Savings and Loan Crisis: Explained, Summary, Timeline, Bailout, Finance, Cost, History
The following is a detailed summary of the major causes for losses that hurt the savings and loan business in the 1980s. More on the topic:
Lack of net worth for many institutions as they entered the 1980s, and a wholly inadequate net worth regulation.
Decline in the effectiveness of Regulation Q in preserving the spread between the cost of money and the rate of return on assets, basically stemming from inflation and the accompanying increase in market interest rates.
Absence of an ability to vary the return on assets with increases in the rate of interest required to be paid for deposits.
Increased competition on the deposit gathering and mortgage origination sides of the business, with a sudden burst of new technology making possible a whole new way of conducting financial institutions generally and the mortgage business specifically.
Savings and Loans gained a wide range of new investment powers with the passage of the Depository Institutions Deregulation and Monetary Control Act and the Garn--St. Germain Depository Institutions Act. A number of states also passed legislation that similarly increased investment options. These introduced new risks and speculative opportunities which were difficult to administer. In many instances management lacked the ability or experience to evaluate them, or to administer large volumes of nonresidential construction loans.
Elimination of regulations initially designed to prevent lending excesses and minimize failures. Regulatory relaxation permitted lending, directly and through participations, in distant loan markets on the promise of high returns. Lenders, however, were not familiar with these distant markets. It also permitted associations to participate extensively in speculative construction activities with builders and developers who had little or no financial stake in the projects.
Fraud and insider transaction abuses.
A new type and generation of opportunistic savings and loan executives and owners—some of whom operated in a fraudulent manner — whose takeover of many institutions was facilitated by a change in FSLIC rules reducing the minimum number of stockholders of an insured association from 400 to one.
Dereliction of duty on the part of the board of directors of some savings associations. This permitted management to make uncontrolled use of some new operating authority, while directors failed to control expenses and prohibit obvious conflict of interest situations.
A virtual end of inflation in the American economy, together with overbuilding in multifamily, condominium type residences and in commercial real estate in many cities. In addition, real estate values collapsed in the energy states — Texas, Louisiana, and Oklahoma — particularly due to falling oil prices — and weakness occurred in the mining and agricultural sectors of the economy.
Pressures felt by the management of many associations to restore net worth ratios. Anxious to improve earnings, they departed from their traditional lending practices into credits and markets involving higher risks, but with which they had little experience.
The lack of appropriate, accurate, and effective evaluations of the savings and loan business by public accounting firms, security analysts, and the financial community.
Organizational structure and supervisory laws, adequate for policing and controlling the business in the protected environment of the 1960s and 1970s, resulted in fatal delays and indecision in the examination/supervision process in the 1980s.
Federal and state examination and supervisory staffs insufficient in number, experience, or ability to deal with the new world of savings and loan operations.
The inability or unwillingness of the Bank Board and its legal and supervisory staff to deal with problem institutions in a timely manner. Many institutions, which ultimately closed with big losses, were known problem cases for a year or more. Often, it appeared, political considerations delayed necessary supervisory action.
Political Documentary Filmmaker in Cold War America: Emile de Antonio Interview
Emile Francisco de Antonio (May 14, 1919 -- December 16, 1989) was an American director and producer of documentary films, usually detailing political or social events circa 1960s--1980s. About his films:
He has been referred to by scholars and critics alike, and arguably remains, ...the most important political filmmaker in the United States during the Cold War.
de Antonio was born in 1919 in in the coal-mining town of Scranton, Pennsylvania. His father, Emilio de Antonio, an Italian immigrant, fostered the lifelong interests of Antonio by passing on his own love for philosophy, classical literature, history and the arts. Although his intelligence allowed him the privilege of attended Harvard University alongside future-president John F. Kennedy, he was also familiar with the working class experience, making his living at various points in his life as a peddler, a book editor, and the captain of a river barge (among other duties).
