What is the savings and loan scandal?
The savings and loan crisis of the 1980s and 1990s in the United States was a massive financial debacle involving the insolvency of hundreds of thrift institutions. Triggered by a combination of rapid federal deregulation, high inflation, and risky speculative real estate investments, many savings and loan associations accumulated catastrophic losses. The systemic collapse required a massive federal taxpayer-funded bailout through the establishment of the Resolution Trust Corporation, leading to sweeping legislative reforms, stricter regulatory oversight, and numerous high-profile criminal prosecutions.
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A savings and loan company, commonly known as a thrift or savings and loan association, is a specialized financial institution that focuses primarily on accepting consumer savings deposits and originating residential mortgage loans.