Masters Theses

Date of Award

5-2002

Degree Type

Thesis

Degree Name

Master of Arts

Major

History

Major Professor

Robert J. Norrell

Abstract

The primary area of investigation of this work is the breakdown of the savings and loan industry during the period between 1980 through 1994. The history of the industry is traced from the early 1800's through the legislation of the New Deal into the recessionary period of the early 1980's and subsequent deregulation. The collapse of the industry cost United States taxpayers more than $130 billion making it the most expensive public policy error on record. The primary sources of data for this work are the reports of the U.S. government agencies involved in the cleanup and the monographs of several key participants. In addition to the opinions of those either directly involved or simply interested in the savings and loan debacle, a presidential commission reported on the causes of the crisis. This thesis reviews and comments on those findings, but draws a little noticed conclusion. The cleanup was a success. The Resolution Trust Corporation (RTC) and the Federal Depository Insurance Corporation (FDIC) unencumbered the economy of $402 billion in overvalued and unproductive assets. The cleanup helped to create a sound financial basis for the subsequent economic expansion. The RTC became a model for several nations during the banking crisis that befell much of the Asian Rim in the 1990's. Deregulation deserves continued debate, but two federal agencies merit credit for alleviating a tremendous financial problem.

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