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Economic Commentary

The Thrift Industry: Reconstruction in Progress

During the 1981-82 recession, high interest rates sparked a financial crisis in the savings and loan (thrift) industry.1 A number of companies were liquidated; others required help from the Federal Home Loan Bank Board (FHLBB). Since then, the industry has shrunk from about 4,000 to 3,200 institutions.2 In this Economic Commentary, we discuss the problems that high and volatile interest rates have caused for thrifts, starting with the first major hint of trouble back in 1966. We show that, despite deregulation of the lending and other asset powers of thrifts since 1980, more must be done to reduce their susceptibility to high interest rates and to unfavorable economic conditions.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit for updates.

  1. In this article, thrifts refer to institutions that have Federal Savings and Loan Insurance Corporation (FSLIC) insurance; another segment of the thrift industry, which includes most savings banks and credit unions, are not discussed here. Return to 1
  2. After 1982, the frequency of FHLBB-assisted mergers decreased dramatically, in part due to the comparatively low remaining level of financial resources available to FSLIC. As of year-end 1985, FSLIC only had approximately $2 billion of its $6 billion fund available as unobligated funds to insure an industry whose assets presently exceed $1 trillion. Return to 2
Suggested Citation

Buynak, Thomas M. 1986. “The Thrift Industry: Reconstruction in Progress.” Federal Reserve Bank of Cleveland, Economic Commentary 6/1/1986.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International