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

The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) was enacted in 1989 in response to the savings and loan crisis in the U.S. It aimed to restore confidence in the financial system by restructuring the regulatory framework for savings and loan institutions, improving oversight, and enabling the government to handle failed banks more effectively. FIRREA established the Resolution Trust Corporation (RTC) to manage and liquidate the assets of failed savings and loans and introduced stricter regulations to prevent future crises, thereby protecting depositors and promoting stability in the financial sector.