American Savings and Loan Association was an American

savings and loan Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an ...

based in

Stockton, California Stockton is a city in and the county seat of San Joaquin County in the Central Valley of the U.S. state of California. Stockton was founded by Carlos Maria Weber in 1849 after he acquired Rancho Campo de los Franceses. The city is named after R ...

. It was the largest thrift failure and the federal government's costliest resolution during the savings and loan crisis at an estimated cost of $5.4 billion. The thrift was founded in 1922 as State Savings & Loan Association in Stockton. It was owned by

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based Financial Corporation of America (FCA). The thrift experienced rapid growth in the 1970s and early 1980s. In 1983, it acquired First Charter Financial Corporation in

Los Angeles Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the largest city in the state of California and the second most populous city in the United States after New York City, as well as one of the world ...

for $700 million. First Charter was the parent company of American Savings & Loan, and was controlled by real estate developer

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. State Savings changed its name to American Savings after the acquisition. In 1984, the thrift suffered a

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of nearly $7 billion on its deposits after posting a $1.1 billion loss on bad investments and real estate loans. Chairman Charles W. Knapp and president J. Foster Fluetsch were forced out of the thrift by regulators in August 1984 and Bill Popejoy took over as chairman. However, the condition of the thrift continued to deteriorate. The thrift had large holdings of

mortgage-backed securities A mortgage-backed security (MBS) is a type of asset-backed security (an 'instrument') which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals (a government agency or investment ba ...

. which were subject to price volatility as interest rates changed. A $468 million loss in 1987 left the thrift technically insolvent. American Savings was placed in receivership in September 1988. FCA filed for chapter 11 bankruptcy the next day. (In February 1989, it was changed to a chapter 7 liquidation.) The thrift was split into a good bank and bad bank, with New West Federal Savings bank as the bad bank. At the time it had $30 billion in assets and was one of the largest thrifts in the United States. The Robert M. Bass Group, Inc. of Fort Worth, headed by

Robert Bass Robert Muse Bass (born 19 March 1948) is an American billionaire businessman and philanthropist. He was the chairman of Aerion Corporation, an American aerospace firm in Reno, Nevada. In 2018 he had a net worth of $5 billion. Bass has served o ...

, acquired American Savings in December 1988 in a controversial deal with the federal government. They invested $500 million total over three years, and the federal governments contributed $1.7 billion. The thrift was then renamed American Savings Bank, F.A. The thrift purchased deposits and branches of Columbia Savings and Loan in 1991, Far West Savings and Loan in 1992, Valley Federal S&L in 1992, and Encino Savings Bank in 1994. In 1996, American Savings Bank was purchased by

Washington Mutual Bank Washington Mutual (often abbreviated to WaMu) was the United States' largest savings and loan association until its collapse in 2008. A savings bank holding company is defined in United States Code: Title 12: Banks and Banking; Section 1842: D ...

for $1.2 billion. Washington Mutual failed in 2008 and was acquired by JP Morgan Chase Bank. Charles Knapp was convicted in 1993 of fraud, although it was not related to American Savings. His company, Trafalgar Holdings Ltd., obtained a $15 million loan from

Western Savings and Loan Western Savings and Loan was an American financial institution founded by the Driggs family. The Driggs family came to Arizona in 1921 after trading everything they owned—a bank, drugstore, hotel, and wheat farm in Driggs, Idaho—for ...

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, using fraudulent financial information. He was sentenced to years in prison.

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