Federal Deposit Insurance Corporation Improvement Act (FDICIA, 1991)

1) Link to the Text of the Act
Read the statute (12 U.S.C. §§ 1811 et seq.)

2) Why It Was Done
Passed after continuing bank and thrift failures in the late 1980s and early 1990s, FDICIA strengthened the FDIC’s authority, imposed stricter capital requirements, and introduced a system of prompt corrective action to intervene in troubled banks before collapse.

3) Pre-existing Law or Constitutional Rights
FIRREA (1989) had addressed the S&L crisis, but weaknesses remained in deposit insurance and bank supervision. FDICIA expanded federal authority over banks but did not directly impact constitutional rights.

4) Overreach or Proper Role?
Supporters saw it as necessary to protect taxpayers from further bailouts by forcing earlier intervention. Critics argued it increased regulatory burden and limited banks’ flexibility to manage downturns.

5) Who or What It Controls

• FDIC (granted expanded oversight powers and risk-based insurance premiums)
• Banks & Thrifts (required to meet new capital standards)
• Bank management (subject to stricter enforcement and removal for unsafe practices)
• Depositors & taxpayers (indirectly protected by stronger safeguards)

6) Key Sections / Citations

• 12 U.S.C. § 1831o: Prompt corrective action based on capital levels
• 12 U.S.C. § 1821: FDIC authority to resolve failing banks
• 12 U.S.C. § 1817: Risk-based deposit insurance premiums

7) Recent Changes or Live Controversies

• Many FDICIA provisions were tested again during the 2008 financial crisis, particularly in debates over whether regulators intervened early enough.
• Some rules have been modified by later legislation such as the Dodd–Frank Act (2010).
• Still central to how the FDIC supervises banks and manages failures today.

8) Official Sources

• Congress.gov – FDICIA 1991
• U.S. Code – 12 U.S.C. §§ 1811 et seq.
• FDIC – FDICIA Overview

• Banking
• Finance
• Fdic
• Regulation
• Capital Requirements
• Bank Failures