According to Curry and Shibut (2000, tables 1 and 4), the FSLIC
made disbursements of $125 billion, and the RTC added $394 billion.
Unfortunately, some of that legislation, namely Regulation Q, the prohibition of the payment of interest on transactions accounts, and poorly designed deposit insurance (in particular, the FSLIC
and the Home Loan Bank System), arguably directly contributed to the subsequent financial crises and the near demise of thrift institutions in the late 1970s and 1980s.
(117) FIRREA's main objective was to "restore public confidence" in the S&L industry to foster "a safe, stable, and viable system of affordable housing finance." (118) FIRREA abolished the FHLBB and the FSLIC
, gave the FDIC initial responsibility for managing the Resolution Trust Corporation (RTC), and assigned the FDIC permanent responsibility for operating the new Savings Association Insurance Fund (SAIF).
The calculations exclude FSLIC
and RTC receiverships because the experience of the 1980s savings and loan crisis are expected to differ from bank resolution costs for reasons other than PCA.
At the time of the crisis, deposit insurance for these institutions was provided through the FSLIC
. Like the FDIC, the FSLIC
supplied the same function and suffered from the same destabilizing moral-hazard effects.
The Act's new regulations included expanded "capital assistance" programs, new powers granted to the Federal Deposit Insurance Corporation (FDIC) and the Federal Savings and Loan Insurance Corporation (FSLIC
) for treating insolvencies, and a mandate for the Depository Institutions Deregulation Committee to invent a new type of account that could adequately compete with money-market mutual funds (Barth, 1991, p.
: Federal Savings and Loan Insurance Corporation
1991) (extending D'Oench Duhme protection to a subsidiary of a savings and loan under receivership of FSLIC
Recall that the old savings-and-loan deposit insurance fund (FSLIC
or Federal Savings and Loan Insurance Corporation) never recovered from its 1980s descent into insolvency, and that the depositors it covered were then made whole by the taxpayers directly.
Bancone, Article III and Due Process Limitations on the FSLIC
FDIC administers the Deposit Insurance Fund (DIF), which protects bank and savings deposits, and the Federal Savings and Loan Insurance Corporation (FSLIC
) Resolution Fund (FRF), which was created to close out the business of the former FSLIC