The review titled "The Loan Rangers" by Robert Kuttner in the Dec. 30 Book Review covers the why and the how of the S&L debacle. However, it does not point out the unfair advantage S&Ls had that enabled them to make a profit earlier.
I believe that when I started saving in the 1950s, the typical payout to savers by an S&L was restricted by law to about 2.5%. This was considerably less than "rich people" could get on their (uninsured) savings.
At that time, inflation was low, but not so low as to be covered by S&L interest before income taxes. Meanwhile, housing was subsidized by the thrifty homeowners, and other borrowers were making money on real estate faster than inflation. They got tax breaks and could pay back loans in inflated dollars.
When small investors realized what was happening to them, they revolted and took advantage of alternative investments such as money-market funds that were becoming available. There were many spendthrifts who became upset because they could no longer get subsidized by the thrifty.
They got the government to permit financing their way, and the rest is covered in the book review.
WILLIAM BUCHMAN, LOS ANGELES