Federal Deposit Insurance Corpora­tion Improvement Act of 1991

The Federal Deposit Insurance Corporation Improvement Act of 1991 introduces significant changes to the regulation and supervision of insured depository institutions. Key takeaways include a substantial increase in deposit insurance fund funding from $5 billion to $30 billion, as well as enhanced accounting standards and requirements for independent annual audits. The act also establishes a system of prompt corrective action, requiring undercapitalized banks to submit capital restoration plans and imposing restrictions on asset growth, transactions with affiliates, and management fees. The FDIC is granted authority to take enforcement action against insured depository institutions that pose risks to the deposit insurance fund or are in an unsafe or unsound condition. Furthermore, regulatory practices encourage banks to reduce their real estate lending without regard to long-term historical risk, contributing to a credit crunch of crisis proportions in the commercial real estate market. The FDIC is required to provide continuation coverage for former employees of failed depository institutions, including health plan coverage. Overall, these changes aim to promote financial stability and protect consumers' rights while supporting community development through enhanced regulations and requirements for insured depository institutions.