Financial Institutions Reform, Recovery, and Enforcement Act

The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) was enacted in 1989 to address the problems caused by the savings and loan crisis, where many financial institutions faced collapse. FIRREA aimed to strengthen regulation of savings associations, improve accountability, and recover funds from bad loans. It abolished the weaker Federal Savings and Loan Insurance Corporation, replacing it with the more robust Federal Deposit Insurance Corporation (FDIC). The law also increased penalties for fraud and misconduct, helping restore confidence in the financial system. Overall, FIRREA was designed to stabilize the industry and prevent future financial crises.