On The Savings And Loan Association Crisis Of The 1980s In The U.S.A.

As a kind of financial institutions which first appeared in the early 1830 s in the United States,Savings and Loan Association(S&Ls)serve has always been playing an important role in American people's dream of "home ownership" since its birth.Especially after the crisis of 1930 s,the federal government set up Federal Home Loan Bank Board which is responsible for the supervision of S&Ls which the Federal Saving and Loan Insurance Corporation provides insurance for it at the same time,after that S&Ls entered a long period of rapid development.S&Ls maintained a healthy state of operation in 40 years and once occupied half of the U.S.housing market due to the financial reform in the “New Deal” period.However,the financial reform in 1930 s also sown the seeds of crisis in the 1980s' S&Ls crisis.Because the financial reform in 1930 s,the federal government pay more attention to the function of providing Housing Loan of S&Ls.After that federal government implemented a series of policies which had lasting impact on S&Ls structure of assets and liabilities of “borrow short and lend long”.In this structure,S &Ls can get a stable income as long as the interest rates remains stable for a long period of time.However,the interest rate environment in the United States has not existed and the financial innovation continued to develop since the end of 1960 s.But for S&Ls,as the main supply of housing financing for a long time,on the one hand,were protected by the federal government,on the other hand,it were strictly limited in the business scope.So,S&Ls could not get rid of the shackles of “borrow short and lend long”structure of assets and liabilities.This result was that the operation of S&Ls faced the increasing difficulty under the “financial disintermediation” shock.The domestic interest rate volatility is more intense since 1980 s,then,federal government started a financial reform of deregulation.However,S&Ls industry had suffered a large number of institutions bankruptcy after deregulation.According to statistics,there have been 1295 S& Ls closed or received federal assistance from 1980 to 1994,and the U.S.suffered from $500 billion economic losses.Under the circumstances of a large number of S&Ls bankruptcy,in order to avoid FSLIC bankruptcy and response to the Reagan government's economic policy of cut budget and reduction tax rate at the same time,FHLBB adopted a "forbearance" policy to dealwith the crisis.However,deregulation was only a measure of delay in dealing with the crisis at this time.This approach not only could not ease the crisis,but made the crisis more serious.Federal government began to deal with the bankrupt S&Ls because the S&Ls crisis can't be covered by the end of 1980 s.Bush President immediately signed the?Financial Institutions Reform,Recovery and Enforcement Act of 1989?after he took office.According to this act,federal government established Resolution Trust Corporation which is responsible for the disposal of bankrupt S&Ls.A total of 794 bankrupt S&Ls were solved by RTC from 1989 to 1995,then S&Ls was gradually coming out of the crisis.Although the S&Ls crisis was eventually solved,the Crisis had a profound impact on S&Ls and American housing finance market.After the crisis,the overall strength of S&Ls is not as good as before,the function of providing housing loans weakened,the boundaries between S&Ls and commercial banks became increasingly fuzzy.At the same time the market structure of American housing finance has changed significantly in the process of the outbreak and settlement of the crisis.In the end,the S&Ls crisis caused huge economic losses to U.S.,meanwhile exposed the shortcomings of federal government on financial supervision.First,the federal government poorly understand financial regulation and deregulation that makes it could not to find a balance between regulation and deregulation;Second,the federal government's financial regulatory policy is lack of foresight,and exists lag and passive weakness in the process of making polices.In summary,the S&Ls crisis and federal government's solved crisis had provided valuable experience and beneficial lessons for Chinese financial supervision.The financial regulatory authorities of our country should view strict regulation and deregulation correctly,and strive to maintain the balance of both freely and flexiblely,and keep the forward-looking and predictability in the formulation of regulatory policies in the future.