The Rise & Fall of Savings and Loans

Early in the Great Depression (before Roosevelt?), a new federal banking charter was created for savings and loans. Savings in federally chartered S&Ls were insured so people felt safer leaving money in S&Ls and S&Ls in turn would then have money they could lend to people to buy homes.

It worked. From the 1950s until the 1980s, savings and loans were by far the primary source of U.S. home mortgages. Savings and loans did everything themselves, they would make, hold and service mortgages, and when necessary, foreclose on them too.

The incredibly high interest rates in the 1970s and early 1980s, however, pretty much wiped out the savings and loan industry. Their market share of home mortgages fell from roughly 40% (1980) to 10% (2000). (I’m not sure if those numbers are total outstanding mortgages or originations in those years. Probably total outstanding.)