Systemic Risk Authority Transparency Act
Systemic Risk Authority Transparency Act aims to increase federal oversight and public transparency around the use of the systemic risk authority when winding up a failed insured depository institution (IDI). It requires the Government Accountability Office (GAO) to review and report on each determination to apply the systemic risk authority, including the basis and effects of the action, potential impacts on banks and depositors, possible mismanagement, and regulator shortcomings. In addition, it mandates the appropriate federal banking agency to provide Congress with periodic, detailed reports about the failed institution, including examination reports, supervisory communications, mismanagement, dynamics leading to failure, and recommended improvements for safety and soundness. The bill emphasizes transparency while allowing for redactions to protect personally identifiable information and certain privileges, and it sets procedures for publication, consultation with Congress, and the possibility to extend deadlines. Overall, the bill seeks to strengthen accountability and public understanding of how systemic risk tools are used in bank resolution, potentially influencing future practices, regulatory reforms, and expectations for bankers, regulators, and stakeholders involved in bank failures.
Key Points
- 1GAO review framework created: Not later than 60 days after a systemic risk determination and again 180 days later, the GAO must review and report to Congress on the determination, including the rationale, purpose, effects on incentives, potential mismanagement, compensation practices, regulatory shortcomings, actions by regulators, and other contributing factors (including auditing, rating agencies, and liquidity options).
- 2New congressional reporting from appropriate federal banking agency: Within 90 days after a determination and again at 210 days, the agency must submit to Congress a detailed report about the failed IDI, covering:
- 3- Examination reports and material supervisory communications from the prior 3 years (with redactions as appropriate);
- 4- Investigations of mismanagement by executives/board;
- 5- Supervisory/regulatory shortcomings by the agency;
- 6- Dynamics contributing to the failure;
- 7- Recommendations to improve safety and soundness of similarly situated institutions, the banking system, and financial stability.
- 8Privacy and transparency protections: Reports may redact personally identifiable information and protect privileged materials; agencies must publish materials to the fullest extent possible, with a process to consult Congress if omitting materials, and provide written explanations if materials are not published.
- 9Extensions and consolidation: Agencies may extend deadlines by up to 60 days for stability-related reasons and may consolidate multiple reports, provided each original report would have met timing requirements.
- 10No restriction on enforcement: Provisions clarify that these reporting requirements do not limit the ability of agencies to enforce federal statutes, rules, or orders.