GAO Urges Congress to Close Bank Disclosure Oversight Gap
By CU Today Staff —
WASHINGTON—The Government Accountability Office is urging Congress to reconsider who reviews investor disclosures from publicly traded banks without holding companies, finding those institutions are not subject to the same investor-focused SEC scrutiny as most public companies.
Eleven public banks, including two with more than $80 billion in assets, operate without holding companies and therefore have their disclosures reviewed by federal banking regulators instead of the Securities and Exchange Commission. The GAO report found those regulatory reviews do not assess disclosures specifically for investors’ benefit.
The GAO pointed to the 2023 failures of First Republic Bank and Signature Bank, both of which operated without holding companies. Shareholders lost more than $29 billion in the two banks between the end of 2022 and May 2023. The GAO also reviewed Silicon Valley Bank and found none of the three institutions disclosed when internal interest-rate or liquidity-risk limits were breached or how management addressed the breaches.
In addition to asking Congress to reassess disclosure-review authority, the GAO recommended that the SEC provide guidance on determining whether breaches of interest-rate and liquidity-risk limits are material to investors. The SEC disagreed, saying its staff provides feedback after disclosures when warranted, but the GAO maintained that public guidance is needed.
Originally reported by CU Today.