Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

GAO is required to annually study financial services regulations. GAO has issued a report that examines:

  • the regulatory analyses federal agencies performed for rules issued pursuant to the Dodd-Frank Act;
  • how the agencies consulted with each other in implementing the final rules to avoid duplication or conflicts; and
  • what is known about the impact of the Dodd-Frank Act rules.

GAO identified 66 final Dodd-Frank Act rules in effect between July 21, 2011, and July 23, 2012. GAO examined the regulatory analyses for the 54 regulations that were substantive and thus required regulatory analyses.

The GAO report found, among other things:

  • As part of their analyses, the agencies generally considered, but typically did not quantify or monetize, the benefits and costs of the rules reviewed. Most of the federal financial regulators, as independent regulatory agencies, are not subject to executive orders that require comprehensive benefit-cost analysis in accordance with guidance issued by the Office of Management and Budget. Although most financial regulators are not required to follow OMB’s guidance, they told GAO that they attempt to follow it in principle or spirit. GAO’s review of selected rules found that regulators did not consistently follow key elements of the OMB guidance in their regulatory analyses.
  • Federal financial agencies continue to coordinate on rulemakings informally in order to reduce duplication and overlap in regulations and for other purposes, but interagency coordination does not necessarily eliminate the potential for differences in related rules.
  • Some indicators suggest that since 2010 U.S. bank holding companies subject to enhanced prudential regulation under the Dodd-Frank Act (SIFIs) , on average, have decreased their leverage and enhanced their liquidity. Second, empirical results of GAO’s regression analysis suggest that, to date, the act may have had little effect on U.S. bank SIFIs’ funding costs but may have helped improve their safety and soundness.

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