What Caused the Savings & Loan Crisis — and What It Changed

Causes

Deregulation: Early 1980s legislation let thrifts pursue riskier lending well beyond their traditional home-mortgage focus.
Risky commercial real estate lending: Many thrifts expanded aggressively into speculative commercial property loans.
Fraud and mismanagement: Some institutions, like Lincoln Savings and Loan, were run fraudulently, deepening losses.
Interest rate volatility: Sharp rate swings in the early 1980s squeezed thrifts holding older, low-rate mortgages funded by newly expensive deposits.

Hundreds of thrift failures over the course of the crisis.
FIRREA (1989) overhauled thrift regulation and created the Resolution Trust Corporation to manage the cleanup.
Tens of billions of dollars in taxpayer cost to resolve failed institutions.
The "Keating Five" scandal drew lasting political attention to the relationship between regulators, lawmakers, and the industries they oversee.