Final answer:
Following the deregulation of savings and loan institutions by the Reagan administration, many S&Ls engaged in risky lending and went bankrupt, necessitating a massive federal bailout.
Therefore the correct answer is D. Many S&Ls made bad loans and went bankrupt.
Step-by-step explanation:
After the Reagan administration loosened regulations on savings and loan institutions (S&Ls), many S&Ls made bad loans and failed, resulting in significant bankruptcies within the industry. With regulations eased, allowing S&Ls to make riskier investments and loans, the decline in real estate market further exacerbated the situation. This led to a financial disaster, culminating in the federal government bailing out the institutions with over $150 billion to protect the depositors' insured accounts.