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The Garn–St. Germain Depository Institutions Act of 1982 (Pub.L. 97-320, H.R. 6267, enacted 1982-10-15) is an Act of Congress, that deregulated the Savings and Loan industry. This Act turned out to be one of many contributing factors that led to the Savings and Loan crisis of the late 1980s.[1]

The bill, whose full title was "An Act to revitalize the housing industry by strengthening the financial stability of home mortgage lending institutions and ensuring the availability of home mortgage loans," was a Reagan Administration initiative.[2]

The bill is named after its sponsors, Congressman Fernand St. Germain, Democrat of Rhode Island, and Senator Jake Garn, Republican of Utah. The bill had broad support in Congress, with co-sponsors including Charles Schumer and Steny Hoyer.[3] The bill passed overwhelmingly, by a margin of 272-91 in the House.[4]

An important consumer change was to allow anyone to place real estate in their own trust without triggering the due-on-sale clause that allows lenders to foreclose on a current loan upon transfer to another. This greatly facilitates the use of trusts to pass property to heirs and minors. It may also protect the property of wealthy or risky owners against the possibility of future lawsuits or creditors, because the trust owns the property, not the individuals at risk. The bill states "...A lender may not exercise its option pursuant to a due-on-sale clause upon a transfer into an inter vivos trust in which the borrower is and remains A beneficiary and which does not relate to a transfer of rights of occupancy in the property”. (The Garn St. Germain Depository Institutions Act of 1982, (U.S.C.) 1701j-3(d)(8). .[5]

Title VIII, Alternative Mortgage Transactions, allowed Adjustable rate mortgages [6]


  1. ^ Leibold, Arthur. "Some Hope for the Future After a Failed National Policy for Thrifts" in Barth, James et al. The Savings and Loan Crisis: Lessons from a Regulatory Failure, pages 58-59 (2004). Leibold cites Strunk and Case, Where Regulation Went Wrong: A Look at the Causes Behind Savings and Loan Failures in the 1980s, pages 14-16 (1988).
  2. ^ Reagan, Ronald. "Remarks on Signing the Garn-St Germain Depository Institutions Act of 1982" (1982-10-15).
  3. ^ H.R. 6267, Cosponsors.
  4. ^ H.R. 6267, Major Actions.
  5. ^ [1].
  6. ^ FRB Philadelphia - PL 97-320, Garn-St Germain Act

Further reading

  • Cornett, Marcia Millon; Tehranian, Hassan (1990). "An Examination of the Impact of the Garn-St. Germain Depository Institutions Act of 1982 on Commercial Banks and Savings and Loans". Journal of Finance 45 (1): 95–111. doi:10.2307/2328811.  

External links



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