We were talking about the S and L crisis in my political econ class, and the topic caught my interest, because it seems so similar to the 2008 crisis, which was obviously much worse.
My professor talked about the economy being segmented in order to contain failures and economic problems, and he made it sound like this segmentation was pretty much the reason the crisis resolved relatively well.
This doesn't fully answer the question, but in lecture 13 of Robert Schiller's (Yale Finance professor and Nobel Prize winner) 2008 Financial Markets class he said:
"The S&L Crisis in the United States, 1980s--what happened there? Saving and Loan Associations were making bad loans, especially in Texas, but in lots of other states as well--this is when Ronald Reagan was President. Reagan was a big believer in free markets; we had a law that actually passed, it's called the Depository Institution's Deregulation and Monetary Control Act of 1980--that's actually before Reagan.
That's Depository Institution's Deregulation and Monetary Control Act; what that did was, it eliminated ceilings on interest rates--on deposits, it allowed banks to pay high interest rates. It used to be that the government didn't let banks pay more than a certain amount on their deposits and that helped protect banks because then they didn't have to compete to pay high interest rates--then be incentivized to make risky loans to try to make money with those high interest rates. Once they freed up interest rates, interest rates on deposits started soaring and banks started taking greater risks, particularly Savings and Loans. Now, the government insures deposits, as you know, through the FDIC--the Federal Deposit Insurance Corporation. For Savings and Loans, they had an organization called the FSLIC, which is now defunct because of this crisis--Federal Savings and Loan Insurance Corporation--it was insuring deposits of Savings and Loans.
They should have been watching, under Reagan, because if you let them pay high interest rates you better watch out that they don't make risky loans if you're insuring them. But the FSLIC wasn't; it was sleeping at the switch, so it allowed banks in the United States--it was primarily Savings and Loans who did this--to make bad loans and they were playing this moral hazard game. The moral hazard crept in because they said, hey we can borrow at a high rate. Let's make some risky loans and if it succeeds we make money; if the thing blows up, well then they government will pay. So, they had an unfortunate incentive to make bad loans. This thing collapsed in the 1980s and it cost the U.S. Government, through the FSLIC, about 150 billion dollars. The collapse of this was part of the reason for a general economic collapse. We saw a collapse in real estate prices after 1990 and a recession in 1991, so it was the big story of the 1980s"
At the least, this should help point you in the right direction.