Overview
Title
To amend the Federal Deposit Insurance Act to require reports on the use of the systemic risk authority applicable to winding up a failed insured depository institution, and for other purposes.
ELI5 AI
H.R. 4116 is a new rule that wants to make sure people know why some banks fail by having reports that explain everything in a way that tries not to spill secrets, but some parts of this rule might make it hard to show all the details.
Summary AI
H.R. 4116, known as the "Systemic Risk Authority Transparency Act," seeks to amend the Federal Deposit Insurance Act by ensuring clearer reporting on the use of the systemic risk authority when dealing with failed banks. The bill mandates that the Government Accountability Office (GAO) and relevant federal banking agencies review and report on the factors leading to a bank's failure, such as management missteps and regulatory issues. These reports must be shared with Congress and, to the extent possible while maintaining privacy, with the public. Additionally, the bill requires the protection of sensitive information and allows for report extensions in specific situations, to ensure transparency while maintaining stability in the banking system.
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AnalysisAI
General Summary of the Bill
H.R. 4116, titled the "Systemic Risk Authority Transparency Act," aims to amend the Federal Deposit Insurance Act. It proposes the introduction of new reporting requirements to enhance transparency in the use of the Federal Deposit Insurance Corporation's (FDIC) systemic risk authority when winding up failed insured depository institutions. The bill mandates that the Government Accountability Office (GAO) and relevant federal banking agencies submit detailed reports to Congress. These reports should cover the reasons for a bank's failure, actions taken by authorities, and steps that could be taken to prevent future failures of a similar nature.
Summary of Significant Issues
The bill contains several areas that could lead to ambiguities or challenges in implementation:
Typographical Error: In the section regarding GAO reviews, a typographical error ("later than later than") could cause confusion, indicating a need for careful proofreading to ensure clarity.
Transparency and Discretion: The language allowing federal banking agencies to redact information as they deem appropriate is vaguely defined, leading to potential overuse and limited transparency.
Interpretation of Public Interest: The clause allowing materials to be withheld from publication due to "substantial public interest" could be broadly interpreted, potentially obscuring critical information from public view.
Report Timing: The bill's timeline for reporting lacks precision, which might result in inconsistencies in how and when reports are submitted, potentially undermining the bill's intent to ensure timely transparency.
Deadline Extensions: The criteria for extending report deadlines are undefined, which might lead to frequent delays and reduced effectiveness in promoting prompt transparency.
Combining Reports: Allowing multiple reports to be consolidated could lead to important details being omitted, reducing oversight and accountability.
Impact on the Public Broadly
If implemented effectively, the bill could enhance transparency around significant financial events, such as bank failures, by providing detailed insights into systemic risk decisions. This could improve public confidence in the financial system by holding involved parties accountable and preventing similar future crises. However, any vague or discretionary language around report redactions or publication could negatively impact public trust, as key information might be withheld.
Impact on Specific Stakeholders
Banking Institutions: The bill could lead to increased scrutiny of banks' failures, prompting them to maintain higher standards of management and governance. However, they might face more stringent regulatory oversight, potentially increasing operational burdens and costs.
Regulatory Agencies: Agencies will be tasked with rigorous reporting requirements and may need additional resources to comply. They might also face criticism or legal challenges if their discretion in redactions or extensions is perceived as overused.
Lawmakers and Policymakers: The additional data could aid in crafting more effective financial regulation policies. However, if agencies frequently delay or redact significant information, lawmakers might find it challenging to glean accurate insights necessary for reform.
Overall, while the bill provides a framework for greater transparency and accountability, its potential effectiveness heavily relies on how clearly and strictly report-related provisions are defined and adhered to.
Issues
Section 2(b)(12)(A)(i): The provision allowing 'redactions as the appropriate Federal banking agency determines appropriate' is vague and may give the agency undue discretion to withhold information, potentially limiting transparency and accountability.
Section 2(a)(I): The phrase 'later than later than' appears to be a typographical error, which could cause confusion and should be corrected for clear communication in official documents.
Section 2(b)(12)(B)(ii)(III): The phrase 'substantial public interest in not publishing such materials' may be subject to broad interpretation, potentially limiting the transparency and public oversight intended by the bill.
Section 2(b)(12)(A): The requirement for reports to be submitted 'not later than 90 days' and 'again 210 days thereafter' lacks clear guidance on the acceptability of a 290-day timeframe, which could lead to misinterpretation and inconsistent reporting standards.
Section 2(b)(12)(C): The conditions allowing extension of report deadlines based on 'ongoing circumstances' are not clearly defined, which might result in their overuse and delayed transparency.
Section 2(b)(12)(D): The ability to 'consolidate multiple reports' without detailed criteria could lead to reduced transparency if it results in omitting important information that should be disclosed separately.
Section 2(b)(12)(B)(iii): The definition of 'privilege' to include any recognized under Federal or State law may not fully account for differences in state law, potentially complicating legal interpretations and enforcement.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the Act provides its official name, which is the “Systemic Risk Authority Transparency Act”.
2. Bank failure transparency related to systemic risk exception Read Opens in new tab
Summary AI
The bill requires the Government Accountability Office (GAO) and appropriate federal banking agencies to report to Congress on bank failures involving systemic risk, detailing the causes of failure and actions taken, and includes transparency provisions to ensure information is shared while protecting sensitive data.