The Blogosphere Banking Panic (III. The Failure of the FSLIC)
The Savings and Loans Crisis of the 1980's was one of the biggest financial crises in US history. The insurer for savings and loans, the FSLIC became insolvent and was abolished in 1989. A new institution, the Resolution Trust Corporation (RTC) was established to liquidate failed financial institutions. Federal insurance of S&L deposits was transferred to the FDIC in 1989.
One contemporary account described the scope of the financial meltdown as follows:
The failure rate of FSLIC insured savings and loan associations (S&Ls) in the United States during recent years has assumed unprecedented proportions. For the period from 1934 through 1941, a total of 33 F.S.L.I.C. insured S&Ls failed. Over the period from 1942 through 1962, a total of 15 FSLIC insured S&Ls failed. The number of failed so-insured S&Ls rose to 82 for the period from 1963 through 1979. However, since 1980, the annual number of failed FSLIC insured S&Ls has reached unprecedented levels. Indeed, ... over the period 1980 through 1989, a total of 525 FSLIC insured insolvent S&Ls failed.