The U.S. thrift industry was forced to write down loan losses and goodwill in the 2007 fourth quarter due to the subprime mortgage crisis, but the institutions remain fundamantally strong and will rebound in 2008, the head of the U.S. Office of Thrift Supervision told the Reuters Regulation Summit.
John Reich, whose agency supervises savings and loan institutions, said the current situation is vastly different from the thrift crisis of the late 1980s when many institutions were hit by commercial real estate problems. “Once we get past the credit quality issues, these institutions are basically profitable institutions,” Reich said. More than 1,000 savings and loan institutions failed during the thrift crisis two decades ago, which was blamed in part on unsound commercial real estate lending.
