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Savings and Loan Scandal:
The Savings and Loan Scandal was one of the largest financial crises in history.
-Savings & Loan banks (S&L) were types of Banks that used low interest, federally insured deposits to fund mortgages (home loans). Mortgages tend to be safe loans to give.
- In the 1980's "money market accounts" became more popular (because they offered higher interest rates) which led to people pulling their money out of S&L banks which depleted their source of funds.
- Congress gave S&L banks clearance to raise interest rates and fund different and riskier types of loans. When these risky loans defaulted, it caused many S&L banks to lose money and fail.
- The Bush Sr. Administration bailed out the industry using taxpayer money, altogether costing taxpayers $132 billion dollars
The Savings and Loan Scandal was one of the largest financial crises in history.
-Savings & Loan banks (S&L) were types of Banks that used low interest, federally insured deposits to fund mortgages (home loans). Mortgages tend to be safe loans to give.
- In the 1980's "money market accounts" became more popular (because they offered higher interest rates) which led to people pulling their money out of S&L banks which depleted their source of funds.
- Congress gave S&L banks clearance to raise interest rates and fund different and riskier types of loans. When these risky loans defaulted, it caused many S&L banks to lose money and fail.
- The Bush Sr. Administration bailed out the industry using taxpayer money, altogether costing taxpayers $132 billion dollars
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