The first Savings and Loan (S&L) institution was established in Pennsylvania in 1831, with the primary goal of helping people purchase homes when they lacked sufficient savings.

The Federal Home Loan Bank Act of 1932 formally established the S&L industry as a means for lower-income Americans to achieve homeownership. It provided lower mortgage rates compared to banks, making it an attractive option for homebuyers.

Savings and Loan (S&L) institutions were established as a type of financial institution that accepted deposits from clients and provided loans for mortgages, car purchases, and personal loans.

In 1934, the Federal Deposit Insurance was extended to Savings and Loans institutions, which later became a root cause of the S&L crisis. The extension of deposit insurance to S&Ls contributed to the actuarially unsound financial structure of these institutions.

The federal government established Fannie Mae and Freddie Mac, which had a significant impact on S&L profits by leveraging taxpayer backing to lower interest rates on mortgages, contributing to the risk of S&L maturity mismatching.

In October 1979, Paul Volcker, the chairman of the Federal Reserve Board, decided to restrict the growth of the money supply, leading to a significant increase in interest rates. This policy decision had far-reaching consequences for the economy.

During the Savings and Loan Crisis, some S&Ls engaged in fraudulent land schemes where insiders conspired with appraisers to buy land using S&L loans, inflate its value, and then sell it to extract huge profits, leading to outright fraud.

During 1981 and 1982, the interest rate spreads for S&Ls were -1.0 percent and -0.7 percent, respectively. This caused significant financial strain on S&Ls as they had to pay more to their depositors than they were making on their mortgages.

By mid-1982, all S&Ls combined had a negative net worth of $100 billion, equivalent to 15 percent of the industry’s liabilities, due to the valuation of their mortgages on a market-value basis. This further exacerbated the crisis in the Savings and Loan industry.

In mid-1983, the closure of hopelessly insolvent S&Ls was postponed, leading to the growth of losses in insolvent S&Ls during the 1980s. This delay compounded the problem by increasing the pure cost of delayed closures and resulting in the waste of real resources.

In 1985, S&L assets experienced a significant surge, growing by almost 50%, outpacing the growth of banks.

Empire Savings and Loan of Texas was involved in illegal land flips and other criminal activities, leading to its default and eventually costing taxpayers $300 million.

Frederick Wolf of the GAO testified on May 19, 1988, that the FSLIC bailout would cost thirty to thirty-five billion dollars. However, over the next eight months, the GAO increased its estimate by forty-six billion dollars.

The Lincoln Savings and Loan Association exceeded regulatory caps by over $615 million, leading to its seizure by the FHLBB. The scandal defrauded thousands of depositors and cost taxpayers $3 billion for its bailout.

The delayed closure of unprofitable S&Ls led to losses for the S&L industry, ultimately causing the Federal Savings and Loan Insurance Corporation (FSLIC) to declare bankruptcy. This crisis was a contributing factor to the recession in 1990 in the United States.

Fand's paper presented at the George Edward Durell Foundation Conference delves into the Savings and Loan (S&L) debacle, discussing its implications for American money and banking in the 1990s.

The Senate Ethics Committee investigated the Keating Five, a group of U.S. senators, for accepting $1.5 million in campaign contributions from Charles Keating, head of the Lincoln Savings and Loan Association. The senators were accused of pressuring the Federal Home Loan Banking Board to overlook suspicious activities involving Keating.

The National Commission on Financial Institution Reform, Recovery, and Enforcement presented a report to the President and Congress, outlining the origins and causes of the S&L debacle and proposing a blueprint for reform, offering significant recommendations for addressing this crisis.

In 1994, Congress authorized interstate branching for banks, allowing them to expand across state lines. This change had a significant impact on the banking industry.

The Savings and Loan Crisis came to an end when the Resolution Trust Corporation (RTC) was eventually closed on December 31, 1995, after closing 747 S&Ls with assets of over $407 billion.

In 1996, Charles Keating's conviction for conspiracy, racketeering, and fraud was overturned.

In 1999, Charles Keating pleaded guilty to lesser charges and was sentenced to time served.

Curry and Shibut's article in the FDIC Banking Review discusses the cost and consequences of the Savings and Loan Crisis, providing valuable insights into this financial debacle.

By the end of 2004, 886 S&Ls remained with total assets of $1.35 trillion. While many of the largest S&Ls were owned by bank holding companies, two independent S&Ls—Washington Mutual Bank and World Savings Bank—each had more than $100 billion of assets.

Various government and financial institutions have published reports and research on the Savings and Loan Crisis, highlighting its impact on the banking industry.