Outlook for the ‘90s : ...

The thrift industry--what’s left of it--will continue to fade out as more savings and loans are bought, and the ones that survive become more like banks.

Horror stories about thrifts with luxury jets, expensive art collections and French chefs on the payroll will fade as industry rogues are purged from the business and limits are placed on the use of taxpayer-insured deposits. With the spigot of federally insured funds turned off, the main issue for the thrift industry becomes maintaining adequate capital to provide enough of a financial cushion to protect against losses.

Tough new federal standards on capital will force weaker savings and loans to sell out. Stronger, better-capitalized thrifts, such as Home Savings, Great Western and World Savings, are likely to survive and become more like banks. In addition, thrifts could be acquisition targets for out-of-state and foreign banks wanting to operate in California. And aggressive in-state banks such as Wells Fargo may look to thrift acquisitions to expand in Southern California.

As the 1980s end, the thrift industry, having blindsided taxpayers with a bill of more than $200 billion, finds its public image in shambles. In addition, it is becoming harder for the thrift business to justify itself as a separate industry from banks with separate rules and regulators. Banks for the first time in 1989 made more mortgage loans than did savings and loans. Many experts predict that the industry will not survive the decade as a separate business.