Definition
Federal Savings and Loan Associations (FS&LAs) are government-regulated financial institutions initially established to facilitate home ownership by providing a reliable source of mortgage loans. These institutions primarily collect savings deposits from the public and use these funds to issue long-term mortgage loans. The Depository Institutions Deregulation and Monetary Control Act of 1980 broadened their operations by allowing these associations greater flexibility in the types of loans and financial products they could offer.
Examples
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Example 1: Atlantic Federal Savings and Loan Association
- A typical FS&LA located in a suburban area that accepts savings deposits and provides mortgage loans for local residents.
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Example 2: Pacific Federal Savings and Loan Association
- An institution that also engages in community investments and development projects in addition to offering residential mortgage loans.
Frequently Asked Questions (FAQs)
What is the main function of Federal Savings and Loan Associations?
FS&LAs primarily accept savings deposits and provide mortgage loans for residential housing, making home ownership accessible to the general public.
How did the Depository Institutions Deregulation and Monetary Control Act of 1980 affect FS&LAs?
The Act broadened the role and scope of FS&LAs, allowing them more flexibility in the types of financial services they could offer.
Are deposits in FS&LAs insured?
Yes, all accounts in FS&LAs are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC).
Can FS&LAs offer financial products other than mortgage loans?
Yes, post the 1980 Act, FS&LAs can offer a variety of financial products including personal loans, auto loans, and various types of savings accounts.
Are FS&LAs similar to traditional banks?
While they perform similar functions, FS&LAs are distinct in that they focus primarily on residential mortgages and savings deposits. They were specifically designed to make home ownership accessible.
Related Terms
- Mortgage Loan: A loan used by individuals to purchase a home, where the property itself serves as collateral.
- Savings Deposit: Funds that individuals deposit in a savings account, typically earning interest over time.
- Federal Deposit Insurance Corporation (FDIC): A government agency that insures deposits at banks and savings institutions.
- Depository Institutions Deregulation and Monetary Control Act of 1980: Legislation that deregulated various aspects of the banking industry, providing more flexibility to depository institutions.
- Chartered Institution: Financial institutions that are given legal authority to operate by federal or state charters.
Online References
- Federal Deposit Insurance Corporation (FDIC)
- Depository Institutions Deregulation and Monetary Control Act of 1980
Suggested Books
- A History of the Federal Savings and Loan Insurance Corporation (FSLIC) by Ralph D. Crosby
- The Thrift Institutions Restructuring by Richard T. Pratt
- Federal Deposit Insurance Corporation Improvement Act of 1991: An Overview by Warren G. Heller and David S. Holland
Fundamentals of Federal Savings and Loan Associations: Finance Basics Quiz
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