Bank Regulation: Lessons Learned and a Framework for Monitoring Emerging Risks and Regulatory Response, Report to Congressional Addressees   [open pdf - 601KB]

From the Document: "Weakness in federal oversight was one of many factors that contributed to the size of federal losses and the number of bank failures in banking-related crises over the past 35 years-- including the 1980s thrift and commercial bank crises and the 2007- 2009 financial crisis. Resolving the failures of banks and thrifts due to these crises resulted in estimated costs to federal bank and thrift insurance funds over $165 billion, as well as other federal government costs, such as taxpayer-funded assistance during the financial crises. Ongoing monitoring of banking regulators' efforts to identify and respond to emerging threats to the banking system can provide a starting point for identifying opportunities for more targeted and frequent assessments of these efforts. This report (1) discusses regulatory lessons learned from these past crises and (2) offers a framework that GAO [Government Accountability Office] and other oversight bodies, such as inspectors general, can use to provide continuous future oversight of regulatory responses to emerging risks. To do this work, GAO reviewed its prior studies and those of federal banking regulators, the regulators' inspectors general, and academics that evaluated regulators' efforts to identify and respond to risks that led to bank failures in past crises. In developing an oversight framework, GAO reviewed frameworks for monitoring domestic and global financial systems to identify key areas in which risks to banks can arise. GAO interviewed regulators to identify supervisory actions that can be used to respond to emerging risks."

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