Centennial Savings and Loan

THE SAVINGS AND LOAN scandal of the 1980s is the greatest white collar-crime in terms of monetary loss to date (2004). Hundreds of institutions collapsed due to illegal and fraudulent transactions.

[Page 149]Savings and loans were created in the 1930s as an alternative to banks that were limited to real estate loans within 50 miles of the institution. Their executives had to be familiar with local property values. Such conservative practices meant depositors were at virtually no risk of losing their money. To insure safety the Savings and Loan Federal Deposit Insurance Corporation was created in 1934 to shield depositors against even a remote chance of loss.

During the late 1970s, deposits were withdrawn from low-interest paying saving accounts when interest rates climbed. Savings and loans were, ...