Scotsman Guide, October 2012
There are many similarities between the 2008 financial crash and the crisis of the savings and loan associations (S&Ls) in the 1980s. In both situations, the markets were thrown into turmoil, troubled financial institutions loomed on every corner, bad debts stacked up and taxpayers looked to the government for answers.
In the 1980s, however, the solution came when Congress passed the Financial Institutes Reform, Recovery, and Enforcement Act that established the Resolution Trust Corporation (RTC) in 1989. RTC was charged with seizing and selling off what would end up being more than $400 billion in assets amassed by more than 700 failed S&Ls. Bargain-seeking investors benefited, and the crisis eventually abated. Needless to say, there has been no RTC-like institution to provide a similar rescue in today’s market…