examines the savings and loan crisis in somewhat greater detail. It attempts to answer the ques tions related to how things got to this state of affairs, and what the best way out of the mess is in 1990.
National politicians, from the president on down, tend to treat the savings and loan crisis, as they do the drug crisis, and all other crises: as if it is some alien animal in our midst, which has no relation to our society, and must be fought to the death. As is true with respect to the drug crisis, and other crises, this approach to the savings and loan crisis overlooks the facts that (1) the savings and loan crisis is the result of actions and policies integral to American society and federal governmental policy, and (2) the savings and loan cri sis is not an isolated phenomenon within the American financial 3environment it is related to other quite recent financial sec tor debacles.
The problems which are being experienced by the savings and loan industry have been attributed to a number of factors. Chief among these factors cited by federal politicans, industry regulators, and media columnists are (1) fraud, (2) imprudent loans to the small players in the oil industry, and to real estate developers in states heavily dependent upon the oil industry, which, in each instance, were severely and adversely affected by the collapse of world oil prices in the mid 1980s, and (3) a widening gap in the interest rate margin between earning assets and funding liabilities, which resulted, in great part, from home owners defaulting on long term, high interest mortgages issued in the late 1970s.
A factor mentioned only incidently as a cause of the savings and loan problem is the role of the deregulation of the banking and finance industry
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