Question

How did high interest rates affect savings and loans (S&Ls) in the 1980s? S&Ls lost money. They had to pay high interest on deposits, but took in less money from low interest loans. S&Ls lost money. Their earnings were not enough to pay off the loans they had taken out from the Federal Reserve. S&Ls made money. High interest rates attracted more depositors, and S&Ls used their deposits to make more loans. S&Ls made money. They earned high interest on loans they made throughout the 1980s.

Answer 1

S&Ls; lost money. They had to pay high interest on deposits, but took in less money from low interest loans.

Answer 2

• S&Ls; lost money. They had to pay high interest on deposits, but took in less money from low interest loans.

Step-by-step explanation:

Inflation rates and interest rates both rose significantly in the late 1970s and mid 1980s. This delivered two issues for S&Ls. To start with, the interest rates that they could pay on stores were set by the government and were generously beneath what could be earned somewhere else, driving savers to pull back their funds.

Second, S&Ls principally made long haul fixed-rate mortgages. At the point when loan costs climbed, these home loans lost a lot of significant worth, which basically cleared out the S&L industry net worth.