The Financial Institution Reform, Recovery, and Enforcement Act of 1989 was enacted to address which main issue?

The Financial Institution Reform, Recovery, and Enforcement Act of 1989 was primarily enacted in response to the Savings and Loan crisis, which was a significant financial disaster that involved the failure of numerous savings and loan associations in the United States during the 1980s. This crisis led to substantial losses for depositors and necessitated extensive government intervention to stabilize the financial system.

The Act aimed to restore public confidence in the banking system, provide mechanisms to resolve the failures of financial institutions and protect depositors’ savings. It included provisions for the restructuring of the Federal Savings and Loan Insurance Corporation (FSLIC) and provided funding mechanisms to stabilize the affected institutions, thereby facilitating the recovery after the crisis.

Other options, such as regulation of derivatives trading, implementation of new tax laws, and reduction in bank fees, were not the primary focus of this legislation and were less connected to the immediate needs and responses required at the time of the Savings and Loan crisis.