The Federal Deposit Insurance Corporation Improvement Act (FDICIA) was passed in 1991 in response to the savings and loan (S&L) crisis. From 1980 until the end of 1991, nearly 1,300 commercial banks either failed or required failing bank assistance from the FDIC. The wave of bank failures occurred due to a surge and subsequent collapse in industries including energy, agriculture, and real estate.

Understanding the FDIC Improvement Act (FDICIA)

Signed into law by President George H.W. Bush in December 1991 in response to problems in the banking industry, the FDICIA fortified the role and resources of the Federal Deposit Insurance Corporation (FDIC) to protect consumers. As the FDIC closed insolvent institutions during the financial crisis in the 1980s, it became severely 澳洲幸运5官方开奖结果体彩网:undercapitalized by 1991, leading to the legislation.

The FDIC was 澳洲幸运5官方开奖结果体彩网:established in 1933 as an independent government agency with the passing of the 澳洲幸运5官方开奖结果体彩网:Emergency Banking Act to provide deposit insurance for consumer bank accounts and other qualified assets when and if financial institutions fail. The FDIC divides institutions into three tiers based on consolidated 澳洲幸运5官方开奖结果体彩网:total assets:

• Institutions with less than $500 million in consolidated total assets
• Institutions with consolidated total assets between $500 million and $1 billion
• Institutions with consolidated total assets greater than $1 billion

Numerous financial institutions fell during the 澳洲幸运5官方开奖结果体彩网:savings and loan crisis. The FDICIA established greater oversight and more rigorous audits of the banking industry.

Provisions of the FDICIA

Often referred to as the “FDICIA requirements", Section 36 of the Federal Deposit Insurance Act and Part 363 of the FDIC’s regulations impose annual audit and reporting requirements on insured depository institutions with $500 million or more in consolidated total assets. The act ensures financial institutions:

• Have annual reporting requirements
• Provide written statements regarding management's responsibilities in preparing the institution's 澳洲幸运5官方开奖结果体彩网:financial statements
• Abide by certain audit committee provisions

Institutions that fail to comply wit♑h these audit standards could face FDIC civil penalties or adm𒐪inistrative actions.

The FDICIA raised the FDIC's 澳洲幸运5官方开奖结果体彩网:U.S. Treasury line of credit from $5 million to $30 million, revamped the FDIC auditing and evaluation standards of member banks, and included the 澳洲幸运5官方开奖结果体彩网:Truth in Savings provision, also 澳洲幸运5官方开奖结果体彩网:known as Regulation DD.

The Bottom Line

The Federal Deposit Insurance Corporation Improvement Act of 1991 strengthened the FDIC's role in overseeing banks and protecting consumers. Created in response to the savings and loan crisis of the 1980s and 90s, the act imposed annual audit and reporting requirements on insured depository institutions and established the Truth in Savings Act, or Regulation DD, which requires banks to provide disclosures about savings account interest rates.