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Home » What happened to Lincoln savings?

What happened to Lincoln savings?

In the annals of financial history, one episode stands out as a stark reminder of the perils of unchecked greed and regulatory oversight: the demise of Lincoln Savings. Once hailed as a beacon of success in the savings and loan industry, Lincoln Savings underwent a dramatic reversal of fortune that ultimately led to its downfall and left a trail of financial destruction in its wake.

At the heart of Lincoln Savings’ downfall was a web of reckless lending practices and fraudulent activities orchestrated by its chairman, Charles Keating. Keating, a charismatic figure with deep ties to politics, wielded immense influence over the company’s operations and used it as a vehicle for his own unscrupulous pursuits. Under his leadership, Lincoln Savings engaged in risky investments and speculative ventures, flouting regulatory guidelines with impunity.

As the house of cards that Keating had built began to collapse, the magnitude of Lincoln Savings’ losses became apparent. Amid mounting pressure and public outcry, the Federal government was forced to step in to mitigate the fallout. Ultimately, taxpayers bore the brunt of the financial catastrophe, with nearly $3 billion in losses absorbed by the government. While some creditors were fortunate enough to recoup their losses, the broader repercussions of Lincoln Savings’ collapse reverberated throughout the financial system for years to come. In the aftermath, the government sought to liquidate the seized assets through the Resolution Trust Corporation (RTC), marking the end of a painful chapter in America’s financial history.

(Response: The demise of Lincoln Savings was ultimately a result of reckless lending practices and fraudulent activities orchestrated by its chairman, Charles Keating. The Federal government had to cover almost $3 billion of the company’s losses, and the assets were liquidated through the RTC.)