H.R. 3716: Systemic Risk Authority Transparency Act

The Systemic Risk Authority Transparency Act aims to enhance accountability and transparency regarding the governmental response to the failure of insured banks. Specifically, the bill amends existing regulations under the Federal Deposit Insurance Act to require detailed reporting by federal banking agencies when a bank failure occurs and systemic risk authority is invoked. Here are the key points of what the bill would do:

1. Requirement for GAO Review

The bill mandates that the Government Accountability Office (GAO) conduct a review within 60 days of a bank's failure where systemic risk authority is triggered, and again 180 days after the initial review. The review must include:

• The reasons behind the decision to invoke systemic risk authority.
• The intended outcomes of any actions taken.
• The potential impacts on the behavior of banks and their customers.
• Any mismanagement by the bank's executives that may have led to its failure.
• A review of the bank's compensation practices.
• Any regulatory shortcomings related to the bank.
• Actions taken by financial regulators in response to the failure.
• Other relevant factors contributing to the bank's failure, such as issues related to auditing or credit rating agencies.

2. Federal Banking Agency Reporting

The relevant federal banking agency must submit a comprehensive report to Congress within 90 days following a bank's failure and an additional report 210 days later. This report should include:

• Examination and inspection reports related to the failed bank from the last three years.
• Formal communications regarding supervisory decisions made in the previous three years.
• Information about any mismanagement that contributed to the bank failure.
• Any shortcomings in supervision or regulation by the federal agency.
• Factors that might have led to the bank's failure.
• Recommendations for improving the safety and soundness of similar banks and the financial system.

3. Protection of Sensitive Information

The bill includes measures to protect sensitive information in the reports, ensuring that disclosing certain data does not waive privileges under the law. It emphasizes the importance of transparency while allowing for redaction of personally identifiable information.

4. Transparency Enhancements

The federal banking agency is required to publish the materials contained in the reports to promote transparency. If specific materials are determined not to be published due to public interest concerns, the agency must consult with congressional leaders and provide a written explanation for the decision.

5. Extensions and Consolidation of Reports

Federal agencies have the option to extend the reporting deadlines in certain situations and can also consolidate reports if timing requirements are met.

Relevant Companies

None found.