Definition

Savings and Loan Crisis (SL) Crisis

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The savings and loan (SL) crisis were a financial tragedy leading to the collapse of a significant bank. The crisis of the 1980s and 1990s, the nation's savings and loan (SL) industry faced distraught due to the rise in inflation and interest rate. The federal government set the interest rates on the deposits at a lower value what could be earned elsewhere, leading to the withdrawal of deposit from SL. Also, the rising interest rate, the long-term fixed-rate mortgages of SLs lost a substantial amount of value, which lead to wiping out of the SL industry's net worth. This crisis has led to the ~32% failure of the US SL associations out of 3,234 during the period 1986 to 1995.