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. Because the financial sector is vital to our economic well being and billions of taxpayer dollars are being committed to address the current crisis, we viewed the efforts being undertaken to ensure that this sector is overseen by an effective and efficient regulatory system as a key challenge to our nation. As a result, we included the need to modernize our financial regulatory system as a new issue on our high-risk list for 2009.
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 issued 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
- Describes the current regulatory system and how it was created over the past 150 years
- Discusses 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
- Presents 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.
- Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System
- GAO-09-216, January 8, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 107 pages) Accessible Text
- 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)
More Reports
- Troubled Asset Relief Program: Status of Participants' Dividend Payments and Repurchases of Preferred Stock and Warrants
- GAO-09-889T, July 9, 2009
- Summary (HTML) Full Report (PDF, 13 pages) Accessible Text
- Troubled Asset Relief Program: June 2009 Status of Efforts to Address Transparency and Accountability Issues
- GAO-09-658, June 17, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 117 pages) Accessible Text Recommendations (HTML)
- Regulation SHO: Recent Actions Appear to Have Initially Reduced Failures to Deliver, but More Industry Guidance Is Needed
- GAO-09-483, May 12, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 114 pages) Accessible Text Recommendations (HTML)
- Hedge Funds: Overview of Regulatory Oversight, Counterparty Risks, and Investment Challenges
- GAO-09-677T, May 7, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 18 pages) Accessible Text
- Management Report: Improvements Needed in SEC's Internal Controls and Accounting Procedures
- GAO-09-376R, April 2, 2009
- Summary (HTML) Full Report (PDF, 29 pages) Accessible Text Recommendations (HTML)
- Troubled Asset Relief Program: March 2009 Status of Efforts to Address Transparency and Accountability Issues
- GAO-09-504, March 31, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 100 pages) Accessible Text Recommendations (HTML)
- Troubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues
- GAO-09-539T, March 31, 2009
- Summary (HTML) Full Report (PDF, 16 pages) Accessible Text
- Financial Regulation: Review of Regulators' Oversight of Risk Management Systems at a Limited Number of Large, Complex Financial Institutions
- GAO-09-499T, March 19, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 34 pages) Accessible Text
- Troubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues
- GAO-09-484T, March 19, 2009
- Summary (HTML) Full Report (PDF, 22 pages) Accessible Text
- Federal Financial Assistance: Preliminary Observations on Assistance Provided to AIG
- GAO-09-490T, March 18, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 23 pages) Accessible Text
- Troubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues
- GAO-09-474T, March 11, 2009
- Summary (HTML) Full Report (PDF, 16 pages) Accessible Text
- Systemic Risk: Regulatory Oversight and Recent Initiatives to Address Risk Posed by Credit Default Swaps
- GAO-09-397T, March 5, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 32 pages) Accessible Text
- Bank Secrecy Act: Suspicious Activity Report Use Is Increasing, but FinCEN Needs to Further Develop and Document Its Form Revision Process
- GAO-09-226, February 27, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 53 pages) Accessible Text Recommendations (HTML)
- Securities and Exchange Commission: Oversight of U.S. Equities Market Clearing Agencies
- GAO-09-318R, February 26, 2009
- Summary (HTML) Full Report (PDF, 48 pages) Accessible Text
- Bank Secrecy Act: Federal Agencies Should Take Action to Further Improve Coordination and Information-Sharing Efforts
- GAO-09-227, February 12, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 110 pages) Accessible Text Recommendations (HTML)
- Troubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues
- GAO-09-359T, February 5, 2009
- Summary (HTML) Full Report (PDF, 13 pages) Accessible Text
- Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System
- GAO-09-349T, February 4, 2009
- Summary (HTML) Full Report (PDF, 30 pages) Accessible Text
- Troubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues
- GAO-09-296, January 30, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 112 pages) Accessible Text Recommendations (HTML)
- Issues Involving the Use of the Futures Markets to Invest in Commodity Indexes
- GAO-09-285R, January 30, 2009
- Summary (HTML) Full Report (PDF, 37 pages) Accessible Text
- Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System
- GAO-09-314T, January 21, 2009
- Summary (HTML) Full Report (PDF, 30 pages) Accessible Text
- Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System
- GAO-09-310T, January 14, 2009
- Summary (HTML) Full Report (PDF, 30 pages) Accessible Text
- Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System
- GAO-09-216, January 8, 2009
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 107 pages) Accessible Text
- Troubled Asset Relief Program: Additional Actions Needed to Better Ensure Integrity, Accountability, and Transparency
- GAO-09-266T, December 10, 2008
- Summary (HTML) Full Report (PDF, 12 pages) Accessible Text
