Question
Asked Nov 19, 2019
39 views

8b. Explain how the deregulation of the savings & loan industry in the 1980s affected the viability of S&Ls.

 

check_circle

Expert Answer

Step 1

The 1960s witnessed the rising inflation and the higher interest rates in the economy. As a result of these factors, the returns from the existing portfolios which were focused on the fixed rate mortgages faced the funding problem as the interest payments due to the depositors creped above the returns from the existing portfolios. The thrift industry profitability eroded as a result of this issue and the regulations in the economy prevented the industry from diversifying the portfolio of the federally insured savings and loans. As the interest rates went above the statutory interest rate ceilings, the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) came into existence in the 1980.

Step 2

The DIDMCA is the deregulation that the savings and loan industry faced in the 1980 which phased out the regulations that the savings and loans industry had previously. Thrifts were permitted to diversify the asset portfolios and this lead the way to the inclusion of the consumer loans other than the mortgage loans for which they were permitted. But the deregulation was a late comer as the interest rates in the economy already sta...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Economics

Other

Related Economics Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: (dollas мс . F 40 E ATC 30 AVC 22 в 20 ED0 350 Output (unit) 425 450 0 rri

A: The firm maximizes his profits at the intersection of marginal revenue and marginal cost curve. Sinc...

question_answer

Q: b. Explain in some detail the 4 phases of the business cycle, Please don’t include Depression as one...

A: Business Cycle: It refers to the fluctuation (rise or fall) in the economic trade that occurs over t...

question_answer

Q: Question: Looking at the average total cost data, at what level of output does the diminishing retur...

A: The spreading effect is the effect which the increasing output has on the average total cost. As the...

question_answer

Q: The production function in the image uses a variable amount of labor and a fixed a mount of capital ...

A: Production function states the functional relationship among input and output produced. In the short...

question_answer

Q: How do minimum wages affect wages, employment, and unemployment?

A: Click to see the answer

question_answer

Q: Suppose that annual output in year 1 in a 3-good economy is 3 quarts of ice cream, 1 bottle of shamp...

A: Hey, Thank you for the question. According to our policy we can only answer 3 subparts per question....

question_answer

Q: 3. Activists and nonactivists both believe that Group of answer choices -the self-corrective mechan...

A: Activists and nonactivists both believe that: Macro-policy should seek to minimize economic fluctuat...

question_answer

Q: Р МС $4.00 ATC $3.00 D $2.50 $2.00 MR 3,000 3,500 4,000

A: The imperfect competition is a market condition in which there will be many sellers selling differen...

question_answer

Q: 15. During the 1960s, most economists believed that expansionary macro-policy Group of answer choice...

A: The correct statement is “Most economist believed that expansionary macro-policy that caused inflati...