Federal Savings and Loan

What is the 'Federal Savings and Loan'

The Federal Savings and Loan is a banking institution that functions in a very similar fashion to retail banks and credit unions, with some slight limitations on the type of services it can offer. Historically, the primary purpose of savings and loan associations was to allow members to deposit savings and borrow money at rates that were slightly more competitive than commercial banks. The competitive difference in interest and loan rates came from the fact that a savings and loan was "mutually owned" by its members, with no need to pass profits on to a third party.

BREAKING DOWN 'Federal Savings and Loan'

Federal savings and loan associations reached their heyday in the mid-1980s after being deregulated just a few years earlier. However, in response to the scandalous failure of a number of prominent S&Ls, including Charles Keating's Lincoln Savings and Loan, participation in savings and loans begain to dwindle by the early 1990s. In reaction to the growing insolvency of the savings and loan industry, the government reestablished stronger oversight and created the Office of Thrift Supervision in 1989. This regulatory body, itself a division of the Treasury Department, helps to ensure the safety and stability of member savings and loans. As part of the act that created this agency, savings and loan deposits came under the protection of the FDIC insurance and remain so today.

RELATED TERMS
  1. Savings Association Insurance Fund ...

    A government insurance fund for savings and loans and thrift ...
  2. Building And Loan Associaiton

    It is a depository financial institution that is federally or ...
  3. Direct Consolidation Loan

    A loan that combines two or more federal education loans into ...
  4. Thrift

    Thrifts are savings and loans associations. Thrifts also refer ...
  5. Loan Officer

    Representatives of banks, credit unions and other financial institutions ...
  6. Call Loan

    A loan provided to a brokerage firm and used to finance margin ...
Related Articles
  1. Investing

    Understanding Term Loans

    A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate.
  2. Retirement

    4 Reasons You Shouldn't Use Your Retirement Savings as a Piggy Bank

    An overview of the effects of borrowing against your retirement savings.
  3. Personal Finance

    College Loans: Private vs. Federal

    Not all student loans are the same. Know what you're getting into before signing on the dotted line.
  4. Managing Wealth

    When Are Personal Loans a Good Idea?

    You never want to borrow money for frivolous reasons, but these five circumstances might warrant it.
  5. Personal Finance

    How To Apply For a Personal Loan

    Learn about different avenues for applying for a personal loan, and learn valuable tips to help you get your personal loan application approved.
  6. Personal Finance

    Personal Loans: To Lend Or Not To Lend?

    Attempting to help a loved one with a cash loan can put a strain on your relationship - and your bank account.
  7. Managing Wealth

    Unsecured Personal Loans: 8 Sneaky Traps

    If you are seeking a personal loan, be aware of these pitfalls before you proceed.
  8. Personal Finance

    Personal Loans vs. Car Loans

    How to tell whether a personal loan or a car loan is better for you.
  9. Investing

    What is a Bank?

    A bank is a financial institution licensed to receive deposits or issue new securities to the public.
  10. Personal Finance

    The 5 Best Alternatives to Bank Saving Accounts

    Find out about some of the most profitable available alternatives to depositing money in a traditional bank passbook savings account.
RELATED FAQS
  1. What is the difference between a savings & loan company and a bank?

    Find out how a savings and loan company, sometimes also known as a thrift or savings institution, focuses on different types ... Read Answer >>
  2. How do commercial banks make money?

    Learn the different ways commercial banks make money, including interest from loan products and banking fees charged to customers. Read Answer >>
  3. What economic factors affect savings account rates?

    Find out how supply, demand and central bank policy all affect savings account rates offered by banks for extra deposits ... Read Answer >>
  4. What is the rate of return I can expect on a savings account?

    Find out what kind of return you can expect from the cash balance in your savings account and why interest rates have been ... Read Answer >>
  5. Are secured personal loans better than unsecured loans?

    Read about the differences between secured loans and unsecured loans and how they are used. Learn about forms of collateral ... Read Answer >>
  6. What are the similarities and differences between the savings and loan (S&L) crisis ...

    Learn about some of the similarities and differences between the savings and loan crisis and the subprime mortgage crisis ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center