savings and loan crisis

The savings and loan crisis 19 years ago may be instructive for those managing the new $700 billion bailout.

The turmoil on Wall Street is prompting a key congressional Democrat to consider a broad federal market rescue that could include creating a new government entity to take over collapsed financial institutions and sell off their assets, as lawmakers did during the 1980s savings and loan crisis.

Facing a growing credit crisis and a rising number of troubled banks, the F.D.I.C. has recruited back many of the people who helped it clean up the savings and loan crisis 20 years ago.

Credit rating agency Standard & Poor's recently placed an estimated price tag on this worst case scenario -- $420 billion to $1.1 trillion of taxpayer's money.

This dwarfs how much it cost to help banks during the savings and loan crisis of the late 1980's and early 1990's.

The U.S. savings and loan crisis of the 1980s ended up costing taxpayers 3.2 percent of G.D.P., the equivalent of $450 billion today.

Some estimates put the fiscal cost of Japan's post-bubble cleanup at more than 20 percent of G.D.P.