Financial Institutions Reform, Recovery, and Enforcement Act of 1989

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

Federal legislation that revamped regulation and insurance of depository financial institutions in response to the savings and loan crisis. The Act created several new organizations, including the Resolution Trust Corporation that closed and merged troubled institutions and the Bank Insurance Fund that replaced the Federal Savings and Loan Insurance Corporation as the insurer of thrift deposits.

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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, 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.