Federal Deposit Insurance Corporation Improvement Act of 1991

Other short titles	Foreign Bank Supervision Enhancement Act of 1991 Qualified Thrift Lender Reform Act of 1991 Truth in Savings Act
Long title	An Act to reform Federal deposit insurance, protect the deposit insurance funds, recapitalize the Bank Insurance Fund, improve supervision and regulation of insured depository institutions, and for other purposes.
Nicknames	Bank Enterprise Act of 1991
Enacted by	the 102nd United States Congress
Effective	December 19, 1991
Citations
Public law	102-242
Statutes at Large	105 Stat. 2236
Codification
Titles amended	12 U.S.C.: Banks and Banking
U.S.C. sections amended	12 U.S.C. ch. 16 § 1811
Legislative history
Introduced in the Senate as S. 543 by Donald W. Riegle Jr. (D-MI) on March 5, 1991 Committee consideration by Senate Banking, Housing, and Urban Affairs Passed the Senate on November 21, 1991 (passed voice vote) Passed the House on November 23, 1991 (passed voice vote) Reported by the joint conference committee on November 27, 1991; agreed to by the House on November 27, 1991 (agreed voice vote) and by the Senate on November 27, 1991 (68-15) Signed into law by President George H. W. Bush on December 19, 1991
Major amendments
Dodd–Frank Wall Street Reform and Consumer Protection Act Economic Growth, Regulatory Relief and Consumer Protection Act

The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA, Pub. L.Tooltip Public Law (United States) 102–242), passed during the savings and loan crisis in the United States, strengthened the power of the Federal Deposit Insurance Corporation.

It allowed the FDIC to borrow directly from the Treasury department and mandated that the FDIC resolve failed banks using the least costly method available. It also ordered the FDIC to assess insurance premiums according to risk and created new capital requirements.

Prompt Corrective Action

Title I, § 131(a), Prompt Corrective Action, mandates progressive penalties against banks that exhibit progressively deteriorating capital ratios. At the lower extreme, a critically undercapitalized Federal Deposit Insurance Corporation (FDIC)-regulated institution (i.e., one with a ratio of total capital / assets below 2%) is required to be taken into receivership by the FDIC in order to minimize long-term losses to the FDIC.^[1] The motivation behind the law is to provide incentives for banks to address problems while they are still small enough to be manageable. Spong (2000, pages 90–95) summarizes the details (http://www.kansascityfed.org/publicat/bankingregulation/RegsBook2000.pdf).

In an interview on Bill Moyers Journal broadcast April 3, 2009, former bank regulator William K. Black asserted that federal officials were ignoring the PCA law requiring them to put insolvent banks into receivership.^[2] The PCA law applies only to institutions insured by the FDIC and therefore would not affect, for better or worse, companies such as AIG.