These developments did not occur in time to prevent a large fraction of the thrift industry from becoming effectively insolvent by the early 1980s in the wake of the late-1970s surge in inflation. 7 In this instance, the government abandoned attempts to patch up the system and instead undertook sweeping deregulation.
The evidence suggests that there are far too many cases of chronic statutory fund deficits, late filing of returns, inadequate reinsurance and other areas of non-compliance. The diagnostic studies also indicate that the investment strategy of some companies requires stricter regulatory attention, in part because of limited portfolio diversification and related party transactions.