7 Shocking Ways The S&L Crisis Irrevocably Reshaped American Banking

2. The Real Estate Bubble

The second chapter centers around the real estate bubble of the 1980s. Deregulation and loose lending practices fueled a dramatic rise in property values. As S&Ls heavily invested in real estate, the bubble grew. But when it burst, many institutions found themselves saddled with devalued, non-performing assets. The collapse of the real estate market deepened the insolvency of S&Ls, worsening the financial fallout.