-
Tax reform
Tax reform act of 1981: Helped encourage real estate investment. -
Recession
Recession of 1982: jobs were lost and the economy went bad. -
International Lending Supervision Act
International Lending Supervision Act of 1983: This act regulates the banks to make sure they have adequate capital levels. -
GDP, unemployment rate, and inflation rate
The GDP was 7.2% in 1984, unemployment was 7.3%, and inflation was 3.9%. -
Federal fund rates
10.5%
Raised rates again -
Federal fund rates
11.75%
Raised from March to August -
Federal fund rates
10%
Began lowering again -
Federal fund rates
8.25%
Lowered from September to December -
Banks failed
100 banks failed in 1985 -
Congress rejects recapitalization
- Congress rejects a $15 billion recapitalization plan for the Federal Savings and Loan Insurance Corporation. Congress approves $10.75 billion the next year.
-
Tax Reform Act of 1986
- Many of the 1981 tax benefits intended to promote real estate investment are repealed by the Tax Reform Act of 1986. However, overbuilding and the 1986 Tax Reform Act made real estate investments less appealing.
-
Banks failure
- 138 FDIC-insured banks failed, totaling $7 billion in assets.
-
GDP, unemployment rate, and inflation rate
The GDP was 3.5% in 1986, unemployment was 6.6%, and inflation was 1.1%. -
GDP, unemployment rate, and inflation rate
In 1987, the gross domestic product (GDP) was 3.5 percent, unemployment was 5.7 percent, and inflation was 4.4 percent. -
Banks failure
- 184 FDIC-insured banks failed, totaling $7 billion in asset.
- The Federal Deposit Insurance Corporation (FDIC) oversees 1,575 problem banks with $385.5 billion in reserves. The FDIC has a problem list of more than 10% of banks.
-
FSLIC & Federal Reserve Board
- The Federal Savings and Loan Insurance Corporation (FSLIC) is $6 billion in debt.
- With $1.2 billion in assets, Vernon Savings in Texas, an FSLIC-insured institution, fails. (98% of the time, the loans are in default.
- The Federal Deposit Insurance Corporation (FDIC) has $18.3 billion in its insurance fund, which is the highest amount ever.
- Federal Reserve Board has come to the decision on flooding the economy with money.
-
Dow Jones Industrial Average and S&L
- The Dow Jones Industrial Average drops 23% in one day (recovering 18 months later).
- S&Ls lose $30 million each individual business day.
-
Black Monday crash
In 1987 alone, the stock market increased by 43 percent, hitting a high of 2,746.65 on August 25, 1987. Until Oct. 2, it remained in a slightly lower trading range. Then it started to plummet precipitously. In the two weeks leading up to Black Monday, it fell 15%. -
FSLIC
- 223 FSLIC-insured S&Ls failure
- 200 FDIC-insured banks failed, totaling $35.7 billion in assets.
- With $31.2 billion in cash, Dallas and the Houston-based First Republic fails. At $3.7 billion, it is the most expensive FDIC resolution to date.
- With $12.3 billion in deposits, Houston's First City Bank fails. The FDIC provides the bank with a $900 million loan. (It eventually shuts down in 1992.)
-
GDP, unemployment rate, and inflation rate
In 1988, the gross domestic product (GDP) was 4.2 percent, unemployment was 5.3 percent, and inflation was 4.4 percent -
Banking industry & Basel Capital Accord
- Despite rising challenges, the banking industry makes a record $24.8 billion profit.
- The Basel Capital Accord, also known as the Basel I Accord, is adopted by the central bank governors of the Group of Ten (G-10) countries. It establishes procedures for factoring on- and off-balance-sheet risks into supervisory capital adequacy assessments.
-
Federal fund rates
On February 10, the federal fund rates were continuing to decrease. -
Federal fund rates increases
On March 29, the federal funds began to raise in the hope to fight inflation. -
GDP, unemployment rate, and inflation rate
In 1989, the gross domestic product (GDP) was 3.7 percent, unemployment was 5.4 percent, and inflation was 4.6 percent. -
After effect of Cold war
The end of the Cold War brings the US economy a so-called peace dividend.
The Berlin Wall “comes down." -
Texas
- The failure of 206 FDIC-insured banks with a total value of $29.2 billion is the highest in FDIC history. Texas is home to two-thirds of the banks.
- With $15 billion in assets, Texas' second-largest bank, MCorp fails.
-
S&L
More than 1,000 of the country's savings and loans had collapsed by 1989. A total of $160 billion was spent on the crisis. Taxpayers paid $132 billion, with the remainder going to the S&L industry. Before going bankrupt, the Federal Savings and Loan Insurance Corporation charged $20 billion to depositors of failed S&Ls. S&Ls is covered by state-run funds in excess of 500. Before collapsing, their failures cost $185 million. -
Lincoln Savings and Loan
With $5.5 billion in cash, Lincoln Savings and Loan in California, fails. -
Charles Keating
The director, Charles Keating, is being investigated for investing rules violations. Political sway has been suggested. -
The nine-month contraction
From July 1990 to March 1991, there was a nine-month contraction. The savings and loan crisis of 1989, higher interest rates, and Iraq's invasion of Kuwait all contributed to it. In Q4 1990, GDP was -3.6 percent, and in Q1 1991, it was -1.9 percent. -
FDIC
- 168 FDIC-insured banks have failed.
- The Federal Deposit Insurance Corporation's (FDIC) insurance rates would rise from 8.3 cents to 12 cents per $100 of deposits. After the FDIC's inception in 1934, this is the first-rate rise.
-
GDP, unemployment rate, and inflation rate
In 1990, the gross domestic product (GDP) was 1.9 percent, unemployment was 6.3 percent, and inflation was 6.1 percent. -
Federal fund rates & mutual funds
- Despite inflation, the federal funds rate has been kept low to support the economy.
- Because of the exodus of deposits from banks and savings and loans, mutual funds have grown to $1.5 trillion from $250 billion in 1983.
-
S&L
315 failed S&Ls are resolved by the RTC. -
Iraq's aftermath on the U.S.
Iraq invades Kuwait, and the United States and Iraq go to war, resulting in higher oil prices, lower consumption, and lower demand. -
End of the recession
March 1990 -
The Gulf War
(Jan 17, 1991 – Feb 28, 1991) Cause: response to Iraq's invasion and annexation of Kuwait arising from oil pricing and production disputes -
Unemployment rises
(June) Job losses and unemployment rise and peaked 7.8% -
bank failure
41 FDIC-insured banks fail, the lowest number of failures in 12 years. -
New earning record
In 1994, banks set a new earnings record, with reported net income of $44.7 billion. The North American Free Trade Agreement links the U.S., Canada, and Mexico into free trade, eliminating some tariffs and phasing out others. Banks invest $19 billion in technology while mergers and consolidations in the banking industry continue to increase. -
FDIC lowers prices and lunches public website
In 1995, The RTC sunsets. Over its 6 1/2 years of existence, the RTC resolves 747 S&Ls with $403 billion in assets at a cost of $160 billion to the taxpayer. The FDIC lowers insurance premiums on July 1. The FDIC launches its first public website in March.