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PAST DECISIONS
CREATE
PRESENT
OPPORTUNITIES
THE 1980s CREDIT CRUNCH
Bartlells attributes to France s Alex De Tocqueville the following:
\"America is a land of wonders， in which everything is in constant
motion and every change seems an improvenlent. The idea of novelty is
there indissolubly connected with the idea of amelioration. No natural
boundary seems to bc set to the efforts of man; and in his eyes what is not
yet done is only what has not been attempted to do.\"
The thrift induslry of our country look De Tocqucville s words to
heart. They felt lhcir quest fl， r increased profits was connected to being
able m their abilily to directly compete with their banking cotmterparts.
When things gol a little tight for them， their powerful lobbying ann was
putting the pressure on Congrcss to do just that.
Whal Ihe entire financial community failed Io realize was the fact that，
if they kept their investment and lending houses in order， financial
instilutiCms had a legislatively guaranteed profit under the former Federal
Reserve Regulation Q， which set a ceiling on interest rates that financial
inslitutions could pay depositors. For years， characteristically， thrifts
would set an approximate 2% margin between the cosl of money and
mortgage rates as their profit margin with consumer type financing for
home improvements and construction financing being the frosting on their
return on equity cake.
During the 1970s， however， a new word creeped into the vocabulary of
financial institutions -- \"disintcrmediation.\" The unpardonable had
happened Depositors were no hmgcr satisfied with the regulated interest
rate ceilings in their savings accounts. They were no longer satisfied with
no relurn on sizeable checking account balances. As a result， depositors
started withdrawing in droves to seek higher yielding instruments such as
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