In response to a growing crisis in the thrift industry, Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA" or "Act"). The crisis was evidenced by the failure of over 500 thrifts between 1980 and 1988-more than three and one-half times as many in the previous forty-five years combined. In 1988 alone, the Federal Savings and Loan Insurance Corporation ("FSLIC," which prior to FIRREA insured most of the thrift industry's deposits) merged or liquidated over 200 insolvent thrifts, and the U.S. Government's General Accounting Office ("GAO") estimated in 1989 that at least 338 additional thrifts were insolvent as of December 31, 1988. Despite the attempted recapitalization of the FSLIC through enactment of the Competitive Equality Banking Act of 1987, the insurance fund held by FSLIC was inadequate to allow the FSLIC and the Federal Home Loan Bank Board ("FHLBB" or "Bank Board") to close these insolvent thrifts. As a result, these thrifts continued to operate and to incur massive losses.
Vicki O. Tucker, Patti G. Meire & Phyllis M. Rubinstein,
The RTC: A Practical Guide to the Receivership/Conservatorship Process and the Resolution of Failed Thrifts,
U. Rich. L. Rev.
Available at: http://scholarship.richmond.edu/lawreview/vol25/iss1/2