Opinion ID: 580887
Heading Depth: 2
Heading Rank: 2

Heading: firrea's new capital requirements

Text: 6 In August 1989, Congress enacted FIRREA. FIRREA abolished FSLIC and FHLBB, created the Office of Thrift Supervision (OTS), and placed the rights and duties formerly held by FHLBB with OTS. 8 FIRREA instructs OTS to prescribe and maintain uniformly applicable capital standards for savings associations, 9 which must include a leverage limit, a tangible capital requirement, and a risk-based capital requirement. 10 FIRREA specifies the percentage of assets required under each of these categories, 11 and authorizes imposition of draconian sanctions upon non-complying associations. 12 FIRREA curtails use of supervisory goodwill to determine whether regulatory capital requirements are met. Supervisory goodwill must be amortized over no more than 20 years, and cannot be used at all to calculate core capital after January 1, 1995. 13 7 OTS interprets FIRREA's capital standards as applying to all associations that are not specifically excepted. FIRREA has no specific exception for assistance agreements with FSLIC that preceded its enactment. Hence, OTS interprets FIRREA as abrogating such agreements. While FIRREA does include a general savings clause in § 401(g), 14 OTS interprets § 401(g) as not applying to pre-existing assistance agreements. OTS also construes FIRREA as giving it the power to require consolidation of assets and liabilities of all domestic insured subsidiaries with those of their parent associations for the purpose of calculating regulatory capital.