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Thursday, September 18, 2014

GAO: FSOC Lacks Transparency, Accountability, Collaboration

The FSOC still lacks a comprehensive, systematic approach to identify emerging threats to financial stability, according to a GAO study on the FSOC’s Status of Efforts to Improve Transparency, Accountability and Collaboration. Since the 2012 report, the GAO report continues, the Office of Financial Research (OFR) has made some progress in developing data tools to support FSOC, but GAO’s observations of two of these tools suggest that one tool does not focus on risks to the financial system, while another remains in a prototype phase.

Also, the GAO said that the FSOC could do more to improve transparency and accountability. In May 2014, FSOC staff said they had attempted to provide more information in the minutes of the meetings, but due to the confidential information discussed, they did not intend to keep detailed minutes. Furthermore, FSOC staff said that the impact of designating nonbanks for enhanced supervisions would be assessed as part of a mandated January 2016 study, but they have not begun to prepare for this study.

Regarding the GAO’s recommendations for improved coordination between FSOC, OFR and member agencies, FSOC said they did not plan to clarify the roles and responsibilities of the aforementioned agencies because the overlapping responsibilities for monitoring systemic risk had not been problematic.

Read the GAO study.

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