FROM BUILDINGS AND LOANS TO BAIL-OUTS
For most Americans, the savings and loan industry is defined by the fraud, ineptitude, and failures of the 1980s. These events, however, overshadow a long history in which thrifts played a key role in helping thousands of households buy homes. First appearing in the 1830s, savings and loans, then known as building and loans, encouraged their working-class members to adhere to the principles of thrift and mutual cooperation as a way to achieve the “American Dream” of home ownership. This book traces the development of this industry, from its origins as a “movement” of a loosely affiliated collection of institutions into a major element of America’s financial markets. It also analyzes how diverse groups of Americans, including women, ethnic Americans, and African Americans, used thrifts to improve their lives and elevate their positions in society. Finally, the overall historical perspective sheds new light on the events of the 1980s and analyzes the efforts to rehabilitate the industry in the 1990s.
David L. Mason is Assistant Professor of History at Young Harris College. Prior to earning his Ph.D. in Business History from The Ohio State University, he served as a corporate banker for nearly a decade, holding positions at the Bank of America and the Resolution Trust Corporation. He is also the author of articles for Essays in Economic and Business History and Proceedings of the Ohio Academy of History.
FROM BUILDINGS AND LOANS TO BAIL-OUTS
A History of the American Savings and Loan Industry, 1831–1995
DAVID L. MASON
Young Harris College
PUBLISHED BY THE PRESS SYNDICATE OF THE UNIVERSITY OF CAMBRIDGE
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CAMBRIDGE UNIVERSITY PRESS
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© David L. Mason 2004
This book is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without
the written permission of Cambridge University Press.
First published 2004
Printed in the United States of America
Typeface Sabon 10/12 pt. System LATEX 2e [TB]
A catalog record for this book is available from the British Library.
Library of Congress Cataloging in Publication data
Mason David Lawrence.
From buildings and loans to bail-outs : a history of the American savings and loan industry, 1831–1995 / David L. Mason.
ISBN 0-521-82754-X (hbk)
1. Savings and loan associations – United States – History. 2. Savings and loan association failures – United States – History. I. Title.
332.3ʹ2ʹ0973 – dc22 2003069691
ISBN 0 521 82754 X hardback
|List of Tables||page ix|
|1||A Movement Takes Shape, 1831–1899||12|
|2||The Rise of the League, 1900–1929||40|
|3||From State to Federal Oversight||69|
|4||The Movement Becomes an Industry, 1930–1945||100|
|5||The Glory Years, 1946–1955||128|
|6||External Challenges and Internal Divisions, 1956–1966||159|
|7||Lost Opportunities, 1967–1979||187|
|8||Deregulation and Disaster, 1979–1988||213|
|9||Resolving the Crisis, Restoring the Confidence, 1989–1995||241|
|10||The American Savings and Loan Industry in Perspective||266|
|Fraud, Forbearance, and Failure: The Case of Empire Savings and Loan Association||275|
|Success the Old Fashioned Way: The Case of Medford Cooperative Bank||297|
LIST OF TABLES
|1.1||Number of Thrifts and Assets – 1888–1900||page 28|
|2.1||Number of Thrifts and Assets – 1900–1920||53|
|2.2||Number of Thrifts and Assets – 1920–1930||60|
|4.1||Number of Thrifts and Assets – 1930–1945||121|
|5.1||Number of Thrifts and Assets – 1945–1955||139|
|6.1||Number of Thrifts and Assets – 1955–1965||173|
|7.1||Number of Thrifts and Assets – 1967–1979||202|
|8.1||Number of Thrifts and Assets – 1980–1988||240|
|9.1||Number of Thrifts and Assets – 1989–1995||261|
|A1.1||Financial Statistics for Empire Savings and Loan Association – 1981–1983||279|
|A1.2||Peer Group Analysis for Empire Savings and Loan Association – 1981–1983||291|
|A2.1||Medford Cooperative Bank, Members and Assets – 1888–1910||299|
|A2.2||Medford Cooperative Bank, Members and Assets – 1915–1930||302|
|A2.3||Medford Cooperative Bank, Members and Assets – 1935–1955||306|
|A2.4||Medford Cooperative Bank, Members and Assets – 1960–1979||309|
|A2.5||Medford Cooperative Bank, Assets and Reserves – 1980–1990||311|
|A2.6||Medford Cooperative Bank, Assets and Reserves – 1990–1999||315|
Completing this project would not have been possible without the aid and support of many individuals. While I was fortunate to have access to nearly one hundred years of trade journals and conference proceedings with regard to thrifts from dozens of libraries across the country, making sense of this material was a daunting task. It was made immeasurably easier by my advisor Mansel G. Blackford, who kept my work focused and helped me develop my ideas on the effects S&Ls had on American society. William R. Childs provided me with valuable insights into the history of government/business relations, and led me to think seriously about just when S&Ls became a true financial industry. Likewise, the seminars I took under the guidance of K. Austin Kerr helped me formulate my basic approach to writing this history.
My research could not have been completed without the assistance of several talented and friendly archivists. Allen Fisher at the Lyndon B. Johnson Presidential Library provided invaluable assistance researching the collections of that impressive repository. Pat Wildenberg and Dale Mayer at the Herbert Hoover Presidential Library helped me to better understand Herbert Hoover’s devotion to the needs of families and better housing. Don Shewe at the Jimmy Carter Presidential Library provided both invaluable assistance and stories about the OSU History Department faculty while he was a graduate student in the 1960s. I also deeply appreciate the financial assistance used to complete my work from the Herbert Hoover Presidential Library and the Franklin and Eleanor Roosevelt Research Institute. Special thanks go to Robert Surabian, who provided me with unrestricted access to the records of Medford Cooperative Bank, and Lorraine Silva, who regaled me with stories of her life as a community banker.
Preparing any manuscript for publication is a daunting task, but for me the process was made infinitely less stressful by the fact that I worked with some very patient people. Frank Smith at Cambridge University Press was very understanding when the inevitable delays occurred, and his enthusiasm for the project was always appreciated. I especially want to thank my readers Paul Miranti and Ed Perkins for their insightful and constructive comments and suggestions; every author should be fortunate enough to have such supportive peers. Eric Crahan and Catherine Felgar at Cambridge University Press and Shubhendu Bhattacharya at TechBooks also provided invaluable assistance in the editing process. Mistakes, however, are inevitable, and I take full responsibility for them. Finally, I would like to thank my mother for always asking me how the book was coming, and thanks to Jeff and Sandy for never bringing up the subject.