Liability of Attorneys, Accountants, Appraisers, and Other Independent Contractors under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) was signed into law in August 1989 to address the thrift industry's financial crisis. One of FIRREA's goals is to protect financial institutions against fraud, waste, and insider abuse. In order to achieve this goal, FIRREA contains provisions that expand the scope of regulatory enforcement powers and increase the magnitude of penalties that regulatory agencies may levy against violators of the statute. Attorneys, accountants, appraisers, and independent contractors are specifically targeted by FIRREA's enforcement provisions and thus are subject to the severe penalties available under the statute. This Note compares the FIRREA regulatory enforcement provisions affecting independent contractors with enforcement provisions existing under prior law in an effort to predict and measure what impact these provisions will have on independent contractors. This Note proposes recommendations for independent contractors in responding to the FIRREA provisions and suggests that the use of enhanced internal control procedures such as the establishment of financial institution committees and the screening of potential financial institution clients can decrease the possibility of liability under FIRREA. Finally, this Note proposes recommendations for regulatory agencies charged with interpreting and applying the new provisions relating to independent contractors and concludes that the FIRREA standards should be interpreted so that competent professionals are encouraged to participate in the resolution of the financial crisis.