Bank Powers:
Insulating Banks From the Potential Risks of Expanded Activities
GGD-87-35: Published: Apr 14, 1987. Publicly Released: Apr 14, 1987.
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GAO reported on a proposed method to permit banks to participate in expanded activities while insulating their insured deposits from risky activities by organizationally separating the new activities from traditional bank operations. Banks generally operate these nontraditional activities under one of their departments, a subsidiary, a holding company subsidiary, or a bank service corporation.
GAO found that: (1) banks engaged in expanded activities insulated their insured deposits by separating their activities legally, economically, and in the market's perception; (2) legal separation insulates a bank's deposits from legal risks because the bank generally is not liable for its affiliate's debts; (3) economic separation from its affiliate restricts the flow of funds from the bank to the affiliate; and (4) if the market perceives a bank and its affiliate as one, even though they are legally and economically separate, the bank may experience problems if the affiliate has financial trouble. GAO also found that: (1) bank departments provide the least amount of insulation because banks are legally liable for them, since they are not separate; (2) although subsidiaries generally provide legal and economic protection to banks' deposits, neither fully protects the bank from market perception risks; and (3) banks may choose not to conduct new activities if the insulation structure is too expensive or inconvenient.
Dec 16, 2020
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Financial Stability:
Agencies Have Not Found Leveraged Lending to Significantly Threaten Stability but Remain Cautious Amid PandemicGAO-21-167: Published: Dec 16, 2020. Publicly Released: Dec 16, 2020.
Dec 10, 2020
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Federal Reserve Lending Programs:
Use of CARES Act-Supported Programs Has Been Limited and Flow of Credit Has Generally ImprovedGAO-21-180: Published: Dec 10, 2020. Publicly Released: Dec 10, 2020. -
Financial Assistance:
Lessons Learned from CARES Act Loan Program for Aviation and Other Eligible BusinessesGAO-21-198: Published: Dec 10, 2020. Publicly Released: Dec 10, 2020.
Sep 22, 2020
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Anti-Money Laundering:
Opportunities Exist to Increase Law Enforcement Use of Bank Secrecy Act Reports, and Banks' Costs to Comply with the Act VariedGAO-20-574: Published: Sep 22, 2020. Publicly Released: Sep 22, 2020.
Sep 4, 2020
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Bank Supervision:
FDIC Could Better Address Regulatory Capture RisksGAO-20-519: Published: Sep 4, 2020. Publicly Released: Sep 4, 2020.
Jul 21, 2020
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Financial Company Bankruptcies:
Congress and Regulators Have Updated Resolution Planning RequirementsGAO-20-608R: Published: Jul 21, 2020. Publicly Released: Jul 21, 2020.
Jul 6, 2020
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Public Companies:
Disclosure of Environmental, Social, and Governance Factors and Options to Enhance ThemGAO-20-530: Published: Jul 2, 2020. Publicly Released: Jul 6, 2020.
Apr 30, 2020
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Priority Open Recommendations:
Department of the TreasuryGAO-20-549PR: Published: Apr 23, 2020. Publicly Released: Apr 30, 2020.
Apr 27, 2020
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Priority Open Recommendations:
Board of Governors of the Federal Reserve SystemGAO-20-499PR: Published: Apr 20, 2020. Publicly Released: Apr 27, 2020. -
Priority Open Recommendations:
Federal Deposit Insurance CorporationGAO-20-498PR: Published: Apr 20, 2020. Publicly Released: Apr 27, 2020.
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