Systemic Risk Authority Transparency Act
Summary
The Systemic Risk Authority Transparency Act aims to increase transparency and accountability regarding the use of systemic risk authority in winding up failed insured depository institutions. It mandates reviews and reports by the GAO and appropriate federal banking agencies. These reports will cover the basis for determinations, the purpose of actions taken, and the likely effects on insured depository institutions and uninsured depositors.
Expected Effects
The act will likely lead to greater scrutiny of bank failures and the use of systemic risk exceptions. This increased oversight could influence the behavior of banks and regulators. It may also improve public understanding of the factors contributing to bank failures.
Potential Benefits
- Increased transparency in the handling of failed banks.
- Enhanced accountability for regulators and bank executives.
- Improved public understanding of systemic risk and its management.
- Potential for better-informed policy decisions regarding financial stability.
- Early detection of mismanagement and regulatory shortcomings.
Most Benefited Areas:
Potential Disadvantages
- Potential for increased compliance costs for banking agencies.
- Risk of disclosing sensitive information that could harm financial institutions (mitigated by redaction provisions).
- Possible delays in resolving bank failures due to increased reporting requirements.
- Could create a chilling effect on regulators' willingness to use systemic risk authority.
- The act's effectiveness depends on the quality and thoroughness of the GAO and agency reports.
Constitutional Alignment
The act aligns with the Constitution's general welfare clause (Preamble) by promoting financial stability and protecting depositors. Congress's authority to regulate commerce (Article I, Section 8) provides a basis for this legislation, as it directly relates to the regulation of financial institutions and the banking system. The reporting requirements imposed on federal agencies are consistent with Congress's oversight responsibilities.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).