Financial Institutions Reform, Recovery and Enforcement Act of 1989

(redirected from Financial Institutions Reform Recovery and Enforcement Act)

Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)

Legislation that established the Office of Thrift Supervision, which was created in the wake of the savings and loan crisis of the late 1980s.

Financial Institutions Reform, Recovery and Enforcement Act of 1989

Legislation in the United States passed in response to the savings and loan crisis. The FIRREA created the Resolution Trust Corporation, which was charged with closing thrifts declared to be insolvent. It also created new funds within the FDIC to administer the depositor's insurance to account holders at insolvent institutions. Importantly, it created the Office of Thrift Supervision, a bureau of the U.S. Department of the Treasury to regulate federal savings associations, savings and loan associations (thrifts), and some holding companies. The OTS both provides charters and creates regulations for thrifts and other institutions that fall under its supervision. Additionally, it audits the practices of financial institutions that specialize in personal savings and mortgage loans to ensure that they comply with applicable regulations.
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That would require limiting the number of boards a director could serve on, much in the same spirit as the Financial Institutions Reform Recovery and Enforcement Act (FIRREA) does for depository institutions (banks and thrifts), and making the independent directors personally liable to the shareholders for gross negligence by the fund manager.
Ross said the proposed legislation, backed by the Office of Thrift Supervision, will restore some S&L funds for real estate lending that had virtually dried up in response to the Financial Institutions Reform Recovery and Enforcement Act of 1989.
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