The DIDMCA gave the Federal Reserve more control over non-member banks and was aimed at deregulating depository institutions. In turn, it allowed for the Fed to gain more control over the monetary policy. In 1982, the Garn-St. Germain Depository Institutions Act deregulated savings and loan associations. Specifically, it allowed banks to provide adjustable-rate mortgage loans, which is a loan that does not have a constant interest rate. These pieces of legislation ultimately encouraged firms to take on risky investments, which led to failure. Many individuals question whether the DIA act of 1982 was a contributing factor to the savings and loan crisis in the late 1980s. The FSLIC, Federal Savings and Loan Insurance Corporation, did not help eradicate to the risky situation of the saving associations. It did not close many of the bankrupt associations. In fact, by not closing the failing associations, it was encouraging firms to invest in risky investments by continuing to insure deposits at these associations. This eventually lead to the savings and loan crisis in the late
The DIDMCA gave the Federal Reserve more control over non-member banks and was aimed at deregulating depository institutions. In turn, it allowed for the Fed to gain more control over the monetary policy. In 1982, the Garn-St. Germain Depository Institutions Act deregulated savings and loan associations. Specifically, it allowed banks to provide adjustable-rate mortgage loans, which is a loan that does not have a constant interest rate. These pieces of legislation ultimately encouraged firms to take on risky investments, which led to failure. Many individuals question whether the DIA act of 1982 was a contributing factor to the savings and loan crisis in the late 1980s. The FSLIC, Federal Savings and Loan Insurance Corporation, did not help eradicate to the risky situation of the saving associations. It did not close many of the bankrupt associations. In fact, by not closing the failing associations, it was encouraging firms to invest in risky investments by continuing to insure deposits at these associations. This eventually lead to the savings and loan crisis in the late