Investing In A Savings And Loans Bank

Savings and loans banks have an unfortunate stigma that goes back to the 1980’s when there was a major savings and loan crisis in the financial industry. The crisis reduced Americans’ capacity for using a savings and loan association and a total of 745 savings and loan associations failed here in the U.S. between 1985 and 1994. The financial crisis ended up costing taxpayers almost $124 billion as the government had to foot the bill on many payments. This lead to a major budget deficit in the early 1990’s, one which the federal government is still recovering from and will be for some time due to recent bailouts.

Thrift Savings

A thrift savings loan basically accepts savings on deposit and turns the money around to distribute loans. If you have money on deposit with the institution there is a unique distinction between a savings and loan association and a regular bank. Those with money on deposit have full voting rights as members of the institution. Those that borrow money from a savings and loan association also have full voting rights just as those that have money on deposit.

Consumer Credit

Federal law dictates that at least 65% of the money lent by a savings and loan association must be given as either mortgages or consumer loans. When spending is high, it helps stimulate movement in the economy. Unfortunately, when there is a sharp downturn in the housing marker, savings and loan institutions can be highly vulnerable. Defaulted loans can negatively impact these institutions because they provide more than half of their money to consumers.

Community Presence

Many people prefer working with a savings and loan institution because most of them are locally owned in their own communities. Instead of sending their money off to a large, faceless corporation far from small town America, the money stays local the dollars are recycled within the community. Savings and Loan companies offer competitive rates and fees for home purchases.  Additionally, they offer special offers for car buyers in their community.

FDIC Insurance

When saving money on deposit with a savings and loan institution most investors are able to rest in two major factors. First, their money is going to work within their community. That gives them a sense of pride because they are helping their neighbors on a personal level. Second, most savings and loan associations are backed at either the state or local level. This gives investors peace of mind because their deposits are then backed by the FDIC in case there is trouble in the financial market. That safety and security is important even when the market it turbulent like it is today.

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