DEFINITION of 'Regulatory Accounting Principles - RAP'

A comprehensive set of rules and regulations for accounting that were introduced by the Federal Home Loan Bank Board. Regulatory accounting principles were created to assist low net-worth savings and loan associations with meeting capital requirements. These rules allowed S&Ls to amortize such items as gains or losses from sales over long periods of time.

BREAKING DOWN 'Regulatory Accounting Principles - RAP'

Unfortunately, the introduction of regulatory accounting principles contributed to the downfall of many S&Ls. The relaxed rules enabled many otherwise insolvent institutions to artificially increase their net worths and continue doing business. RAP stands in contrast to GAAP (Generally Accepted Accounting Principles).

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