After reading my blog last week about Fed Bailout - How, Why and Will It Cost Me?, a reader asked:

How is this different from the S&L scandal in the 80s when our dollars had to bail out that situation in the trillions?

The Savings and Loan Crisis resulted in the failure of over 1,000 banks with over $500 billion in assets on their books. The FDIC estimates that the total cost to resolve the crisis was $153 billion. This was needed to administer the closing of defunct banks, pay the insurance on savings account deposits, and pay off other debts. Of this, the taxpayer cost was $124 billion.

The Fed's bailout in the current Banking Liquidity Crisis has totaled $24 billion, and this was from assets it keeps on hand for just such emergencies. If the Fed's actions are successful, and liquidity is restored, then the money will be repaid, and it shouldn't cost the taxpayers directly.

However, no ones knows exactly how deep the Subprime Mortgage Crisis goes. This was also the problem with the S&L Crisis, and the reason costs kept mounting. All the experts say the current crisis is short-term, and that we should be back on track by the end of the year. Let's hope they are right.