A New S&L Mess

The thrifts' deposit-insurance fund is looking shaky

For most people, the savings and loan debacle of the 1980s, which cost taxpayers $125 billion, is a distant memory. Not, however, for the unfortunate individuals who invested in so-called FICO bonds, $8.2 billion of which were issued by Financing Corp. FICO was established by Congress to pay off depositors of insolvent thrifts. Interest on the bonds is paid from premiums on a chunk of remaining thrift deposits. Over the years, however, thrift deposits have been shrinking rapidly (chart). The result, officials warn, is that the bonds could go into default as soon as next year. That could leave thousands of investors, big and small, holding the bag.

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