What is savings and a loan?

Savings and Loan, sometimes also known as Thrift, is a financial institution that focuses on providing interest savings accounts and deposit certificates to its members while offering housing loans. The idea of ​​savings and loans is that it is to promote gentleness by its members and at the same time provide people with the opportunity to gain home ownership with the help of financing offered through the bank. Such organizations can be based on a community or may be larger chain banks. This banking model has proved to be extremely popular in many regions in the world. Some institutions were operated on a cooperative basis, while profits were returned to members, while others were operated as publicly traded companies or private institutions. These steps included some reforms in the way the mortgages were offered and processed in order to allow people to bear mortgages to complete the risk of market closure. According to the law, they had to offer savings and a loan at least 65% of theirLoans in the form of mortgage loans, which represents most of the assets of assets.

at the end of the 70s. Rumblings had a profound impact on savings and credit industry in the financial sector, eventually brought savings and a credit crisis. The government has initiated extensive deregulation of these institutions, and this combined with radical shifts in real estate values ​​to reduce the value of such institutions down. Almost 800 savings and loans have failed in United during this period and in some regions also pulled conventional banks down.

Many critics pointed out that the structure of savings and loans can be very vulnerable. According to the law, it cannot diversify its assets, concentrate the value in mortgages, which means that it will be highly susceptible to changes in real estate and changes in the economy. Decisions on deregulation in the 80s without introducing some protective measures have been pointed to the reason why these institutions failedSo spectacular and in such a large number.