Federal Home Loan Bank Board policy and the plight of savings and loan associations: A comment on the Jaffee and Swan papers

Abstract

I want to begin by remarking on the thorough-going professionalism of these papers. The general excellence of the authors’ research testifies to the dramatically higher quality of analysis being devoted to Savings and Loan and Federal Home Loan Bank Board problems over the last ten years. This determined purchase of more and better economic advice is, in fact, a policy instrument that Harris Friedman and the authors were perhaps too modest to include in their lists of stabilization weapons currently wielded by the “Bank Board.” Since the role of economic research in an agency’s stabilization effort is a favorite theme of our genial host, and since the Board has on occasion had me on its payroll too, I will not dwell on this point. But it is worth thinking about. SLA economics is now a respectable sub-field of economic analysis and very much a growth industry. During my 15 years as a professional economist, it has developed from an ugly duckling into a veritable swan. Although lacking in elegance, this metaphor seems especially apt in view of the profession’s widespread (but usually unspoken) fear that Savings and Loan Associations may yet take a spectacular swan dive.