Turmoil among depository institutions: Implications for the U.S. real estate market

Abstract

Since the early 1980s, turmoil unlike any since the Great Depression has caused such unprecedented failures among federally insured banks and savings and loans (S & Ls) that the insurance funds for these institutions were driven into insolvency. The traditional commitment of S & Ls and the expanding commitment of banks to housing finance make it important to examine the implications of these record failures for the availability of owner‐occupied housing loans. The substantial commitment of banks and the more recent commitment of S & Ls to commercial real estate also necessitate an examination of the implications of depository failures on the commercial real estate market. This paper therefore will examine selected data from the past decade and assess the implications of the recent turmoil within the federally insured depository industry for the financing of U.S. real estate.