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45 Bus. Law. 1103 (1989-1990)
A Decade's Journey from Deregulation to Supervisory Reregulation: The Financial Institutions Reform, Recovery, and Enforcement Act of 1989

handle is hein.journals/busl45 and id is 1127 raw text is: A Decade's Journey From Deregulation to
Supervisory Reregulation: The Financial
Institutions Reform, Recovery, and
Enforcement Act of 1989
By Daniel B. Gail and Joseph J. Norton*
INTRODUCTION
The 1980s began and have ended with serious congressional and regulatory
concern for the financial health and stability of the thrift industry. The mid-to-
late 1970s and early 1980s witnessed a period of high inflation, rampant interest
rates, energy crises, and heavy investment in real estate and energy as inflation
hedges-all of which caused serious disintermediation, negative spreads, and
losses within the thrift industry. The decade has ended with the collapse and
substantial shrinkage (and possibly even disbandment) of this industry.'
However, the early 1980s was not a period of congressional and regulatory
pessimism, as is the present state of bank regulation in the United States. At
that time, there was a cautious optimism that Congress and the federal regula-
tors could pull the ox from the ditch by instituting an era of deregulation.
Deregulation would help free the thrift industry from historic strictures limiting
lending and investment powers, depository services and access to sources of
funds, and geographic expansion, and would create eventual economic vitality
for the industry. In addition, to aid this process, there would be a governmen-
tally supported program to bolster the capital structure of the thrift industry,
federal preemption of various state usury laws, and expanded regulatory au-
thority to assist financially distressed institutions. All this was set into place by
*Messrs. Gail and Norton are members of the Texas bar. Mr. Gail practices law in the Financial
Institutions and Real Estate Section of Winstead, McGuire, Sechrest & Minick, P.C., Dallas,
Texas. Mr. Norton is professor of banking law at the SMU School of Law, Cameron Markby
Hewitt Professorial Fellow in Banking Law at the University of London, Counsel to Winstead,
McGuire, Sechrest & Minick, P.C., Dallas, Texas, and Editor-in-Chief of the ABA's The
International Lawyer.
Editor's note: Unless otherwise indicated, this article addresses only the FIRREA statute as
enacted and speaks as of October 1, 1989. Substantial regulations for implementing and clarifying
FIRREA are contemplated.
1. For an insightful discussion of the problems of the thrift industry and thrift regulation, see
Harrell, Commentary on FIRREA: What Would George Bailey Think?, to be published in the
Winter 1989 issue of Cons. Fin L.Q. Rep.
1103

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