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From Buildings and Loans to Bail-Outs

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From Buildings and Loans to Bail-Outs

A History of the American Savings and Loan Industry, 1831-1995

Cambridge UP,

15 min read
10 take-aways
Audio & text

What's inside?

Everything you ever wanted to know about the American building and loan industry, from boom to gloom.

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Editorial Rating

7

Qualities

  • Innovative

Recommendation

With thrifts like Washington Mutual now among the nation’s biggest financial institutions, and the excesses of the 1980s still fresh, it’s hard to believe that savings and loans once were nonprofit cooperatives. Yet, so-called buildings and loans were, in fact, altruistic associations that sought to give working-class people access to credit. Business historian David L. Mason lays out the little-known roots of the S&L industry in this intriguing study. He outlines the cultural, political and economic forces that shaped thrifts. While Mason doesn’t shy away from the S&L debacle of the 1980s, he makes it clear that he sides with the institutions. Readers looking for dirt on the crisis should look elsewhere. Still, getAbstract recommends this thorough report to anyone who’s curious about the history of the thrift industry.

Summary

Altruistic Roots

Thrifts or savings and loan (S&L) associations, originally known as buildings and loan (B&L) associations or societies, started as nonprofit cooperatives that pursued the altruistic goal of giving working-class people access to cash and home ownership. Frank Capra’s classic 1946 movie, It’s a Wonderful Life, shows just how deeply this friend-of-the-little-man image had become ingrained in American culture. George Bailey, the unassuming B&L manager, contemplates suicide after a Christmas Eve audit shows that $5,000 is missing. George’s guardian angel describes what the town would be like without him. In his absence, solid homeowners revert to being dysfunctional renters, the profiteering banker runs the town, and hedonism and partying replace the bucolic ambience. The film reflects the deep-seated American belief that home ownership is the key to prosperity and democracy. It illustrates another bias of the time: that B&Ls were bedrocks of American society.

Four decades later, such a rosy portrayal would have been impossible. A costly thrift crisis seized the nation. Journalistic accounts of avarice in thrifts' boardrooms bombarded Americans...

About the Author

David L. Mason, a banker for nearly 10 years, is an assistant professor of history at Young Harris College. He has a doctorate degree in business history from Ohio State University.

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