IDEAS home Printed from https://ideas.repec.org/a/bla/coecpo/v9y1991i1p24-35.html

The Need To Reform The Federal Deposit Insurance System

Author

Listed:
  • JAMES R. BARTH
  • CARL D. HUDSON
  • DANIEL E. PAGE

Abstract

The biggest financial disaster in modern history struck the savings and loan industry during the 1980s. This paper argues that the unifying cause of this debacle was the way in which the federal deposit insurance system is structured. The fundamental cause was not fraud and deregulation, as is commonly argued. The government not only permitted reportedly insolvent institutions to continue to operate, it permitted many such institutions to grow by offering relatively high rates on their deposits. Unfortunately, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 may not prevent a similar situation from ever recurring. Therefore, one must understand exactly what happened, what the FIRREA does and does not do, and the proposals for reforming the entire structure of the federal deposit insurance system.

Suggested Citation

  • James R. Barth & Carl D. Hudson & Daniel E. Page, 1991. "The Need To Reform The Federal Deposit Insurance System," Contemporary Economic Policy, Western Economic Association International, vol. 9(1), pages 24-35, January.
    • Handle: RePEc:bla:coecpo:v:9:y:1991:i:1:p:24-35
    DOI: 10.1111/j.1465-7287.1991.tb00310.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1465-7287.1991.tb00310.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1465-7287.1991.tb00310.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. George J. Benston & George G. Kaufman, 1988. "Risk and solvency regulation of depository institutions: past policies and current options," Staff Memoranda 88-1, Federal Reserve Bank of Chicago.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. GEORGE E. French, 1992. "Early Corrective Action For Troubled Banks," Contemporary Economic Policy, Western Economic Association International, vol. 10(4), pages 103-113, October.
    2. Richard J. Cebula & Willie J. Belton, 1996. "An Empirical Analysis Of Determinants Of Geographic Differentials In The Bank Closing Rate In The United States, 1989-1994, Using The Heteroskedastic-Tobit Model," The Review of Regional Studies, Southern Regional Science Association, vol. 26(3), pages 341-350, Winter.
    3. Douglas D. Evanoff & Larry D. Wall, 2001. "Reforming Bank Capital Regulation: Using Subordinated Debt To Enhance Market And Supervisory Discipline," Contemporary Economic Policy, Western Economic Association International, vol. 19(4), pages 444-453, October.
    4. Randall W. Bennett & Christine Loucks, 1996. "Politics And Length Of Time To Bank Failure: 1986–1990," Contemporary Economic Policy, Western Economic Association International, vol. 14(4), pages 29-41, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ben S. Bernanke, 1989. "Comments on corporate debt," Proceedings 227, Federal Reserve Bank of Chicago.
    2. George J. Benston & George G. Kaufman, 1997. "FDICIA after five years: a review and evaluation," Working Paper Series, Issues in Financial Regulation WP-97-01, Federal Reserve Bank of Chicago.
    3. George G. Kaufman, 1990. "Are Some Banks Too Large To Fail? Myth And Reality," Contemporary Economic Policy, Western Economic Association International, vol. 8(4), pages 1-14, October.
    4. Roy C. Smith & Ingo Walter, 1989. "Investment banking in Europe after 1992," Proceedings 243, Federal Reserve Bank of Chicago.
    5. Ricardo Cabral, 2025. "The Banking Union’s resolution or liquidation approach," Journal of Banking Regulation, Palgrave Macmillan, vol. 26(2), pages 111-128, June.
    6. Franklin R. Edwards & Frederic S. Mishkin, 1995. "The decline of traditional banking: implications for financial stability and regulatory policy," Economic Policy Review, Federal Reserve Bank of New York, vol. 1(Jul), pages 27-45.
    7. Dominique Lacoue-Labarthe, 2003. "L'évolution de la supervision bancaire et de la réglementation prudentielle (1945-1996)," Revue d'Économie Financière, Programme National Persée, vol. 73(4), pages 39-63.
    8. Manuel H. Johnson, 1989. "Altering incentives in an evolving depository system: safe banking for the 1990s," Proceedings 224, Federal Reserve Bank of Chicago.
    9. Mayes, David G. & Nieto, María J. & Wall, Larry, 2008. "Multiple safety net regulators and agency problems in the EU: Is Prompt Corrective Action partly the solution?," Journal of Financial Stability, Elsevier, vol. 4(3), pages 232-257, September.
    10. Biagio Bossone & Larry Promisel, 2012. "Strengthening Financial Systems in Developing Countries," World Bank Publications - Reports 27109, The World Bank Group.
    11. Kenneth R. Cone, 1989. "The globalization of trading and its implications for financial system risk," Proceedings 244, Federal Reserve Bank of Chicago.
    12. Ronnie J. Phillips, "undated". "Narrow Banking Reconsidered, The Functional Approach to Financial Reform," Economics Public Policy Brief Archive ppb_17, Levy Economics Institute.
    13. Sherrill Shaffer, 1989. "Pooling intensifies joint failure risk: abstract," Proceedings 249, Federal Reserve Bank of Chicago.
    14. Daryl R. Leehaug, 1989. "Bank risk: a status report," Proceedings 226, Federal Reserve Bank of Chicago.
    15. Arthur J. Rolnick, 1989. "Taking a new look at some old banking lessons," Proceedings 238, Federal Reserve Bank of Chicago.
    16. George Benston, 2000. "Is Government Regulation of Banks Necessary?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 18(2), pages 185-202, December.
    17. Lawrence J. White, 1992. "What Should Banks Really Do?," Contemporary Economic Policy, Western Economic Association International, vol. 10(3), pages 104-112, July.
    18. Douglas D. Evanoff & Larry D. Wall, 2000. "Subordinated debt and bank capital reform," Working Paper Series WP-00-7, Federal Reserve Bank of Chicago.
    19. Carter H. Golembe, 1989. "Government and banking: some historical perspectives on present problems," Proceedings 223, Federal Reserve Bank of Chicago.
    20. Elijah Brewer & Thomas H. Mondschean, 1992. "Ex ante risk and ex post collapse of S&Ls in the 1980s," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 16(Jul), pages 2-12.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:coecpo:v:9:y:1991:i:1:p:24-35. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.