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Economic Perspectives, 11, No. November/December, 1987
The Federal Safety Net: Not for Banks Only
In 1985, the financial insolvencies of some larger thrift institutions in Ohio and Maryland led to widespread runs on these institutions. A consequence was the insolvency and disappearance of the state-sponsored deposit insurance agencies that insured them. In 1987, after many years of increases in the number and size of savings and loan association failures, Congress was forced to recapitalize the Federal Savings and Loan Insurance Corporation (FSLIC) in order to keep it in operation. Although solvent, the Federal Deposit Insurance Corporation (FDIC) has been weakened by the large number of commercial and savings bank failures. In addition, serious attention is being devoted to a possible merger of the FDIC and FSLIC, if the capital infusion to the latter proves insufficient.


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