Banking Practice Exam

The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) is responsible for the creation of the Office of Thrift Supervision (OTS). This act was enacted in 1989 in response to the savings and loan crisis of the late 1980s. FIRREA reorganized the regulation of thrifts (savings and loan institutions) and sought to enhance the safety and soundness of these financial institutions.

By establishing the OTS, FIRREA aimed to provide federal oversight of thrift institutions, which were previously regulated by the Federal Home Loan Bank Board. The OTS was tasked with ensuring that thrifts operated safely and soundly, complying with applicable laws, and promoting the stability of the thrift industry. In doing so, FIRREA significantly altered the regulatory landscape for thrift institutions, which was necessary given the challenges faced during that period.

Other legislation mentioned had different focuses and outcomes. The Depository Institutions Act (Garn-St. Germain) mainly addressed issues related to the deregulation of interest rates on deposit accounts and the expansion of the powers of thrift institutions. The Competitive Equality Banking Act was focused on reducing the competitive disparities between banks and thrifts but did not establish the OTS. The Depository Institutions Deregulation and Monetary Control