Federal Savings and Loan

A federal savings and loan (S&L) company is similar to a bank, providing services like deposits, loans, checks, and debit cards, but focusing more on local residential mortgages. Federal S&L companies are usually owned by their customers.

How did federal savings and loan companies come about? Federal S&L firms became more popular around the time of the Great Depression, as they helped to make mortgages more accessible and affordable to middle class folk. While made mostly with mortgages in mind, S&L companies also provide typical banking services, like checking and savings accounts. Unlike commercial banks, federal savings and loans companies can borrow from the Federal Home Loan Bank System.

After the savings and loan crisis in the 1980s and 1990s, which headlined the usual market speculation, fraud, and regulatory issues, S&L companies’ deposits came under the umbrella of the FDIC, making them federally insured. They’re not as popular as they once were, but federal S&L associations are still around.

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Finance: What is a Savings & Loan v. a B...187 Views

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finance a la shmoop what is a savings and loan versus a bank all right

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savings and loan some savings and loans yeah it's a cleverly named you know like [Case of cash appears]

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home loans car loans stuff like that banks issuer of credit cards and big

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lines of credit for small to large business savings and loans the little

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local retail gal banks the big fat cat corporate dude with big appetites and [Woman sitting behind savings and loans desk]

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small fast red convertible cars with a stick-shift

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savings and loans owned either by the lenders and borrowers of the savings and

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loan itself you know kinda like a co-op or it can be set up like you know normal

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ish corporation banks usually owned just by shareholders some are big like this

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guy and that guy yeah and there's a whole bunch of other small fries too

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savings and loans can loan up to 20% of their assets half of that for big [Savings and loans assets pie chart appears]

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business half of that for small business loans at least these days and why did

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delineation well because small business is default a whole lot more than big

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businesses savings and loans are allowed to tap into the very liquid Federal Home

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Loan Bank system Fannie Mae in the gang those guys and in order to do that ie [Man with savings and loans briefcase for head appears]

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get cheaper money in return SNL's have to have at least 65% of their assets

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invested in residential mortgages meaning most of their loans are you know

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small home mortgages a lot of first-time buyers there all right well why is this

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a thing well because the American Dream from a political perspective revolves in [A couple moving into house]

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large part around owning your own home right not a bad idea the government has [Uncle Sam appears and boy walks away with pile of cash]

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gone to a whole lot of effort to make it easy for the little guy to borrow money

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and have his or her own little castle a little to start anyway banks those cold [Boy dancing outside castle]

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cruel concrete walled things don't live under this same structure they don't get

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to tap into the same cash fool reserves that SNL's do is not all the time but

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they get to loan money a more or less wherever they want to loan money there's

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way fewer strictures on banks than SNL's banks exist to make money for the

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shareholders of the bank duh and they're financially Darwinian beasts [Charles Darwin beast appears in misty forest]

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good at lending money that costs them low rates to rent and then they rent it

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out at much higher rates to customers right and they live on that spread so

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banks also get hot and heavy with other kinds of borrowings things like credit [Man and woman sitting in car looking at sunset]

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card issuance like I think about how much money your credit cards charges and

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so on they get a big piece of that and servicing a debt you know and wealth

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and/or financial management services like they take a percent of year or so

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for managing all your dough and to some extent merchants and investment banking

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services as well you know for the big guys who are global so banks think big

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loans big money big spreads wholesale savings and loans think small loans

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small money small spreads retail banks mr. Potter savings and loans [Mr Potter appears]

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George Bailey and the rest of the Bedford Falls gang did you hear that a

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video editor just got his wings [Man grows wings]

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