With federal financial institution regulators gearing up to enforce recently enacted regulatory relief legislation as background, the congressional oversight agency Thursday issued a summary of previous work it has done on regulators’ past responses to such legislation.
The conclusions: proposed rules have not been analyzed thoroughly, and there have been “missed opportunities” in regulators’ retrospective reviews.
The “Ensuring Balanced Financial Regulation” report from the Government Accountability Office (GAO) summarizes conclusions the congressional watchdog agency reached in two previous reports, both issued early this year, with regard to compliance with the Regulatory Flexibility Act (RFA).
“Generally, when agencies draft or implement regulations, they are required to analyze the potential impact of those regulations on small entities—such as community banks and credit unions,” the report states.
The GAO urges readers to “learn more about the 20 recommendations we made to financial regulators to improve their policies, procedures, and analyses” in the two reports.
It also notes that in May of this year, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S.2155), which (along with the Dodd-Frank Act) authorized or directed federal agencies to issue regulations that were aimed at improving financial regulation.
With regard to its recent work, GAO notes that in late January it issued “Procedures for Reviews under Regulatory Flexibility Act Need to Be Enhanced” (GAO-18-256), which notes that the Regulatory Flexibility Act lays out rulemaking requirements for financial regulators and other agencies, with intent to have agencies “tailor rules to the scale of the entity being regulated in a manner consistent with the objectives of the rule—so smaller banks are not necessarily expected to bear the same regulatory burdens as larger banks.”
But the January report, GAO said, found that analyses of six financial regulatory agencies it reviewed found that: evaluation and information were limited; supporting documentation was mostly unavailable; and comprehensive policies and procedures were not in place.
In February, the oversight agency issued “Community Banks and Credit Unions: Regulators Could Take Additional Steps to Address Compliance Burdens” (GAO-18-213). That report, GAO said, noted “missed opportunities in retrospective reviews” as required under the RFA.
“In these retrospective reviews, we found that regulators had not analyzed quantitative data, nor had they assessed the cumulative effect of regulations. As a result, they may be missing opportunities for better, more transparent assessments,” the February report stated.