Federal Savings And Loan Insurance Corporation (FSLIC)
What is 'Federal Savings And Loan Insurance Corporation (FSLIC)'
The Federal Savings and Loan Insurance Corporation (FSLIC) is a defunct U.S. government institution that provided deposit insurance to savings and loan institutions until its dissolution at the end of the 1980s. Its responsibilities were transferred to the Federal Deposit Insurance Corporation (FDIC) in 1989.
BREAKING DOWN 'Federal Savings And Loan Insurance Corporation (FSLIC)'
The FSLIC was first established by Congress in 1934 as part of the National Housing Act. Created on the heels of the Great Depression, the FSLIC served as a safety net for the savings and loan industry. After the industry's essential collapse during the Depression, the government sought to restore confidence in the security of savings and loan accounts by backing them up so that if any given institution went under, the depositors' funds would still be safe. Deposits up to $100,000 were insured. The FSLIC was abolished by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).
FIRREA overhauled the savings and loan industry and its regulation in response to the savings and loan crisis of the 1980s, when approximately one-third of the institutions in the United States failed within a ten-year span. This widespread failure put a huge strain on the FSLIC's reserves. By 1989, the FSLIC was past the point of saving, as it was already drawing on large amounts of taxpayer money to provide the necessary funds to keep savings and loans institutions afloat. The FSLIC Resolution Fund, financed by the Financing Corporation (FICO), was created to assume responsibility for all lingering debts after the FSLIC was abolished.
How is the Savings and Loan Industry Insured Today?
After the FIRREA took effect, the FSLIC's responsibility of insuring savings and loan institutions was transferred to the Resolution Trust Corporation (RTC), which merged into the Federal Deposit Insurance Corporation six years later. The FDIC, also created in response to the Great Depression, already insured deposits in commercial banks, so its responsibilities broadened to include individual savings and loan accounts. The 2011 Dodd-Frank Wall Street Reform and Consumer Protection Act increased the insurance limit from $100,000 to $250,000.
Prior to the FSLIC's dissolution, billions of dollars of taxpayer money was used to keep the fund afloat and operational, but no taxpayer money has contributed to the FDIC's insurance funds. The FDIC has a $100 billion credit line through the U.S. Department of the Treasury. Credit unions are separately insured by the National Credit Union Administration, which has the same insurance limit as the FDIC.