Summary

This testimony discusses four basic principles that GAO believes Congress should consider in modernizing the structure of U.S. bank regulatory structure. GAO believes that structural reform should provide for (1) consolidated and comprehensive oversight of companies owning federally insured banks and thrifts, with coordinated functional regulation and supervision of individual components; (2) independence from undue political pressures, balanced by appropriate accountability and adequate congressional oversight; (3) consistent rules, consistently applied for similar activities; and (4) enhanced efficiency and reduced regulatory burden. GAO's work on bank oversight in Canada, France, Germany, the United Kingdom, and Japan showed that different ways exist to simplify bank oversight in accordance with the above four principles. GAO urges Congress to reduce the number of federal agencies with primary responsibility for bank oversight, include both the Federal Reserve and the Treasury Department in bank oversight, provide the Federal Deposit Insurance Corporation with the authority to protect deposit insurance funds, and incorporate mechanisms to ensure consistent oversight and reduce regulatory burden.