Savings and Loan Associations
Savings and loan associations, also known as S&Ls, are financial institutions that specialize in accepting deposits from customers and making mortgage loans. They are similar to banks, but they are not-for-profit organizations that are owned by their members. S&Ls are regulated by the Federal Home Loan Bank Board, which is part of the U.S. Department of Housing and Urban Development (HUD).
History of Savings and Loan Associations
The first savings and loan association was established in 1831 in Philadelphia. The idea of S&Ls was to provide a safe place for people to save their money and to provide loans to those who needed them. The S&Ls were also intended to help people purchase their own homes. Over the years, S&Ls have become an important part of the U.S. economy, providing a reliable source of funds for homebuyers.
In the 1980s, S&Ls began to experience financial difficulties due to a combination of high interest rates, deregulation, and mismanagement. This led to the savings and loan crisis of the late 1980s and early 1990s, which resulted in the failure of hundreds of S&Ls and the loss of billions of dollars in deposits. The crisis was eventually resolved with the passage of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
Comparison of Savings and Loan Associations
| Type of Institution | Interest Rates | Fees |
|---|---|---|
| Savings and Loan Associations | Generally lower than banks | Generally lower than banks |
| Banks | Generally higher than S&Ls | Generally higher than S&Ls |
Summary
Savings and loan associations are financial institutions that specialize in accepting deposits from customers and making mortgage loans. They are similar to banks, but they are not-for-profit organizations that are owned by their members. S&Ls have been an important part of the U.S. economy for many years, providing a reliable source of funds for homebuyers. For more information about S&Ls, visit the websites of the Federal Home Loan Bank Board and the U.S. Department of Housing and Urban Development.
See Also
- Mortgage
- Credit Union
- Deposit
- Interest Rate
- Loan
- Banking
- Finance
- Investment
- Insurance
- Real Estate