- Troubled Asset Relief Program: Status of Efforts to Address Defaults and Foreclosures on Home Mortgages
- GAO-09-231T, December 4, 2008
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 24 pages) Accessible Text
- Troubled Asset Relief Program: Additional Actions Needed to Better Ensure Integrity, Accountability, and Transparency
- GAO-09-161, December 2, 2008
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 72 pages) Accessible Text Recommendations (HTML)
- Check 21 Act: Most Consumers Have Accepted and Banks Are Progressing Toward Full Adoption of Check Truncation
- GAO-09-8, October 28, 2008
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 66 pages) Accessible Text
- Risk-Based Capital: New Basel II Rules Reduced Certain Competitive Concerns, but Bank Regulators Should Address Remaining Uncertainties
- GAO-08-953, September 12, 2008
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 74 pages) Accessible Text Recommendations (HTML)
- 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)
- Sovereign Wealth Funds: Publicly Available Data on Sizes and Investments for Some Funds Are Limited
- GAO-08-946, September 9, 2008
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 59 pages) Accessible Text
- Fair Lending: Race and Gender Data Are Limited for Nonmortgage Lending
- GAO-08-1023T, July 17, 2008
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 21 pages) Accessible Text
- Management Report: Opportunities for Improvements in FDIC's Internal Controls and Accounting Procedures
- GAO-08-863R, July 11, 2008
- Summary (HTML) Full Report (PDF, 11 pages) Accessible Text Recommendations (HTML)
- Fair Lending: Race and Gender Data Are Limited for Nonmortgage Lending
- GAO-08-698, June 27, 2008
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 42 pages) Accessible Text
- Credit and Debit Cards: Federal Entities Are Taking Actions to Limit Their Interchange Fees, but Additional Revenue Collection Cost Savings May Exist
- GAO-08-558, May 15, 2008
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 63 pages) Accessible Text Recommendations (HTML)
- Bank Secrecy Act: Increased Use of Exemption Provisions Could Reduce Currency Transaction Reporting While Maintaining Usefulness to Law Enforcement Efforts
- GAO-08-355, February 21, 2008
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 105 pages) Accessible Text Recommendations (HTML)
- Bank Fees: Federal Banking Regulators Could Better Ensure That Consumers Have Required Disclosure Documents Prior to Opening Checking or Savings Accounts
- GAO-08-281, January 31, 2008
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 84 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
- Securities and Exchange Commission: Opportunities Exist to Improve Oversight of Self-Regulatory Organizations
- GAO-08-33, November 15, 2007
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 73 pages) Accessible Text Recommendations (HTML)
- Minority Banks: Regulators' Assessments of the Effectiveness of Their Support Efforts Have Been Limited
- GAO-08-233T, October 30, 2007
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 28 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
- Securities and Exchange Commission: Additional Actions Needed to Ensure Planned Improvements Address Limitations in Enforcement Division Operations
- GAO-07-830, August 15, 2007
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 53 pages) Accessible Text Recommendations (HTML)
- Securities and Exchange Commission: Steps Being Taken to Make Examination Program More Risk-Based and Transparent
- GAO-07-1053, August 14, 2007
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 43 pages) Accessible Text Recommendations (HTML)
- Credit Derivatives: Confirmation Backlogs Increased Dealers' Operational Risks, but Were Successfully Addressed after Joint Regulatory Action
- GAO-07-716, June 13, 2007
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 48 pages) Accessible Text
- Information on Selected Issues Concerning Banking Activities
- GAO-07-593R, April 30, 2007
- Summary (HTML) Full Report (PDF, 39 pages) Accessible Text
- Financial Market Preparedness: Significant Progress Has Been Made, but Pandemic Planning and Other Challenges Remain
- GAO-07-399, March 29, 2007
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 54 pages) Accessible Text Recommendations (HTML)
- 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)
- Deposit Insurance: Assessment of Regulators' Use of Prompt Corrective Action Provisions and FDIC's New Deposit Insurance System
- GAO-07-242, February 15, 2007
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 68 pages) Accessible Text
- Risk-Based Capital: Bank Regulators Need to Improve Transparency and Overcome Impediments to Finalizing the Proposed Basel II Framework
- GAO-07-253, February 15, 2007
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 109 pages) Accessible Text Recommendations (HTML)
- Bank Secrecy Act: FinCEN and IRS Need to Improve and Better Coordinate Compliance and Data Management Efforts
- GAO-07-212, December 15, 2006
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 59 pages) Accessible Text Recommendations (HTML)
- Credit Unions: Greater Transparency Needed on Who Credit Unions Serve and on Senior Executive Compensation Arrangements
- GAO-07-29, November 30, 2006
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 110 pages) Accessible Text Recommendations (HTML)
- Minority Banks: Regulators Need to Better Assess Effectiveness of Support Efforts
- GAO-07-6, October 4, 2006
- Summary (HTML) Highlights Page (PDF) Full Report (PDF, 74 pages) Accessible Text Recommendations (HTML)