GAO Report Reviews Policies and Analyses in Regulatory Flexibility Act
The U.S. GAO published a report reviewing policies and analyses under the Regulatory Flexibility Act. The report concludes that policies and analyses under the Regulatory Flexibility Act and Retrospective Reviews could be improved.
The Regulatory Flexibility Act requires federal agencies to analyze the impact of their regulations on small entities. GAO found several weaknesses with the analyses of six financial regulators—CFPB, CFTC, FDIC, FED, OCC, and SEC—that could undermine the goal of the Regulatory Flexibility Act and limit transparency and public accountability. For example, some analyses lacked important information, such as data sources, methodologies, and consideration of broad economic impact. Evaluations of potential economic effects and alternative regulatory approaches also were limited. Additionally, regulators generally lacked comprehensive policies and procedures for implementation of the Regulatory Flexibility Act. By not developing such policies and procedures, the ability of regulators to consistently and effectively meet the objectives of Regulatory Flexibility Act may be limited.
This report is based on findings from the GAO reports on implementation of the Regulatory Flexibility Act (published in January 30, 2018) and on regulatory burden on community banks and credit unions (published in February 13, 2018). In these two reports, GAO made 20 recommendations to the financial regulators to improve their policies, procedures, and analysis under the Regulatory Flexibility Act and in retrospective reviews. The regulators generally agreed with the recommendations. Federal financial regulators must comply with various rulemaking and review requirements, including those in the Regulatory Flexibility Act and the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). These statutes require analyses relating to regulatory burden, small entities, or both analyses during rulemaking and retrospective reviews. As part of the retrospective reviews, EGRPRA directs FDIC, FED, and OCC to review regulations at least every 10 years and identify areas that are outdated, unnecessary, or unduly burdensome. The Regulatory Flexibility Act requires agencies to review within 10 years of publication those rules assessed as having a significant economic impact on a substantial number of small entities. Agencies are to determine if rules should be continued without change, amended, or rescinded to minimize such impact.
Related Links
- GAO Report on Policies and Analyses
- Report on Implementation of the Act
- Report on Burden for Community Banks
Keywords: Americas, US, Banking, Regulatory Flexibility Act, Retrospective Reviews, EGRPRA, Proportionality, GAO
Previous Article
FASB Consults on Improvements to the Credit Losses Standard in USRelated Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards