The New Safety Net
8 Pages Posted: 29 Aug 2001
Following the costly banking and thrift crises of the 1980's and early '90s, the United States dramatically reformed the federal government safety net for depository institutions, which many blamed for the outbreak and high cost of the crises. The reforms, highlighted by the 1991 Federal Deposit Insurance Corporation Improvement Act, curtailed the public's liability for bank losses by increasing the portion that banks have to pay and the ability of the federal government to"bail out" uninsured depositors of large or politically well-connected banks and decreased abuse of Fedwire and Federal Reserve discount window lending. However, other reforms are still needed to improve the system further.
Suggested Citation: Suggested Citation