Resolution Trust Corporation (RTC)

The Resolution Trust Corporation (RTC) was a United States government agency that was created in 1989 to resolve the savings and loan crisis. The RTC was created by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), which was signed into law by President George H. W. Bush on August 9, 1989.

The RTC was responsible for liquidating or selling the assets of insolvent savings and loans, and for resolving the claims of depositors and other creditors of those institutions. The RTC also had the authority to issue new capital to healthy savings and loans in order to help them recover from the crisis.

The RTC was funded by a combination of taxpayer money and funds from the sale of assets of insolvent savings and loans. The RTC's total cost was estimated to be $161.1 billion.

The RTC closed its doors on December 31, 1995, after it had resolved the affairs of 747 insolvent savings and loans. The RTC's work helped to restore confidence in the savings and loan industry and to prevent a wider financial crisis.

The RTC's legacy is mixed. On the one hand, the RTC was successful in resolving the savings and loan crisis and in preventing a wider financial crisis. On the other hand, the RTC's cost was high, and some critics argue that it could have been done more efficiently.

The RTC's experience has led to a number of changes in the regulation of the financial industry. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) gave the federal government new powers to regulate the financial industry. These powers have been used to prevent a repeat of the savings and loan crisis.

The RTC's experience has also led to a greater awareness of the need for financial regulation. The financial crisis of 2008 showed that the financial industry can be a source of systemic risk. In response to the crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was passed. This law gave the federal government new powers to regulate the financial industry and to prevent another financial crisis.

The RTC's experience is a reminder that the financial industry can be a source of systemic risk. It is also a reminder that financial regulation is necessary to prevent a repeat of the savings and loan crisis or the financial crisis of 2008.