Everything about The Lincoln Savings And Loan Association totally explained
The
Lincoln Savings and Loan Association of
Irvine, California was the financial institution at the heart of the
Keating Five scandal during the 1980s
Savings and Loan crisis.
Up through the early 1980s, Lincoln was a conservatively-run enterprise, with almost half its assets in
home loans and only a quarter of its assets considered at risk. It had slow growth at best, and had shown a loss for several years until it made a profit of a few million dollars in 1983. Keating fired the existing management.
When American Continental Corporation, the parent of Lincoln Savings, went bankrupt in 1989, more than 21,000 mostly elderly investors lost their life savings. This total came to about $285 million, largely because such investors held securities backed by the parent company rather than deposits in the federally insured institution, a distinction apparently lost on many if not most of them until it was too late. The federal government covered almost $3 billion of Lincoln's losses when it seized the institution. Many creditors were made whole, and the government then attempted to liquidate the seized assets through its
Resolution Trust Corporation, often at pennies on the dollar compared to what the property had allegedly been worth and the valuation at which loans against it had been made. Charles Keating would be sent to prison for fraud.
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