Theodor de Bry’s 1590 engraving of Secoton, from John White’s watercolors. Public domain.
Savings and loans were trapped in old mortgages, and Congress let them take new risks.
If money is tight, your small thrift is where the house deposit sits, and a failure is not abstract.
If you are in the middle, the local lender on your mortgage may be gambling to get out of a hole.
If you have savings, deposit insurance is the reason you do not run, until the insurance itself is the public bill.
Thrifts had borrowed short and lent long, and Volcker's rates turned that mismatch into losses.
The Garn-St Germain Act of 1982 let them offer new products and chase higher-yielding bets.
The bets became the savings and loan crisis.
Source: Garn-St Germain Depository Institutions Act of 1982; Federal Deposit Insurance Corporation history of the savings and loan crisis.