After serving in the military during World War II as a bomber pilot, de Antonio returned to the United States where he frequented the art crowd, often associating with such Pop artists as Jasper Johns, Robert Rauschenberg, and Andy Warhol, in whose film Drink de Antonio appears. Warhol was famously quoted praising de Antonio with the words, Everything I learned about painting, I learned from De.
The book Necessary Illusions (1989) by Noam Chomsky and the documentary Manufacturing Consent: Noam Chomsky and the Media (1992) by Mark Achbar and Peter Wintonick are dedicated to Emile de Antonio.
Filmography
Point of Order (1964)
McCarthy: Death of a Witch Hunter (1964)
Rush to Judgment (1967)
America Is Hard to See (1968)
In the Year of the Pig (1968)
Charge and Countercharge (1969)
Millhouse: A White Comedy (1971)
Painters Painting (1972)
Underground (1976)
In The King of Prussia (1982)
Mr. Hoover and I (1989)
Abortion Debate: Attorneys Present Roe v. Wade Supreme Court Pro-Life / Pro-Choice Arguments (1971)
Roe v. Wade, 410 U.S. 113 (1973), is a landmark decision by the United States Supreme Court on the issue of abortion. More on the topic:
Decided simultaneously with a companion case, Doe v. Bolton, the Court ruled 7--2 that a right to privacy under the due process clause of the 14th Amendment extended to a woman's decision to have an abortion, but that right must be balanced against the state's two legitimate interests in regulating abortions: protecting prenatal life and protecting women's health. Arguing that these state interests became stronger over the course of a pregnancy, the Court resolved this balancing test by tying state regulation of abortion to the trimester of pregnancy.
The Court later rejected Roe's trimester framework, while affirming Roe's central holding that a person has a right to abortion until viability. The Roe decision defined viable as being potentially able to live outside the mother's womb, albeit with artificial aid, adding that viability is usually placed at about seven months (28 weeks) but may occur earlier, even at 24 weeks.
In disallowing many state and federal restrictions on abortion in the United States, Roe v. Wade prompted a national debate that continues today, about issues including whether and to what extent abortion should be legal, who should decide the legality of abortion, what methods the Supreme Court should use in constitutional adjudication, and what the role should be of religious and moral views in the political sphere. Roe v. Wade reshaped national politics, dividing much of the United States into pro-choice and pro-life camps, while activating grassroots movements on both sides.
Sarah Ragle Weddington (born February 5, 1945, in Abilene, Texas) is an American attorney, law professor, and former Texas state legislator best known for representing Jane Roe (real name Norma McCorvey) in the landmark Roe v. Wade case before the United States Supreme Court.
After graduating, Weddington found it difficult to find a job with a law firm. She instead joined a group of graduate students at University of Texas-Austin that was researching ways to challenge various anti-abortion statutes. After deciding that a woman should helm a lawsuit to challenge Texas' statute, Weddington volunteered.
Soon after, a pregnant woman named Norma McCorvey visited a local attorney seeking an abortion. The attorney instead assisted McCorvey with handing over her child for adoption, and after doing so, referred McCorvey to Weddington and Linda Coffee. In March 1970, Weddington and her co-counsel filed suit against Wade, the Dallas district attorney and the person responsible for enforcing the anti-abortion statute. McCorvey became the landmark plaintiff, and was referred in the legal documents as Jane Roe to protect her identity.
Weddington first stated her case in front of a three-judge district court on May 1970 in Dallas. The district court agreed that the Texas abortion laws were unlawful, but the state appealed the decision, landing it before the United States Supreme Court.
Weddington appeared before the Supreme Court in 1971 and again in the fall of 1972. Her argument was based on the 1st, 4th, 5th, 8th, 9th and 14th amendments, as well as the Court's previous decision in Griswold v. Connecticut, which legalized the sale of contraceptives based on the right of privacy. Of the experience, Weddington later stated, There was a sense of majesty, walking up those stairs, my steps echoing on the marble. I went to the lawyers' lounge — to go over my argument. I wanted to make a last stop before I went in — but there was no ladies' room in the lawyer's lounge.