When the RTC opened its doors in 1989, savings and loans were swooning by the dozens, victims of real estate speculation run amok. The agency closed or merged 747 thrifts, protected 25 million depositor accounts and sold off more than $465 billion in assets, including 120,000 real estate properties.
The meltdown hurt many thousands of innocent victims whose property lost value. But it benefited several groups of investors -- a first set who profited from the expansion of the S&L bubble, and a second who profited after the bubble burst, by buying properties at fire sale prices. Local real estate lawyer C. Daniel Clemente called it the "greatest transfer of wealth outside of armed rebellion in the history of this country."
Savings and loan institutions surged into commercial real estate investment, buying land and financing the construction of many thousands of apartment buildings, shopping centers and office complexes. Their projects competed in a market that was already glutted -- thanks to generous real estate tax incentives enacted in 1981. Bidding wars broke out as real estate brokers, developers, investors and lenders competed to make deals, with real estate prices skyrocketing.
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