S&L Crisis

S&L Crisis - Congress allowed direct investments in...

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Brett Bunker Caleb Brigman Clayton Powers Savings and Loan Crisis What did we learn from the S&L crisis of the 1980’s that could help today’s economy?
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How did government regulation affect them? How did the government try to fix the problem? What resulted from government intervention? What are some myths associated with the crisis? What was learned from the crisis? Agenda
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Deposits Loans Repayment Returns Repayment – Returns = Profits S&Ls
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Interest Rates Home Mortgages Expected Returns Deposits Withdrawals Cost of Borrowing S&Ls
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Federal Deposit Insurance Fixed mortgage rates Pay variable rates Borrowing short to lend long Government Regulation
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FED restricted money supply (1979)
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Unformatted text preview: Congress allowed direct investments in service corporations (1980s) Federal Deposit Insurance premiums were not risk-sensitive Federal Home Loan Bank Board (FHLBB) hid S&L problems Government Intervention & Deregulation Role of CPAs Raising of Deposit Insurance Limit Effect of Junk Bond Investments Myths Government bail out of $124 billion Healthy S&Ls pay $30 billion for S&L losses The majority of S&Ls were dissolved into commercial banks S&L Crisis Regulate in moderation Raise premiums on risky investments Resist bailing out failing industries Raise Net Worth requirements How to Avoid Future Crises Any Questions?...
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This note was uploaded on 12/29/2011 for the course BUS 453 taught by Professor Jerrynelson during the Fall '11 term at BYU.

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S&L Crisis - Congress allowed direct investments in...

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