Savings and loans went bankrupt in the 1970s and 80s because they took on excessive interest-rate risk by funding 30-year fixed-rate mortgages with short-term deposits—a fundamental duration mismatch where rising rates make the institution lose money on both sides.

causalpending

Speaker

Arnold Kling

Evidence Quote

you can't do that for very long without going bankrupt so it's there that's the fragility of that setup

Source

Arnold Kling on the Unseen World of Banking, Mortgages, and Government 07/5/2010EconTalk
Created: 6/13/2026, 7:04:06 PM

My Notes

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