What is the Financial Institutions Reform, Recovery and Enforcement Act?

The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) is a federal law enacted in 1989 that is enforced by the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board. The law was designed to prevent and eliminate any fraud or other financial misconduct in the banking industry. The law made sweeping changes to the banking industry, including the formation of a new agency, the Office of Thrift Supervision (OTS). The main purpose of FIRREA is to establish regulations that protect the safety and soundness of financial institutions, including banks, thrifts, and credit unions, and promote the stability of the financial system. The FDIC is responsible for enforcing the law’s provisions, which include a number of prohibitions, such as requiring banks to maintain higher capital requirements, prohibiting insider trading and insider lending, and requiring institutions to manage risk with regard to their assets, investments, and lending. The benefits of FIRREA have been widely recognized. Not only does the law help protect consumers from fraud and other hazards, but it also provides for the supervision of financial institutions, increasing public confidence in the stability of the banking sector. It also helps ensure the soundness of financial institutions by making sure that banks are properly staffed and that their practices are consistently monitored and regulated. In Washington, the law is administered by the Washington State Department of Financial Institutions.

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What is the Financial Institutions Reform, Recovery and Enforcement Act?

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