HR3716-119

What This Bill Does

The Systemic Risk Authority Transparency Act rewrites the reporting process that follows a systemic risk exception under the Federal Deposit Insurance Act. When federal officials use the exception for a failed insured depository institution, the Comptroller General must report to Congress within 60 days and again 180 days later. GAO must examine the basis for the determination, the purpose of actions taken under the exception, likely effects on incentives and conduct of insured depository institutions and uninsured depositors, executive and board mismanagement, compensation practices, supervisory or regulatory shortcomings, actions by banking regulators, the Financial Stability Oversight Council, Treasury, and other financial regulators, and additional contributors such as auditors, accounting firms, credit rating agencies, investment bank underwriters, Federal Reserve bank loans, and Federal Home Loan Bank advances. The bill also requires the appropriate federal banking agency for the failed institution to report within 90 days and again 210 days later, disclosing examination and inspection reports, material supervisory determinations, relevant correspondence, mismanagement, regulatory shortcomings, failure dynamics, and recommendations.

Who Benefits and How

House Financial Services Committee staff, Senate Banking Committee staff, Congress, uninsured depositors, community banks, bank investors, financial-stability watchdogs, journalists covering bank failures, and the public benefit because the bill creates fast, detailed disclosure about why extraordinary systemic-risk authority was used, whether supervisors missed warning signs, whether executive pay or board decisions contributed to failure, and whether outside firms or emergency liquidity channels played a role.

Who Bears the Burden and How

The Government Accountability Office, FDIC, Federal Reserve, Office of the Comptroller of the Currency, state banking supervisors, Treasury Department, Financial Stability Oversight Council, failed-bank executives, failed-bank boards, auditing firms, accounting firms, credit rating agencies, investment bank underwriters, Federal Reserve Banks, Federal Home Loan Banks, and federal banking-agency disclosure staff bear burdens because the bill forces rapid document production, public reporting to the fullest extent possible, committee consultation before withholding materials, and scrutiny of management, compensation, supervision, liquidity support, underwriting, auditing, accounting, and ratings practices tied to bank failures.

Key Provisions

• Requires GAO reports to Congress 60 days and 180 days after a systemic risk determination.
• Requires GAO review of the determination basis, action purpose, depositor incentives, bank incentives, mismanagement, compensation, supervisory shortcomings, regulator actions, and outside contributors.
• Requires the appropriate federal banking agency to report 90 days and 210 days after the determination.
• Requires disclosure of three years of examination and inspection reports, material supervisory determinations, and relevant correspondence for the failed institution.
• Requires publication to the fullest extent possible while preserving privileges and FOIA exemptions.
• Requires consultation with House and Senate banking committee leaders before withholding materials from publication.