DOJ revives FIRREA law in Standard & Poor’s lawsuit

The 1989 act allows the government to pursue civil suits for violations of criminal laws that affect federally insured financial institutions

An often-ignored financial reform law is getting its moment in the spotlight, thanks to a Department of Justice (DOJ) lawsuit against Standard & Poor’s Ratings Services (S&P).

The Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA) allows the federal government to levy civil penalties for violations of criminal laws that deal with a federally insured financial institution. Passed in the wake of a savings and loan crisis that wiped out more than 700 savings and loan associations and cost the government billions, FIRREA has now been revived by the DOJ, which is suing S&P for allegedly flouting company standards when rating mortgage bonds, many of which collapsed during the 2008 financial crisis.

Alanna Byrne

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