Systemic Risk Authority Transparency Act

This bill aims to make bank failures more transparent and accountable. When a bank fails and the Treasury decides that letting it fail could harm the whole financial system, two sets of reports must be made public. The Government Accountability Office (GAO) must quickly explain why that decision was made, what actions were taken, how it might affect bank behavior, and what went wrong at the failed bank, including pay practices, any mistakes by its leaders, and any gaps in oversight. GAO must report within 60 days and again at 180 days. Nothing in these reports limits the government’s power to enforce the law. Banking regulators must also share exam reports and letters from the last three years and explain mismanagement, regulator shortcomings, and lessons to improve safety. They must do this within 90 days and again at 210 days. They should publish as much as possible, protect sensitive and private information, and can ask for a short extension if needed for financial stability. Overall, the goal is clearer answers for the public and Congress after major bank failures, plus ideas to prevent future ones.

Key points

• Who is affected: GAO; federal banking agencies; failed banks’ leaders; Congress; and, indirectly, customers and communities who rely on a stable banking system.
• What changes: Required public reports on why the failure threatened the system, what actions were taken, mismanagement and oversight failures, and recommendations to fix problems. Regulators must publish as much as possible while protecting privacy and legal privileges; they may combine reports and extend deadlines in limited cases.
• When: GAO reports at 60 and 180 days; regulator reports at 90 and 210 days after the Treasury’s “system risk” decision on the failed bank.