savings and loan association


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savings and loan association

(S&L), type of financial institution that was originally created to accept savings from private investors and to provide home mortgage services for the public.

The first U.S. S&L was founded in 1831. In 1932, the Federal Home Loan Bank System was created to oversee the S&Ls, with deposits to be insured by the Federal Savings and Loan Insurance Corporation (FSLIC). In 1933 the federal government began chartering S&Ls, although they generally were not required to be federally chartered. After World War II, the associations began a period of rapid expansion. Historically, S&Ls could be organized in two ways: either as a mutual or a capital stock institution. A mutual organization would be similar in operation to a mutual savings banksavings bank,
financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest.
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.

S&Ls went through many changes in the late 20th cent., primarily due to deregulatory measures instituted in the 1980s by the U.S. federal government, allowing them to offer a much wider range of services than ever before. The deregulatory measures allowed S&Ls to enter the business of commercial lending, trust services, and nonmortgage consumer lending. The Depository Institutions Deregulation and Monetary Control Act of 1980 began these sweeping changes, one of which was to raise deposit insurance from $40,000 to $100,000. Many contend that this extension of insurance coverage encouraged S&Ls to engage in riskier loans than they might otherwise have sought.

Two years later, the Depository Institutions Act gave S&Ls the right to make secured and unsecured loans to a wide range of markets, permitted developers to own S&Ls, and allowed owners of these institutions to lend to themselves. Under the new laws, the Federal Home Loan Bank Board (FHLBB) was given a number of new powers to secure the capital positions of S&Ls. The FHLBB allowed S&Ls to print their own capital, and escape charges of insolvency through such measures as "goodwill," in which customer loyalty and market share were counted as part of a capital base. As a result, an S&L that was technically insolvent could resist government seizure.

S&Ls began to engage in large-scale speculation, particularly in real estate. Financial failure of the institutions became rampant, with well over 500 forced to close during the 1980s. In 1989, after the FSLIC itself became insolvent, the Federal Deposit Insurance CorporationFederal Deposit Insurance Corporation
(FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $250,000.
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 took over the FSLIC's insurance obligations, and the Resolution Trust CorporationResolution Trust Corporation
(RTC), in U.S. history, government-owned company formed in 1989 to liquidate the assets of insolvent savings and loan associations (S&Ls).
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 was created to buy and sell defaulted S&Ls. The S&L crisis ultimately cost the government some $124 billion. The Office of Thrift Supervision (1989; functions transferred to the Office of the Comptroller of the Currency, 2011) also was created, in an attempt to identify struggling S&Ls before it was too late, but the largest S&Ls were among the institutions at the core of the financial crisis of 2008.

Bibliography

See A. Teck, Mutual Savings Banks and Savings and Loan Associations (1968); F. E. Balderston, Thrifts in Crisis: Structural Transformation of the Savings and Loan Industry (1985).

References in periodicals archive ?
In the 2017 Financial Inclusion Survey, it was found that in 2017, only 0.3 percent of Filipinos save their money in Non-stock savings and loan associations, down from 0.4 percent in 2015.
8367 or "The Revised Non-Stock Savings and Loan Associations Act of 1997 to Foster the Industries Frugality and the Accumulation of Savings to Promote Judicious Utilization of Credit Among the Members of Non-Stock Savings and Loan Associations, Providing Still Penalties and Sanctions, and For Other Purposes, which is principally authored by Rep.
In connection with the reorganization, Applicants have also filed notices under section 4(c)(8) and (j) of the BHC Act to retain interests of greater than 5 percent of the voting shares of three savings and loan associations held by FBRG and thereby engage in operating savings and loan associations.
Headquartered in Gouverneur, New York, Gouverneur Bancorp Inc is the holding company for Gouverneur Savings and Loan Association. A New York State chartered savings and loan association, Gouverneur Savings and Loan Association offers a variety of banking products and services to individuals and businesses in its primary market area in St.
Kentucky First Federal Bancorp is the parent company of First Federal Savings and Loan Association, which operates one banking office in Hazard, Kentucky and First Federal Savings Bank, which operates six banking offices in Kentucky, including three in Frankfort, two in Danville, and one in Lancaster, Kentucky.
Nelson Collantes said at the 23rd convention of the Confederation of Nonstock Savings and Loan Associations Inc.
The three branches of Second Federal Savings and Loan Association of Chicago will reopen on Saturday as branches of Hinsdale Bank & Trust Company.
Third Federal Savings and Loan Association of Cleveland, MHC, the company's mutual holding company and owner of 227,119,132 shares, or 81.0 percent of the company's common stock outstanding, has waived its right to receive the dividend on its shares.
The Blumberg contract also provides that the purchaser must apply to a "lending institution," which is a bank, savings bank, savings and loan association, trust company, credit union of which purchaser is a member, insurance company or government entity.
Third Federal Savings and Loan Association of Cleveland, MHC (the "MHC"), the mutual holding company of the company and owner of 227,119,132 shares, or 81% of the company's common stock outstanding, has waived its right to receive the dividend on its shares.
Since the Federal Home Loan Mortgage Corporation is not a bank or a savings and loan association, its entire mortgage was lost.
Grant audited the financial statements of Rooks County Savings and Loan Association for the years 1984 through 1986.
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