ACCOUNTING FIRM INVOLVEMENT WITH SAVINGS AND LOANS

A savings and loan association (S&L) is a financial intermediary that takes deposits and uses them primarily to finance real estate mortgage loans. Like a bank, the aim is to earn a higher rate of return on its loans (and other investments) than the interest rate it pays its depositors. To gain depositors, therefore, it must compete with other financial institutions and instruments to attract funds. Against banks, a savings and loan must vie not only with depositor interest rates but also various services such as checking accounts. But increasingly, the competition comes from money market instruments like government Treasury bills, corporate bonds, and stocks, to say nothing of longer-term investments such as real estate and collectibles. Indeed, with the government deregulation that occured in the 1980s, competition has become more intense as the line between banks, savings and loans, and other financial intermediaries has thinned.

Savings and loans constitute the second largest type of financial intermediary in the country, with total assets about 40 percent those of commercial banks. The trend since the S & L crisis, however, has been downward, as the industry might well lose half its institutions by the time the shakeout is over. At any rate, other major intermediaries include insurance companies and pension funds, which rank third and fourth respectively in terms of assets. Because of restri

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d Loan Association of Denver (in which President Bush's son was involved); and Western Savings Association of Phoenix. In the wake of deregulation, the role of private auditors became that much more important because the government (both federal and state) cut their staffs of examiners as the practices of savings and loans diversified and expanded. Many such institutions merged and acquired related firms (construction companies) and diversified into commercial real estate, which is intrinsically much riskier than the more traditional home loan business. For such savings and loans, the highly competitive environment meant that they had to get higher returns on their investments, and that required higher risks. And in most industries, that presents no problems, but with savings and loans, the deposits of their customers are insured by the federal (or state) government, up to $100,000 dollars, that is. So in the aftermath of the failure of many such savings and loans, the Office of Thrift Supervision and Resolution Trust Corporation, which respectively oversees the institutions and supervise the deposit insurance program, have had to close down those that have failed and disposed of their assets. In so doing, it has been discov
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Some common words found in the essay are:
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Approximate Word count = 2437
Approximate Pages = 10 (250 words per page)

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