Regulatory accounting principles - also known as RAP - are a set of rules and regulations that were created with the intention of helping low net worth saving and loan associations (S&Ls) meet capital requirements by the Federal Home Loan Bank Board. The regulatory accounting principles allowed S&Ls to amortize gains and losses over long periods of time. Although the rules were created with the best intentions, they were in effect the cause of the 1980s savings and loan crisis because they allowed S&Ls to inflate their net worth. In the end, RAP was phased out by the Financial Institutions Reform, Recovery and Enforcement Act of 1989.
Discover how CCH Tagetik Performance Management Software delivers: