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Economic Review

Mar/Apr, 1990

Reforming Deposit Insurance: Lessons from the Savings and Loan Crisis

Michael Dotsey and Anatoli Kuprianov

A history of the collapse of the savings and loan industry. The authors contend that FSLICā€™s institutional structures, established decades ago, made a thrift crisis inevitable. Poorly designed incentive structures strongly encouraged regulators and thrift managers to delay proper action when thrifts became insolvent. The authors present recommendations to prevent a recurrence of the crisis.

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