Failed Utah thrifts were victims of a nationwide boom-and-bust cycle that no one noticed in time to avoid disaster, state officials told a new task force considering ways for the state to settle with thrift depositors.

The Thrifts Task Force - which includes lawmakers, depositors and financiers - was formed by the Legislature to advise the governor how the state could settle claims from 15,000 people who deposited an estimated $75 million in the thrifts, which were insured by a private corporation set up by the Legislature.Recommendations are due in July. The task force held its first meeting Tuesday. And while a standing-room-only crowd of about 100 depositors watched, state officials explained some of the background causes that led to the failure of the thrifts.

George Sutton, who became state financial institutions commissioner after the collapse of the thrifts, said the chain of events that initially made thrifts boom and then later bust began in the mid-1970s.

He said inflation at that time soared into double digits. While banks were allowed by law to offer only 5.5 percent on traditional savings accounts, investors were attracted to thrifts by the higher interest they could offer.

Adding to the boom was the fact that in 1975, the Legislature created the Industrial Loan Guarantee Corp. and ordered thrifts to join and manage it to insure their deposits.

With that new added level of security, deposits with those thrifts skyrocketed even more - from about $19 million total deposits before the insurance to $90 million within a year, Sutton said.

After a few years of boom, the thrifts lost their advantage of being about the only institutions that could offer high interest rates when Congress eregulated banks and savings and loans so they could also offer them.

Then inflation declined - meaning thrifts could no longer charge such high rates for loans nor pay high interest. Many thrifts began having trouble and by 1984 were losing huge amounts of money.

Also, many of the larger, healthier thrifts began bailing out of the ILGC to take advantage of law changes that allowed them to obtain deposit insurance from the Federal Deposit Insurance Corp., which previously insured only banks.

In 1986, that left the ILGC with only the more shaky thrifts that could not qualify for FDIC insurance. The ILGC had sufficient funds to cover less than 2 percent of the money deposited with member institutions.

It was declared insolvent in July 1986, and state regulators took over control of seven troubled Utah thrifts. It tried to find buyers for the thrifts, could not and finally decided last year to liquidate them.

Depositors have filed a lawsuit against the state and numerous other businesses and individuals alleging racketeering and fraud to recover their money lost in the thrifts' collapse.

Sutton said the Utah ILGC was not the only insurance fund caught by surprise by the boom-and-bust cycle. He said similar funds in numerous other states also collapsed, and even the FDIC and the Federal Savings and Loan Insurance Corp. faced crises because of the situation.