This paper assesses the probable impact on S&Ls' profitability and participation in mortgage markets of The Depository …&L mortgage holdings between 1965 and 1979 and argues(contrary to conventional wisdom) that deposit-rate ceilings proved no more … and state restrictions on S&L loan opportunities and on mortgage lenders' ability to design and to price mortgage …

because mortgage yields are inadequate to cover interest and operating costs. This hypothesis suggests that observed … profitability is primarily the result of the tendency of the industry to "ride" the yield curve by borrowing short and lending long …