[Spero]

http://www.time.com/time/magazine/article/0,9171,957083,00.html

Last week President Bush came forward with a long-awaited bailout plan in which he sought to spread around the unhappiness in an evenhanded way. Said Bush: "Nothing is without pain when you come to solve a problem of this magnitude." His program will require taxpayers and S & Ls to share the burden of a rescue that will cost an estimated $126 billion during the next decade. The taxpayer portion would amount to about $60 billion, which would be contained in the federal budget over the next ten years. The Government would borrow $50 billion by issuing 30-year bonds to be repaid through revenues collected from S & Ls. Including the interest expense, half of which will be borne by taxpayers, the total package could cost $200 billion or more over the course of three decades.

The Government is obliged to spend $40 billion to cover bailout cases to which federal regulators are already committed, including 205 savings and loans that the Government closed or sold last year. The $50 billion bond issue would be spent to liquidate or auction off the remaining 300 or more insolvent savings and loans. Those failing thrifts will be isolated from the rest of the industry by bringing them under a new agency called the Resolution Trust Corp., which will oversee their cleanup.

Besides rounding up all that cash, Bush proposes to reform the system that supervises the thrift industry and insures its deposits. The main regulatory agency, the Federal Home Loan Bank Board, which has been accused of being too chummy with thrift-industry leaders, will be replaced by one chairman who will answer to the Treasury Secretary. The exhausted Federal Savings and Loan Insurance Corp., which guarantees deposits, will be overseen by its healthier and better-staffed counterpart for the banking industry, the Federal Deposit Insurance Corp. Banks and thrifts have traditionally had separate regulators and roles: S & Ls specialized in taking long-term savings deposits and issuing residential mortgages, while banks typically held shorter-term accounts and concentrated on making commercial loans.

 

[Spero]

http://www.econlib.org/library/Enc/SavingsandLoanCrisis.html

Years later, the extraordinary cost of the 1980s S&L crisis still astounds many taxpayers, depositors, and policymakers. The cost of bailing out the Federal Savings and Loan Insurance Corporation (FSLIC), which insured the deposits in failed S&Ls, may eventually exceed $160 billion. At the end of 2004, the direct cost of the S&L crisis to taxpayers was $124 billion, according to financial statements published by the Federal Deposit Insurance Corporation (FDIC), the successor to the FSLIC. Additionally, healthy S&Ls as well as commercial banks have been taxed approximately another $30 billion to pay for S&L cleanup costs. Finally, the federal courts are still resolving the so-called goodwill cases stemming from regulatorily inspired mergers of failing S&Ls into healthy S&Ls in the early 1980s (discussed below). Resolving these cases will probably cost taxpayers another $5–$10 billion.

The estimated cost to taxpayers at the time of the bailout was around $60Bn



I was too young to see any of this happening and even in college wasn't educated much on the subject. The core of the S&L crisis seemed to be attributable to the commercial side of real estate as our current issue is partially due to residential lending. What I'm interested in are the industries that failed/flourished in the few years immediately following the S&L fallout. For those of you that remember the early 90s well, what's your take?

 

[Secret Squirrel]

Psssssshhhhh....

what's a couple extra zeros among friends...I mean really...

On the flip side...

The world's oldest trade is starting to look more and more inviting. I've already got some slogans for my roadside sign:

"Protein shakes - $5"
"No fat chicks."
"Like pineapple? See me in the alley."