ABSTRACT
The quintessential building and loan operator in the classic movie It’s a Wonderful Life. Commercial banks accepted primarily demand deposits and issued business loans. The building and loans accepted primarily time deposits and granted home mortgage loans. The state issuing the thrift’s charter set restrictions on who could own and operate the institution, the types of deposits it could accept, the types of assets it could hold, and the number and location of branches it could operate. The post-war baby boom motivated young couples to purchase bigger houses. The key provision of the legislation was the phase–out of interest rate ceilings. The Regulatory Accounting Principles also permitted savings and loans to revalue their land and buildings to current market value. The new funds were invested not in home loans but in high–yield junk bonds, commercial real estate development projects, and raw land.
