Time                     1986-1995                     2007-?
Value at Risk:       3. $500 Billion        4. $700 Billion to $1 Trillion
Cost to US Taxpayer  5. $124 Billion        6. No obligation, unknown
Cost to Industry     7. $29 Billion         8. Unknown

1. Source: FDIC Banking Review 2000, Curry and Shibut.
2. Advisor Perspectives 2008, A think tank for Registered Investment Advisors.
3. 1,043 thrifts with total assets over $500 billion failed in the stated time period
4. $11 trillion are in the current home mortgage market, 10% are sub-prime,
70% of that was bundled and sold as investment, of those, about $256 billion
is either behind on payment or in foreclosure.
5. The Federal Savings and Loan Insurance Corporation was at risk to back the failed
institutions. The actual value of the properties at risk meant that two thirds of the value
still existed. That is, the entire $500 billion was not a total loss.
6. There is no taxpayer obligation this time. The Federal Reserve has so far limited
its participation to that of low cost loans. No money has yet come from the taxpayer
7. Other banks and Savings and Thrifts put up money to assist in the bailout.
8. These were not insured deposits, the exposure is almost entirely the investor. In some
cases the investor may have been a pension fund. It possible a pension fund could fail
due to their losses. In addition, the US Government may yet commit money from the
Federal Budget.

Conclusion:

It seems to me that the Sub-Prime Crisis is nothing like the Savings & Loan Crisis of the '90s.
The biggest difference is the lack of exposure on the part of the US Taxpayer and the US
Government. This time, the private bankers and finance companies are almost entirely at risk.
Yes the Feds will intervene with cheap loans and as arbiter to broker sweetheart deals like the Countrywide and Bear Stearns Buyouts, but the US taxpayer will not be directly at risk.

Additionally, adjusted for inflation, the real dollars at risk are less than that of the S&L Crisis
Will there be a containing shock to the economy? Yes, but this is only one small event amongst many factors. We'll talk more about economic factors in the future, but let's take a break from the Sub-Prime NON-crisis for now. And by the way, does anyone even remember how bad the S&L Crisis was? No? I didn't think so.

(c) Hass Financial Services

www.haasfsi.com