The Government Accountability Office (GAO) advocated for greater FSOC transparency in a report released last week (“Report”). The report examined the FSOC’s progress on GAO recommendations issued in September 2012 covering “emerging threats and risks identification, transparency and accountability, and collaboration and coordination.” While the Report acknowledged that the FSOC has taken steps to address the recommendations, the GAO found that more changes are necessary.
The GAO found that, while the Office of Financial Research’s data tools have provided some support to the FSOC, the “FSOC still lacks a comprehensive, systematic approach to identify emerging threats to financial stability.” In an attempt to increase transparency, the FSOC had previously committed to provide additional information in meeting minutes, but also noted that the confidential nature of the discussions limited their ability to do so. However, the Report argued that, despite limitations, “current practices do not provide detailed records even for policymakers, including members of FSOC, to assess decisions.” The Report also urged the FSOC to begin planning for a mandated January 2016 study on the impact of SIFI designation on nonbanks. Lastly, the Report recommended increased coordination and collaboration between the FSOC, OFR, and member agencies, despite the FSOC’s claim that overlapping responsibilities do not pose an issue and that the FSOC lacks the authority to give direction to member agencies.