The thrifts crisis

Article Abstract:

The deregulation of the savings and loan (S&L) industry in 1982 led to a period of abuse and fraud and poor investments that has led to 350 S&Ls being placed in receivership or in the Federal Savings and Loan Insurance Corp's Management Consignment Program. Approximately 500 more S&Ls are economically insolvent, and the cost of the S&L debacle is estimated at $300 billion. After deregulation, the S&Ls turned to areas in which they had little expertise, particularly real estate. S&L auditors were cited by the US General Accounting Office with the failure to properly supervise the industry and with failing to detect widespread fraud. The lessons for other countries considering deregulation are that prior planning is necessary before deregulation is implemented: adequate control systems should be in place to prevent fraud, and adequate resources must be provided to ensure feedback and control.

Laws, regulations and rules, Financial institutions, Deregulation, Savings banks, Savings and Loan Associations Bailout Crisis, 1987-, United States. Federal Savings and Loan Insurance Corp.

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A shabbey habit to take off

Article Abstract:

The public share floatation of Abbey National, the first building society to convert to PLC status, was chaotic. The offer of 750 million shares to existing members and employees was oversubscribed, allotments were not made in full, and shareholders were prevented from selling their shares until they received definitive share certificates. The Building Society Commission criticized Abbey' poor assessment of the conversion's consequences and its implementation of an inadequate conversion timetable but took no regulatory action. The Abbey floatation reveals to building society shareholders the volatility inherent in public share ownership and illustrates the ineffectiveness of regulators. The antagonism created by the floatation has increased the likelihood of the share holders welcoming a takeover of Abbey.

Abbey National PLC, Savings and loan associations, Going public (Securities), Initial public offerings, United Kingdom. Building Societies Commission

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