The Savings and Loan Crisis of the late 1980s and early 1990s marked a tumultuous period in the financial history of the United States. Characterized by the collapse of numerous Savings and Loans (S&Ls), it posed significant challenges to the stability of the country’s financial system. As a result of widespread mismanagement, fraud, and reckless lending practices, hundreds of S&Ls faced insolvency, leading to substantial losses for both depositors and taxpayers.
To address the crisis and mitigate its repercussions, the government established the Resolution Trust Corporation (RTC) in 1989. The RTC was tasked with liquidating failed S&Ls and managing their assets to minimize losses. Over the years of its operation, the RTC played a crucial role in resolving the crisis by closing down hundreds of insolvent institutions and disposing of their assets in an orderly manner. By the time the RTC ceased operations on December 31, 1995, it had shuttered 747 S&Ls with total assets exceeding $407 billion.
Despite the RTC’s efforts, the Savings and Loan Crisis took a heavy toll on taxpayers. The ultimate financial burden was estimated to reach as high as $124 billion, underscoring the magnitude of the crisis and its lasting impact on the economy. However, the closure of the RTC marked the formal conclusion of the crisis, signaling a turning point in the country’s financial landscape as it embarked on the path to recovery.
(Response: The Savings and Loan Crisis ended when the Resolution Trust Corporation (RTC) ceased operations on December 31, 1995, after closing down 747 S&Ls with assets exceeding $407 billion. The ultimate cost to taxpayers was estimated to be as high as $124 billion.)