Comprehensive Thrift Act

ON NOVEMBER 29, 1990, President George H. W. Bush signed the Crime Control Act of 1990 into law. It was a series of acts designed to reduce crime in a variety of ways. One particular provision, Title XXV of the Crime Control Act, which is better known as the Comprehensive Thrift Act and Bank Fraud Prosecution and Taxpayer Recovery Act of 1990, deals with the prevention of financial misconduct by banking institutions.

Proposed by Senator Joe Biden (D-D) and cosponsored by Senator Strom Thurmond (R-SC), Title XXV of the Crime Control Act greatly improved banking law enforcement to prevent and punish previous financial misconduct through a number of provisions, outlined into nine different subsections. Title XXV increases criminal penalties and allows for imprisonment if a banking official conceals assets from the Federal Deposit Insurance Corporation (FDIC), obstructs government examination of a financial institution, or commits bank fraud. Prison sentences for banking officials guilty of bank fraud or embezzlement may be as high as a maximum of 30 years.

Also, former felons of certain crimes like perjury or breach of trust are prohibited from working or participating at a financial institution for at least 10 years. Under the legislation, undercapitalized banks, or those banks whose operations are hampered by a lack of capital, are prohibited from making indemnification payments to parties related to the affected cash-strapped institutions. After penalties for misconduct have been assessed, the act directs the U.S. Sentencing Commission to restore properties or money lost through financial violations to related bank crime victims.

Title XXV amends other laws related to financial crimes in order to protect assets from wrongful disposition. The Federal Deposit Insurance Act and the Federal Credit Union Act were amended to provide clearer guidelines for asset attachment procedures. The amendment improves the procedures for dealing with financial misconduct cases and modifies the federal response structure for crimes by financial institutions. Reporting requirements for the attorney general were changed and they specify that the attorney general must compile reports on major criminal investigations related to finance, and present reports that detail the status of each federal juridical district and the actions of the Financial Institutions Unit.

The act establishes the National Commission on Financial Institution Reform, Recovery, and Enforcement to research and reach conclusions concerning the causes of problems within the savings and loan scandals of the 1980s which led to the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). FIRREA was amended to increase appropriations over the next two financial years (1991–93) to the attorney general, Internal Revenue Service, and the federal court system in order to better prosecute and ameliorate bank crimes.

At first, banking officials were unsure of the eventual implications of the sweeping provisions of the Comprehensive Thrift Act and Bank Fraud Prosecution and Taxpayer Recovery Act of 1990. However, they were able to circumvent certain new regulations by acting as an individual independent of a financial institution. Still, the act provided the[Page 189] Attorney General and the Federal Deposit Insurance Corporation (FDIC) with more power to take action against banks operating in a fiscally unsound manner and to recover assets which were improperly lost by financial institutions or citizens.

...