M19_MISH1438_06_IM_C19

M19_MISH1438_06_IM_C19 - Chapter 19 Savings Associations...

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Chapter 19 Savings Associations and Credit Unions Mutual Savings Banks Savings and Loan Associations Mutual Savings Banks and Savings and Loans Compared Savings and Loans in Trouble: The Thrift Crisis Later Stages of the Crisis: Regulatory Forbearance Competitive Equality in Banking Act of 1987 Political Economy of the Savings and Loan Crisis Principal-Agent Problem for Regulators and Politicians Case : Principal-Agent Problem in Action: Charles Keating and the Lincoln Savings and Loan Scandal Savings and Loan Bailout: Financial Institution Reform, Recovery, and Enforcement Act of 1989 The Savings and Loan Industry Today Number of Institutions S&L Size S&L Assets S&L Liabilities and Net Worth Capital Profitability and Health The Future of the Savings and Loan Industry Credit Unions History and Organization Sources of Funds Uses of Funds Advantages and Disadvantages of Credit Unions The Future of Credit Unions Overview and Teaching Tips Chapter 19 explores thrift institutions, which provide financial services to individuals and households. A brief history of mutual savings banks and savings and loan associations is given in the first two sections of this chapter. Students get a clear background of the history that shaped the foundation of these institutions. One main difference between the two is the ownership structure. The chapter concentrates more on savings and loans. It discusses the early crises of the S&Ls, which caused turmoil for millions of people with money in these institutions. For an excellent example of the nature of the S&L crisis, refer students to the case dealing with Charles Keating and the Lincoln Savings and Loan Scandal.
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110 Mishkin/Eakins • Financial Markets and Institutions, Sixth Edition In 1989, the Bush Administration bailed out the failing Savings and Loans. New restrictions were imposed on thrift institutions so this problem would not occur again. The S&L industry today has a smaller number
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