25% of S&Ls face failure, Brookings study reports

High interest rates and restrictive federal regulations will force 1 of every 4 US savings-and-loan associations out of existence by 1983, according to a Brookings Institution study.

As market interest rates have soared, the cost to savings institutions for obtaining funds has far outstripped their earnings from the long-term, low-yielding mortgages they hold.

According to the Brookings study, savings industry losses will exceed $9 billion from 1981 to 1983. The Federal Home Loan Bank Board, which supervises most of the country's 4,500 S&Ls and mutual savings banks, is expected to move this week to ease the regulations.

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