loan Insurance Corporation (FSLIC) was an institution that administered deposit insurance for savings and loan institutions in the United States.
The early 1980s recession was a severe economic recession that affected much of the world between approximately the start of 1980 and 1982. It is widely considered to have been the most severe recession since World War II until the 2007–2008 financial crisis.
The Federal Housing Finance Board (FHFB) was an independent agency of the United States government established in 1989 in the aftermath of the savings and loan crisis to take over management of the Federal Home Loan Banks from the Federal Home Loan Bank Board (FHLBB),and was superseded by the Federal Housing Finance Agency (FHFA) in 2008.
John M. Reich was a Director of the Federal Deposit Insurance Corporation (FDIC). He was sworn in on January 15,2001,following an appointment by President of the United States Bill Clinton and served on the FDIC Board for eight years. Reich served as Vice Chairman of the Board of the FDIC from November 2002 until he was nominated on June 7,2005 by President George W. Bush to be Director of the Office of Thrift Supervision (OTS),and the U.S. Senate confirmed his nomination on July 29,2005. He also served as Acting Chairman of the FDIC from July to August 2001. As Deputy Chairman,2001–2005,Reich served as the Chair of FDIC's Audit Committee during a time when the General Accounting Office issued reportable conditions regarding information security at the Corporation.
Benj. Franklin Savings and Loan was a thrift based in Portland,in the U.S. state of Oregon. Founded in 1925,the company was seized by the United States Government in 1990. In 1996 the United States Supreme Court found that this and similar seizures were based on an unconstitutional provision of the Financial Institutions Reform,Recovery,and Enforcement Act of 1989 (FIRREA). Shareholders of the thrift sued the federal government for damages caused by the seizure,with the shareholders winning several rounds in the courts. In 2013,$9.5 million was allocated for disbursement to shareholders.
The Keating Five were five United States Senators accused of corruption in 1989,igniting a major political scandal as part of the larger savings and loan crisis of the late 1980s and early 1990s. The five senators—Alan Cranston,Dennis DeConcini,John Glenn,John McCain,and Donald W. Riegle,Jr. —were accused of improperly intervening in 1987 on behalf of Charles H. Keating,Jr.,chairman of the Lincoln Savings and Loan Association,which was the target of a regulatory investigation by the Federal Home Loan Bank Board (FHLBB). The FHLBB subsequently backed off taking action against Lincoln.
James M. Fail was an American financial executive who served as chairman of Stone Holdings,Inc. and Bluebonnet Savings Bank. A native of Mobile,Alabama,he attended Murphy High School and served for three years in the U.S. Navy. After graduating from the University of Alabama in 1949,he began his career as a securities salesman for Merrill Lynch. In the following decades,Fail and his holding companies have owned and operated a variety of investment,mortgage,banking,savings and loan,and insurance businesses throughout the U.S.
Roger C. Kormendi was an American economist who conducted important research studies in several areas of macroeconomics and finance. A long-time senior member of the Graduate School of Business faculties at the University of Chicago and the University of Michigan,he was the author of over fifty scholarly books and articles.
CenTrust Bank,A State Savings Bank was an American savings and loan association based in Miami,Florida that failed in 1990. Its failure in 1990 was one of the largest and costliest failures of the savings and loan crisis.
Franklin Savings Association was an Ottawa,Kansas-based American Savings and loan association that was one of the largest seizures of the savings and loan crisis. Subsequent litigation established that the institution had always been in full capital compliance,a fact to which the FDIC stipulated in 2011,after 21 years of legal challenges by Franklin's shareholders. Also,the FDIC refused to open its books to a bankruptcy judge and never demonstrated that the seizure resulted in a loss to the American taxpayers. It is widely believed that Franklin's assets,which had a book value of more than $380 million when seized,were ultimately sold by the government to private investors at a significant profit.
American Savings and Loan Association was an American savings and loan based in Stockton,California. In 1988 it was the largest thrift failure and the federal government's costliest resolution during the savings and loan crisis at an estimated cost of $5.4 billion.
Edwin J. Gray is an American politician and businessman who served as the chair of the Federal Home Loan Bank Board in the 1980s.
