The Federal Savings and Loan Insurance Corporation (FSLIC) was an institution that administered

deposit insurance Deposit insurance, deposit protection or deposit guarantee is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance or deposit ...

for

savings and loan A savings and loan association (S&L), or thrift institution, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans. While the terms "S&L" and "thrift" are mainly used in the United States, ...

institutions in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

History

Establishment

The FSLIC was established by the

National Housing Act of 1934 The National Act of 1934, , , also called the Better Housing Program, was part of the New Deal passed during the Great Depression in order to make housing and home mortgages more affordable. It created the Federal Housing Administration (FHA ...

, which was signed into law by

President President most commonly refers to: *President (corporate title) * President (education), a leader of a college or university *President (government title) President may also refer to: Arts and entertainment Film and television *'' Præsident ...

Franklin D. Roosevelt Franklin Delano Roosevelt (January 30, 1882April 12, 1945), also known as FDR, was the 32nd president of the United States, serving from 1933 until his death in 1945. He is the longest-serving U.S. president, and the only one to have served ...

on June 27, 1934. Upon the creation of the FSLIC, it was assigned a

capital stock In economics, capital goods or capital are "those durable produced goods that are in turn used as productive inputs for further production" of goods and services. A typical example is the machinery used in a factory. At the macroeconomic level, ...

of $100,000,000. All federal savings and loan associations were required to apply for insurance through the FSLIC; other building and loan associations whose capital was not impaired were also allowed to apply. The FSLIC was given certain regulatory powers over insured institutions, requiring each institution to accumulate reserves over several years. FSLIC assessed an annual insurance premium, which was calculated as 0.25% of the total amount of all accounts of insured shareholders or members, plus any creditor obligations. The FSLIC would suspend insurance premiums whenever the FSLIC's reserve fund was greater or equal to 5% of all insured accounts and creditor obligations of all insured institutions.Federal Housing Administration Explains National Housing Act Affecting Home Financing Field
. ''The Courier-News'' (Bridgewater, New Jersey). July 28, 1934. p. 2. The FSLIC was administered by the

Federal Home Loan Bank Board The Federal Home Loan Bank Board (FHLBB) was a U.S. board created by the Federal Home Loan Bank Act in 1932 that governed the Federal Home Loan Banks (FHLB or FHLBanks), also created by the act; the Federal Savings and Loan Insurance Corporatio ...

(FHLBB).

Insolvency

In the 1980s, during the

savings and loan crisis The savings and loan crisis of the 1980s and 1990s (commonly dubbed the S&L crisis) was the failure of approximately a third of the savings and loan associations (S&Ls or thrifts) in the United States between 1986 and 1995. These thrifts were b ...

, the FSLIC became insolvent. It was recapitalized with taxpayer money several times, with $15 billion in 1986 and $10.75 billion in 1987; however, by 1989 it was too insolvent to save. Pursuant to the

Financial Institutions Reform, Recovery, and Enforcement Act of 1989 The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), is a United States federal law enacted in the wake of the savings and loan crisis of the 1980s. It established the Resolution Trust Corporation to close hundreds ...

(FIRREA), the FSLIC was abolished along with the FHLBB, and the FSLIC savings and loan deposit insurance responsibility was transferred to the FDIC. The FSLIC Resolution Fund (FRF) was created to assume all the assets and liabilities of the FSLIC, which was to be funded by the Financing Corporation (FICO).

Abolishment

The

(FIRREA) abolished the FSLIC, and it transferred the responsibility for savings and loan deposit insurance to the

Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is a State-owned enterprises of the United States, United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was cr ...

(FDIC). The FSLIC Resolution Fund (FRF) was created to assume all the assets and liabilities of the FSLIC, which was to be funded by the Financing Corporation (FICO). the FDIC continued to administer the FRF, which has paid off the FICO debt but still collects money due from court judgments and terminated receiverships.

History

Establishment

Insolvency

Abolishment

References

Further reading