Savings and loan association

Savings and loan association (S&L), or thrift institution (formerly, building and loan association), U.S. financial institution that accepts private savings of depositors, investing them primarily in home mortgages. Such institutions, the first of which was founded in Pennsylvania in 1831, originally were mutual, that is, owned and operated by the depositors. They are now predominantly capital-stock institutions, owned and operated by stockholders. They operate under federal and state charters, with deposits insured by the Savings Association Insurance Fund (SAIF). Many S&L's failed during the Great Depression of the 1930s. In the 1980s a combination of deregulation, mismanagement, criminal conduct, competition for depositors' funds from commercial banks and other financial institutions, and loan defaults due to recession resulted in a major crisis in the industry. It is estimated that the costs to taxpayers to “bail out” the S&L's will total $500 billion.

See also: Federal Home Loan Bank Board.