Many of us do not know or have forgotten that the U.S. experienced a big real-estate-investment-trust-driven financial crisis in the mid-1970s, and a huge bank-and-savings-and-loan crisis between 1980 and 1994, with real estate playing a major role in both. During the latter period 1,617 banks insured by the Federal Deposit Insurance Corp. failed, as well as about 1,300 savings-and-loan associations insured by the Federal Savings and Loan Insurance Corp. Prior to this year the largest bank to fail in the U.S. was Continental Illinois National Bank and Trust in Chicago that had $40 billion in assets and was the country’s seventh largest bank when it went under in 1984. In 2008 dollars, it would have had $83 billion in assets. Continental Illinois also had made many bad energy loans.

During the late 1980s most of the large savings-and-loan associations and banks in Texas went under, including the First Republic Bank in Dallas $59.23 billion in assets in 2008 dollars that failed in 1988 and MCorp bank in Dallas $32.17 billion in assets in 2008 dollars that failed in 1989. The total assets of the failed banks in Texas excluding savings-and-loans were $60.2 billion not adjusted for inflation and constituted 44 percent of the total bank assets in Texas banks during this period. Texas had the misfortune of being on the losing end of the three principal weaknesses in the U.S. economy at the time-the collapse of energy prices, the agricultural depression of the early 1980s and the real estate recession of the later 1980s.

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