FIRREA is the Financial Institutions Reform, Recovery, and Enforcement Act. This act was passed on August 9, 1989 to respond to the Savinggs and Loan Crisis after it bankrupted the Federal Savings and Loan Insurance Corporation. The FSLIC was supposed to make sure Savings and Loan depositors received their investments back when the banks
FIRREA provided $50 billion to close failed banks and stop further losses. It set up a new government agency called the Resolution Trust Corporation (RTC) to resell Savings and Loan assets, mostly real estate, and use the proceeds to pay back depositors. FIRREA also changed Savings and Loan regulations to help prevent further poor investments and fraud.
Without FIRREA, depositors in bankrupt Savings and Loans would have simply lost their money.