Under the Dodd-Frank Act, banks with over $50 billion in assets are required to submit plans for resolution under bankruptcy. However, the report highlighted the fact that the agencies have never publicly disclosed their frameworks for assessing those plans, or their criteria for reductions in small company plan requirements. The GAO said that by not disclosing this information, companies lack information they could use to assess and enhance their frameworks, and recommended that regulators make that information public in the future.
The report also questioned the feasibility of the annual reporting requirement — on average, the GAO found that regulators took 9 months to complete their reviews, leaving little time for companies to revise their plans before re-submitting.
The study was called for by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), who has previously raised concerns over the lack of transparency among regulators. Hensarling said:
[S]ecrecy and lack of accountability can lead to abuse by Washington regulators and is a tool for them to potentially exercise de facto management authority over major financial institutions. Once again we’re seeing the uncertainty created by Dodd-Frank and its regulatory burden that impedes economic growth and makes it more difficult for working Americans to achieve financial independence.View the report.