| Lincoln Savings |
(Savings and Loan)
|An infamous part of the multi-billion dollar Savings and loan fraud.|
Lincoln Savings was a savings and loan institution which was bought by Charles Keating, who was chairman of a housing construction company, American Continental Corporation. In February 1984 it cost him $51 million. Keating fired the existing management and over the next four years, Lincoln's assets increased from $1.1 billion to $5.5 billion.
When American Continental Corporation, the parent of Lincoln Savings, went bankrupt in 1989, more than 21,000 mostly elderly investors lost their life savings. This total came to about $285 million, largely because such investors held securities backed by the parent company rather than deposits in the federally insured institution, a distinction apparently lost on many if not most of them until it was too late.
The bailout of Lincoln Savings was predicted in 1989 to cost the US taxpayer $2 billion. The federal government covered almost $3 billion of Lincoln's losses when it seized the institution. Many creditors were paid back, and the government then attempted to liquidate the seized assets through its Resolution Trust Corporation, often at pennies on the dollar compared to what the property had allegedly been worth and the valuation at which loans against it had been made.
Pete Brewton has been active in attempting to expose the Savings and loan fraud, but even decades after the event, it remains poorly understood. Mark Lombardi made diagrams about Charles Keating and Lincoln Savings.
- "The Lincoln Savings and Loan Investigation: Who Is Involved". The New York Times. 1989-11-22. Retrieved 2007-05-25.
- Nathaniel C. Nash (1989-11-30). "Collapse of Lincoln Savings Leaves Scars for Rich, Poor and the Faithful". The New York Times.