ABSTRACT
A financial crisis developed in 1982. This time it centered on a crisis of confidence in the nation's commercial banks, which were threatened by losses on outstanding loans to US businesses and less developed countries. The thrift institutions—savings and loan associations and mutual savings banks—were also having their difficulties. Drysdale Government Securities, Inc., was incorporated on January 29, 1982, with capital of approximately $20 million. Anthony Solomon, the former president of the Federal Reserve Bank of New York, testified at a government hearing called to investigate the Drysdale incident that this capital was not large, but that it was within the normal range of those firms trading in government securities. The Drysdale events had barely quieted down when the nation's banking system received another major jolt: the failure of Penn Square Bank on July 6, 1982. The banking system survived the Penn Square failure without further major disruptions.
