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Article: The bailout. (background of savings and loan failures traced to administration of Jimmy Carter)
- Article from:
- National Review
- Article date:
- June 11, 1990
CopyrightCOPYRIGHT 1990 National Review, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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THREE YEARS AGO it was a cloud no bigger than a man's hand. Now, excepting World War II, the S&L bailout may be the most expensive federal undertaking in history: a $550billion transfer of income from ninety million hard-pressed taxpayers to a few million middle- and upper-class S&L depositors.
The seeds of the debacle were planted during the Carter Administration. The characteristic S&L risk-borrowing short while lending long-became life-threatening only after inflation exploded during the late Seventies. As inflation mounted, S&Ls lost deposits to higher-yielding money-market funds, most of them uninsured and unregulated. At the same time, S&L loan portfolios, ...