The savings and loan (S&L) crisis actually began in the late 1980s and extended into the early 1990s. It began as a result of investors withdrawing money from S&L institutions to put into higher interest money market funds. In an effort to make S&L institutions more competitive, in 1982 President Ronald Reagan signed legislation reducing restrictions on how S&Ls did business. In the years that followed, S&Ls pursued more and more risky investments, and plenty of corruption crept into their system as well.
By 1995, half of S&Ls in the country had failed. Overall, the collapse cost $160 billion, of which taxpayers footed the bill for $132 billion. The remaining portion was paid for by the S&L industry.
The Federal Savings and Loan Insurance Corporation (FSLIC) had paid $20 billion to persons who had deposits in failed S&Ls, before the FSLIC went bankrupt in 1989.
