Systemic Risk Authority Transparency Act
Summary
The Systemic Risk Authority Transparency Act aims to increase transparency and accountability regarding the use of systemic risk exceptions in winding up failed insured depository institutions. It mandates reviews and reports by the GAO and appropriate federal banking agencies to Congress. 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
This act will likely lead to greater scrutiny of bank failures and the use of systemic risk exceptions. It requires more detailed reporting on the causes of failures, including mismanagement, regulatory shortcomings, and the role of various financial entities. The increased transparency could influence the behavior of banks and regulators, potentially leading to more cautious practices.
Potential Benefits
- Increased transparency in the handling of bank failures.
- Greater accountability for regulators and bank executives.
- Improved understanding of the factors contributing to bank failures.
- Potential for better risk management practices in the banking industry.
- Enhanced public trust in the financial system.
Most Benefited Areas:
Potential Disadvantages
- Increased reporting burden on federal banking agencies.
- Potential delays in resolving bank failures due to increased scrutiny.
- Possible chilling effect on risk-taking by banks, potentially hindering economic growth.
- Risk of information overload for Congress, making it difficult to identify key issues.
- Potential for political interference in regulatory decisions.
Constitutional Alignment
The Act aligns with the Constitution by promoting transparency and accountability in government actions, particularly concerning financial stability. Congress's power to oversee the financial system is derived from its authority to regulate commerce (Article I, Section 8). The Act's reporting requirements ensure that Congress can effectively exercise this oversight function.
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).