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The crisis of American Savings & Loan Associations

A comprehensive analysis


Karsten Turck

The aim of this thesis is to show the reasons and causes of the S&Ls crisis during the decade of the 80's. It had been various individual facts, factors and also their interaction and mutual influence, that played a role in making the crisis. A comparison between S&Ls and German Mortgage Banks in the aspects mortgage types, project financing and capital requirements shows that it had been the prevailing circumstances of the S&Ls branch, which favoured the emergence and course of the S&Ls crisis. With the Principal-Agent Theory cooperative designs can be used for the mutual cooperation of S&Ls and their supervisory agencies and risk reduction within the sector.
Contents: Environment of American Savings & Loan Associations - Crisis of Savings & Loan Associations and its reasons and causes - Comparison between Savings & Loan Associations and German Mortgage Banks - Principal-Agent Theory for solving conflict of interest problems between S&Ls and their supervisory authorities / deposit insurance agencies.