Reforming the U.S. financial regulatory system to reflect 21st century realities

The current crisis facing the nation's financial markets dramatically illustrates the ineffectiveness of the regulatory system in overseeing the increasing complexity of U.S. markets, institutions, and products that have rapidly evolved over the last 30 years. The regulatory system, developed in a piecemeal fashion over the past 150 years with some parts of the system created in response to previous financial crises, currently lacks the comprehensive framework needed to regulate today's highly complex, ever-changing global marketplace.

^ Back to topWhat Needs to Be Done

These developments highlight the need for the creation of a system of regulation that can more effectively address 21st century realities. Building upon the existing body of work on the regulation of financial markets and emerging issues, GAO plans to issue a report in January 2009 that can be used to help create a new system of regulation and to evaluate regulatory proposals that emerge. Specifically, the report to the Congress will

• Describe the current regulatory system and how it was created over the past 150 years
• Discuss the need for significant reforms of the regulatory structure to better reflect the current integrated and global markets by highlighting problems with the current structure as demonstrated by recent and past events
• Develop an evaluation framework that outlines the key elements that any new regulatory system should include regardless of the structure its takes such as ensuring systemwide risks are identified and mitigated and that consumers are protected

^ Back to topKey Reports

Private Equity: Recent Growth in Leveraged Buyouts Exposed Risks That Warrant Continued Attention

GAO-08-885, September 9, 2008

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 133 pages)   Accessible Text   Recommendations (HTML)

Hedge Funds: Regulators and Market Participants Are Taking Steps to Strengthen Market Discipline, but Continued Attention Is Needed

GAO-08-200, January 24, 2008

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 55 pages)   Accessible Text

Financial Regulation: Industry Trends Continue to Challenge the Federal Regulatory Structure

GAO-08-32, October 12, 2007

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 59 pages)   Accessible Text

Financial Market Regulation: Agencies Engaged in Consolidated Supervision Can Strengthen Performance Measurement and Collaboration

GAO-07-154, March 15, 2007

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 86 pages)   Accessible Text   Recommendations (HTML)

Financial Regulation: Industry Changes Prompt Need to Reconsider U.S. Regulatory Structure

GAO-05-61, October 6, 2004

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 173 pages)   Accessible Text   Recommendations (HTML)

Long-Term Capital Management: Regulators Need to Focus Greater Attention on Systemic Risk

GGD-00-3, October 29, 1999

Summary (HTML)   Full Report (PDF, 60 pages)     Recommendations (HTML)

Financial Derivatives: Actions Taken or Proposed Since May 1994

GGD/AIMD-97-8, November 1, 1996

Summary (HTML)   Full Report (PDF, 169 pages)  

Bank Regulation: Consolidation of the Regulatory Agencies

T-GGD-94-106, March 4, 1994

Summary (HTML)   Full Report (PDF, 12 pages)