Discuss the provisions and implications of the following ban

Discuss the provisions and implications of the following banking legislation:

a. Depository Institutions Deregulation and Monetary Control Act of 1980

b.Financial Institutions Reform, Recovery, and Enforcement Act of 1989

c. Federal Deposit Insurance Corporation Improvement Act of 1991

Solution

All banks were brought under the Fed\'s rules; banks were allowed to merge. The power of the        Federal Reserve Board of Governors under the Glass–Steagall Act Was removed. Negotiable Order of Withdrawal accounts to be offered nationwide was allowed. The deposit insurance of US banks and credit unions were raised from $40,000 to $100,000. Credit unions and savings and loans were allowed to offer checkable deposits. Institutions were allowed to charge any loan interest rates they chose.

The Federal Housing Finance Board (FHFB) was created as an independent agency replacing FHLBB so as to oversee the 12 Federal Home Loan Banks. The Savings Association Insurance Fund (SAIF) replaced the FSLIC as an ongoing insurance fund for thrift institutions. In order to dispose of failed thrift institutions taken over by regulators after January 1, 1989 the Resolution Trust Corporation (RTC) was established. Additional responsibility was given to Freddie Mac and Fannie Mae to support mortgages for low- and moderate-income families. It also created the Bank Insurance Fund (BIF). FIRREA allowed bank holding companies to acquire thrifts. It established new regulations for real estate appraisals. In addition, the Act established Appraisal Subcommittee (ASC) and new capital reserve requirements.

It required the agencies to issue Community Reinvestment Act (CRA) ratings publicly and do written performance evaluations using facts and data to support the agencies\' conclusions. Savings and loans were no longer allowed to acquire \"junk bonds\" and were required to dispose of their holdings of these bonds by 1994. They were also required to mark them to the lower of cost or market value. It created the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council (FFIEC) to oversee and monitor appraisal standards.