FIRREA applies primarily to which group within the financial sector?

The correct answer highlights that FIRREA, or the Financial Institutions Reform, Recovery, and Enforcement Act, primarily affects commercial banks and savings associations. This act was enacted in response to the savings and loan crisis of the 1980s and aims to strengthen the regulation of these financial institutions to enhance the stability and safety of the banking system.

FIRREA directly addresses issues related to the management, oversight, and insurance of deposits within these institutions, providing comprehensive reforms aimed at preventing financial fraud and ensuring that commercial banks and savings associations operate effectively within the regulatory framework. It created the Office of Thrift Supervision and instituted stricter capital requirements, which are critical components of managing risk in these sectors.

In contrast, investment banks, credit unions, and hedge funds operate under different regulatory structures and are not the primary focus of FIRREA. Investment banks typically deal with securities and corporate finance and fall under different regulations from those governing traditional banking institutions. Credit unions, although similar to savings associations in some respects, are governed by specific credit union regulations and are not the main concern of FIRREA. Hedge funds operate with different investment strategies and are typically less regulated in comparison to commercial banks and savings associations, focusing more on high-risk investment avenues rather than deposit taking or making traditional