Savings and loan associations in the United States, commonly called savings organizations, were initially intended to help citizens in local communities purchase their own properties (Laughlin., 1991, p. 301). To achieve this, savers would accept savings from individuals and, therefore, provide affordable, low-rate mortgages. Until the 1980s, mortgage rates received were considered the safest form of liability due to the low credit risk involved. However, the savings and loan (S&L) crisis of the 1980s has been considered one of the worst financial disasters of the 20th century. The Federal Agency (Curry and Shibut, 1986, p. 29) recorded approximately 1,100 insolvent S&L companies between 1980 and 1982, representing an estimated cost to taxpayers close to $200 billion. The goal of this text is to provide context on S&Ls, establishing the causes of the crisis, including the concept of deposit insurance and its role in the disaster. Founded in the mid-19th century, the S&L industry underwent a notable transformation after the Great Depression, which had a particularly negative effect on mortgage institutions, but especially S&Ls. Homeowners defaulted on their mortgage payments (Jarrow, 1995, p. 1107) and, on the liability side, other depositors demanded access to their savings for fear of S&L bankruptcies. The introduction of Regulation Q (“Savings and Loan Crisis,” 2008) in 1933 prompted the Federal Reserve to resort to the concept of price fixing. Banks' interest rates to pay on deposits were set at a certain threshold and this power was extended to S&Ls in 1966. The initial reason for the Great Depression was due to high competition for deposit funds, this which brought the interest rates offered to b. ..... middle of paper ......on the warning signs leading up to the 1980s. Deregulation of the thrift industry did not resolve the situation; in fact, it made the crisis a disaster. Raising the federal deposit insurance threshold from $40,000 to $100,000 meant that savers could take on this additional risk, insinuating the moral hazard problem that causes irrational behavior. New laws implemented by the government have attempted to resolve the crisis, making regulation of the sector stricter and forcing thrifts to return to their original goal of providing affordable property financing. The crisis was resolved in 1989, under the Bush administration, which demanded a huge bailout at taxpayer expense. The S&L crisis has been called one of the worst financial disasters to date, with most still-solvent S&Ls owned by bank holding companies instead of being independent..