S&L Bailout: Assessing the Impact

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Overview

It's been compared to Three Mile Island and even Chernobyl, the financial equivalent of a nuclear power plant meltdown. The failure of hundreds of savings and loan institutions over the past decade overwhelmed the federal deposit insurance fund, forcing taxpayers to pick up the tab. The S&L bailout is the biggest financial disaster in this country's history. Policy-makers and regulators agree that something must be done to prevent a future financial meltdown. But there is widespread disagreement over what policy changes are needed to correct the thrift industry's lingering problems.

To begin with, no one really knows just how much it will cost to close down the more than 1,000 failed savings and loans. Estimates vary widely, but virtually all exceed $100 billion. One thing is certain: It will cost much more than anyone originally anticipated.