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Working Paper

Capital Forbearance And Thrifts: An Ex Post Examination Of Regulatory Gambling

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This paper estimates the losses embedded in the capital positions of the 996 FSLIC-insured savings and loan institutions that did not meet capital standards at the end of the 1970s. We compare the estimated cost of resolving the insolvencies of these institutions at the end of the 1970s with the actual failure-resolution costs for those that were closed by July 31, 1992, and the projected resolution costs for the remaining thrifts that are likely to be closed. Our results show that even when one considers only the direct costs associated with delayed closure of economically failed thrifts, these costs significantly exceed reasonable estimates of the cost of prompt failure resolution.
09.01.1992ISSN 2573-7953 WP 92-09DOI 10.26509/frbc-wp-199209

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

DeGennaro, Ramon, and James B. Thomson. 1992. “Capital Forbearance And Thrifts: An Ex Post Examination Of Regulatory Gambling.” Federal Reserve Bank of Cleveland, Working Paper No. 92-09. https://doi.org/10.26509/frbc-wp-199209