Exhibit 8.1


                [LETTERHEAD OF MANATT, PHELPS & PHILLIPS, LLP]


June 2, 1999



Downey Financial Corp.
3501 Jamboree Road
Newport Beach, California 92660

Downey Financial Capital Trust I
3501 Jamboree Road
Newport Beach, California 92660

          Re:  Certain Federal Income Tax Consequences
               of the Purchase and Ownership of Capital Securities
               Issued by Downey Financial Capital Trust I

Ladies and Gentlemen:

          We have acted as special counsel to Downey Financial Corp. and its
subsidiaries ("Downey") in connection with the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), of a Registration Statement on Form S-3 that is being filed with
the Securities and Exchange Commission on this date (the "Registration
Statement").  The Registration Statement relates to the offer for sale of up to
4,000,000 shares of Capital Securities (the "Capital Securities") of Downey
Financial Capital Trust I (the "Trust"), a statutory business trust that has
been formed at the direction of Downey under the laws of the State of Delaware,
the Junior Subordinated Debentures to be issued by Downey to the Trust in
connection with the sale of the Capital Securities, and the guaranty of Downey
with respect to the Capital Securities (the "Guarantee Agreement").

          This opinion letter relates to the material federal income tax
consequences of the purchase and ownership of the Capital Securities by
investors.  All capitalized terms used in this opinion letter and not otherwise
defined herein have the same meaning as set forth in the Registration Statement.

          We have examined the Registration Statement, the form of the Amended
and Restated Trust Agreement of the Trust, and such other documents as we have
deemed necessary to render our opinions expressed below.  In our examination of
such material, we have relied upon the current and continued accuracy of the
factual matters we have considered, and we have


MANATT, PHELPS & PHILLIPS, LLP

Downey Financial Corp.
Downey Financial Capital Trust I
June 2, 1999
Page 2



assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
copies of documents submitted to us. We assume for purposes of our opinions that
there are no agreements or understandings with respect to the transactions
contemplated in the documents referred to above other than those described
therein and that all parties to such documents will comply with the terms
thereof, including all tax reporting requirements contained therein. Our
opinions are also based (with your consent) on certain representations from
Downey in a letter to us of even date herewith. In addition, we also have
assumed that the transactions related to the issuance of the Junior Subordinated
Debentures, the Capital Securities and the Guarantee Agreement will be
consummated in accordance with the terms and forms of such documents and as
described in the Registration Statement.

          Based on the foregoing, and assuming the Trust will be maintained in
compliance with the terms of the form of the Amended and Restated Trust
Agreement of the Trust, it is our opinion that more likely than not the
following conclusions would be sustained by a court with jurisdiction in a
properly presented case (with all appeals exhausted):

          (1) The Trust will be classified for United Stated federal income tax
purposes as a grantor trust and not as an association taxable as a corporation
and, as a result, each beneficial owner of Capital Securities will be treated as
owning an undivided beneficial interest in the Junior Subordinated Debentures
held by the Trust.

          (2) The Junior Subordinated Debentures will be classified for federal
income tax purposes as indebtedness of Downey.

          (3) Except in the case of the occurrence of an Extension Period,
stated interest on the Junior Subordinated Debentures will be included in income
by a holder of Capital Securities at the time such interest income is paid or
accrued in accordance with the holder's regular method of tax accounting.  If
Downey exercises its right to defer payments of interest on the Junior
Subordinated Debentures during an Extension period, beneficial owners of Capital
Securities will commence reporting interest income with respect to the Junior
Subordinated Debentures under the original issue discount rules of the Internal
Revenue Code of 1986, as amended (the "Code").

          (4) Gain or loss will be recognized by a holder of Capital Securities
on a sale of Capital Securities (including a redemption for cash) in an amount
equal to the difference between the amount realized (which for this purpose will
exclude amounts attributable to accrued interest or original issue discount not
previously included in income) and the holder's adjusted tax basis in the
Capital Securities sold or so redeemed.  Gain or loss recognized by the holder
on


MANATT, PHELPS & PHILLIPS, LLP

Downey Financial Corp.
Downey Financial Capital Trust I
June 2, 1999
Page 3

a sale of Capital Securities held for more than one year will generally be
taxable as long-term capital gain or loss.

          (5) A distribution by the Trust of the Junior Subordinated Debentures,
as described in the Registration Statement (and subject to the limits discussed
therein), will be non-taxable and will result in the distributee receiving
directly its pro rata share of the Junior Subordinated Debentures previously
held indirectly through the Trust, with a holding period and aggregate tax basis
equal to the holding period and aggregate tax basis such distributee had in its
Capital Securities before such distribution.

          (6) The discussion of "Certain Federal Income Tax Consequences" in the
Registration Statement accurately describes the material federal income tax
consequences concerning the Capital Securities.

          These opinions are based upon the Code, the Treasury Regulations
promulgated thereunder and other relevant authorities and law, all as in effect
on the date hereof.  Future changes in the law or interpretations of the law may
cause the tax effects of the transactions referred to herein to be materially
different from those described above.  We have undertaken no obligation to
update this opinion in such event.

          Other than the specific tax opinions set forth in this letter, no
other opinion has been requested of us or rendered by us with respect to the tax
treatment of the Junior Subordinated Debentures, the Capital Securities or the
Guarantee Agreement, including, but not limited to, the tax treatment of the
proposed transactions under other provisions of the Code and the Treasury
Regulations or the tax treatment of the proposed transactions under state,
local, foreign or any other tax laws.

          We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and the use of our name in the Registration Statement
under the caption "Certain Federal Income Tax Consequences."  In giving such
consent, we do not concede that this consent is required under Section 7 of the
Securities Act of 1933.



                              Very truly yours,

                              /s/ Manatt, Phelps & Phillips, LLP