What was the name of the 1980s U.S. savings-and-loan collapse that contributed to financial-market stress?

The 1980s U.S. savings-and-loan collapse was called the savings and loan crisis. Savings and loan associations, or thrifts, had traditionally taken deposits and made long-term home loans. Rising interest rates created a severe mismatch because many thrifts earned low fixed returns while paying more to attract deposits.

Congress and regulators loosened rules governing thrift activities, allowing institutions to pursue riskier investments and lending. Some thrifts expanded aggressively into commercial real estate and other assets. Losses accumulated as property markets weakened and institutions proved unable to cover their obligations.

The crisis produced hundreds of thrift failures and required a large federal cleanup. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 abolished the Federal Savings and Loan Insurance Corporation and created the Resolution Trust Corporation to dispose of failed-thrift assets. The episode is a banking and financial crisis, not the same event as the 1987 stock-market crash, although both occurred during the same broad decade.