Smarty_Pants

RTC: Creating a Big Bad Bank

Prior RTC came about for nearly the same reasons. Big oil boom in Texas and Lousiana led to people buying houses at inflated prices. Oil boom ended, layoffs ensued, foreclosures out the ears.

The individual S&Ls went bust or couldn't handle the foreclosure process in such numbers so Congress formed the RTC to reclaim and auction off the houses (at a loss on the loan amount).

It was hugely expensive because a) Like now houses were auctioning for prices less than 50% of original purchase price due to large numbers and "gotta sell" rules and b) it was run by a government agency so it cost at least 500% more than it should have and took twice as long.

Lots and lots of S&Ls went under and the FSLIC was folded into the FDIC (which is likely to go under this time around).

Things are going to get ugly in the not too distant future folks. This time it's much worse than the S&L crisis was.

Raise cash and have it on hand in case your bank is temporarily 'closed' for a few days (or weeks).