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Well according to the article it destroyed a lot of banks when asset prices stopped rising. > “You could see that no one anticipated that adjustment, even afte
by hodgesrm 5y ago
Well according to the article it destroyed a lot of banks when asset prices stopped rising.
> “You could see that no one anticipated that adjustment, even after Volcker began to address inflation. They didn’t think it would happen to them,” Hoenig recalled. Overall, more than 1,600 banks failed between 1980 and 1994, the worst failure rate since Depression.
I had not personally made that connection to S&L failures but getting out of a bubble has to impose costs to somebody.
- dvogel 5y agoThis glosses over the outright fraud within the banking industry that was at the heart of the S&L crisis. Without the fraud there would have been enough assets and financial incentive to consolidate instead of liquidations. The Fed policies only had the effect of forcing the industry to account for the rot within.