ABSTRACT
In 1982 California allowed commercial banks to become a direct partner in real estate development. Plus the legislature amended another law to allow banks and S&Ls to buy capital stock and other securities bonds of real estate development companies. California was an attractive partner for real estate brokers, as it was one of the more liberal states. State-chartered institutions were allowed to engage in third-party realty brokerage if they were parent institutions, or service corporations, with the permission of the state regulator. The 1981 Economic Recovery and Tax Act of 1981 shortened the depreciation period on real estate investments to fifteen years. Independent investors wanted into the real estate market, too. Congress made most of the major changes in the laws affecting the financial industry in the spirit of the Ronald Reagan presidency. The crisis came in August 1989, when Congress was convinced that huge amounts of money would be needed to save the S&L industry.
