Savings and loan association

Savings and Loan Associations (S&Ls) — also called “thrifts” — are a type of bank that mainly focuses on helping people save money and buy homes. Their main job is to take in savings from customers and use that money to give out mortgage loans so people can buy houses.

In the past, S&Ls were usually mutual organizations, meaning the people who saved money there were also part-owners and could vote on how the bank was run — kind of like how credit unions work. Some later became more like regular businesses and no longer gave members voting rights.

S&Ls became popular in the early 1900s when home ownership started to grow. They offered simple savings accounts and helped people get loans for houses. The government supported these banks by creating rules that made it easier for them to offer loans and pay better interest rates than regular banks.

But in the 1980s, problems started. New laws allowed S&Ls to offer more types of loans and services, which led to bad investments and risky loans — especially in real estate. Many S&Ls didn’t manage this risk well, and a lot of them failed during what’s called the Savings and Loan Crisis. The government had to step in, close hundreds of them, and create new rules to protect customers.

Today, S&Ls still exist, but they’re less common than commercial banks or credit unions. Their main job is still to help people buy homes, but they also offer basic banking services like savings accounts and sometimes checking.