In addition to examining whether financially distressed
thrifts made greater use of FHLBank advances than financially sound
thrifts, we consider whether the pattern of borrowings differed by FHLBank district.
As Berger and Humphrey (1991) argued with respect to commercial banks, there are substantial cost differences among institutions of similar size and product mix and the same is true for
thrifts. Figure 1 illustrates these cost differences among nonacquiring
thrifts for any given asset size.
This deregulated the nation's
thrift industry and threw wide the doors of the S&Ls to anyone with a plausible story, a fistful of cash, and a visible desire to start doing all sorts of wonderful and imaginative things with the taxpayer-insured deposits.
Assuming Benefit is granted a state bank charter and considering IberiaBank FSB of Little Rock's announced plan to merge into its Louisiana-chartered sister IberiaBank, the number of
thrifts chartered in Arkansas is about to dwindle to four: First Federal Bank of Harrison, United Bank of Springdale, Priority Bank of Ozark and Corning Savings & Loan Association.
Another reason why
thrifts appealed to African Americans as a source of home finance was their ease of formation.
* At the end of the third quarter of 2008, the OTS supervised 818
thrifts with assets of $1.18 trillion, as well as 469 holding company enterprises with approximately $8.1 trillion in U.S.-domiciled consolidated assets.
Collectively, the developments had negative impact on the
thrift industry: by 1986, 441
thrifts with $113 billion in assets were found to be insolvent.
In contrast, the post-1994 era was characterized by economic expansion, regulatory normalcy, significant deregulation under the Riegle Neal Act of 1994, and the removal of impediments to acquisitions of
thrifts by banks (including greater freedom to convert acquired
thrifts into branching networks).
Under the auspices of the Federal Financial Institutions Examination Council, the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of
Thrift Supervision issued on January 8, 2003, guidance governing account-management and loss allowance practices for credit card lending.
Merger mania within the publicly traded
thrifts occurred in the late 1990s.
Adding Fay's units to
Thrifts store base and subsequently to the Eckerd empire was a good fit, according to executives at the time of the deal.
Rubin, secretary of the Treasury and chairman of the
Thrift Depositor Protection Oversight Board, told the Senate Committee on Banking, Housing and Urban Affairs that the Resolution Trust Corporation (RTC), created by Congress to sell the assets and pay off depositors of failed
thrifts, could close entirely in December 1995, one year earlier than initially anticipated.
The funds would come from a special, one-time assessment on
thrifts, as well as from asking banks to assume responsibility to share the cost of paying the interest on the bonds issued to borrow money to finance the S&L bailout.
