ABSTRACT
The financial crises that erupted during 1982 were managed in such a way that a cumulative debt-deflation process, of the sort that had led to depressions in the past, was avoided. Nonetheless, the problems of 1982 did not disappear. In particular, the failure of Penn Square Bank in 1982 played a major role in the effective failures of Seattle First National Bank in 1983 and Continental Illinois National Bank and Trust Company in 1984. The story of Continental Illinois is similar to that of Seafirst. Continental also had rapidly expanded its energy lending, and had bought large loan participations from Penn Square. As with the banks, the problems of thrift institutions continued. A survey of the thrift industry in 1985 came to the following conclusion: "The thrift industry survived the losses of the early 1980s though they left a legacy of problem institutions with which regulatory authorities are still dealing".
