Bankers’ Hours
We’ve briefly watched the savings and loan (thrift) segment of the U.S. banking business implode. It didn’t take long: The dominoes began teetering in 1987, and it was all over by 1990. A major segment of the U.S. banking business had effectively ceased to exist after 175 years of financing housing for Americans.
Some 550 thrifts failed, and 403 S&L execs were convicted of fraud. The remaining institutions scrambled to distance themselves from the carnage and stigma of having been in the thrift business. Institution names were changed to “savings bank,” or simply “bank.” But the thrift charter, effectively the license to do business issued by the federal deposit insurers, stayed the same. And that charter had, and still does have, one feature that played a part in the coming of the Great Meltdown in 2008: It allows a thrift to load up on home mortgages. The biggest bank failure in U.S. history, Washington Mutual (WAMU), a thrift, occurred in 2008, a result of home loans gone bad.