Bank and Thrift Regulation:
FDICIA Safety and Soundness Reforms Need to Be Maintained
T-AIMD-93-5: Published: Sep 23, 1993. Publicly Released: Sep 23, 1993.
GAO discussed H.R. 962, the Economic Growth and Financial Institutions Regulatory Paperwork Act of 1993, focusing on the effect this bill would have on credit availability and the safety and soundness of the industry. GAO noted that: (1) H.R. 962 proposes eliminating or altering several of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) safety and soundness reforms concerning prompt regulatory action and accounting requirements; (2) the proposals to change FDICIA safety and soundness requirements are misguided and could eliminate the opportunity for bank management and regulators to correct problems; (3) safeguards to protect the bank and thrift insurance funds should not be weakened; (4) regulators are required to establish various operational and managerial standards for internal audit systems, loan documentation, and asset growth; (5) accounting reforms include bank reporting of the estimated fair-market value of their assets and liabilities; and (6) it would not be prudent to periodically weaken and tighten bank regulation in response to recession and inflation.