Overview
Title
To require the global systemically important bank holding companies to provide annual reports to the Board of Governors of the Federal Reserve System, and for other purposes.
ELI5 AI
H. R. 9848 wants big and important banks to tell the government all about what they're doing every year, like who works there, how they protect computers from bad guys, and how they take care of the Earth, so everyone can see they're being good and safe.
Summary AI
H. R. 9848, also known as the “Greater Supervision In Banking Act of 2024” or the “GSIB Act of 2024,” is a bill that requires global systemically important bank holding companies to submit annual reports to the Board of Governors of the Federal Reserve System. These reports must include detailed information about the banks' activities, size, important subsidiaries, enforcement actions, employee dynamics, cybersecurity measures, climate-related actions, and diversity practices. The intent is to provide transparency and oversight regarding these large financial institutions' operations and impacts on society. The Board is required to make these reports publicly available.
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AnalysisAI
General Summary of the Bill
The proposed legislation, titled the "Greater Supervision In Banking Act of 2024" or the "GSIB Act of 2024," aims to enhance oversight of global systemically important bank holding companies. It requires these banks to issue detailed annual reports to the Board of Governors of the Federal Reserve System. These reports must cover a wide range of topics, including the banks' activities, goals, financial details, employee compensation, diversity policies, environmental actions, and any major changes like mergers or acquisitions. The objective is to promote transparency and accountability within these significant financial institutions. The bill mandates that the Federal Reserve make these reports publicly accessible online.
Summary of Significant Issues
Several issues have been identified in the bill text that could present challenges. First, certain definitions and terms, such as "global systemically important bank holding company" and "forced arbitration clauses," lack specificity, which may create legal ambiguities and difficulties in enforcement. Second, the requirement to disclose detailed information on executive compensation without clear benefits might raise privacy concerns. Third, the extensive reporting requirements could be burdensome for companies, leading to potential resource diversion from core business activities. Moreover, the bill doesn't specify clear consequences for non-compliance, which may weaken enforcement. Additionally, the requirement to report on diversity policies might lack standardized metrics, leading to inconsistent reporting. Lastly, the inclusion of climate risk reporting that relies on speculative modeling could lead to non-uniform interpretations and responses.
Potential Impact on the Public
The bill is likely to promote public confidence in the financial system by increasing transparency surrounding the operations of major banks. It aims to hold these institutions accountable for their actions, potentially reducing risks associated with their size and complexity. Enhanced transparency could empower consumers, investors, and other stakeholders by providing access to more comprehensive information about these banks' activities and policies. Despite these benefits, the bill may also lead to increased operational costs for banks, which could be passed on to consumers in the form of higher fees or reduced services.
Impact on Specific Stakeholders
For global systemically important banks, the bill introduces a significant administrative burden due to its extensive reporting requirements. These banks may face increased costs associated with compiling and submitting detailed reports. While the enhanced oversight aims to safeguard financial stability, it could also lead to compliance challenges and potential privacy issues, particularly regarding the disclosure of sensitive internal information.
Regulators, specifically the Federal Reserve, will benefit from receiving more detailed information, potentially improving their oversight capabilities. However, they may also face challenges in managing and protecting sensitive data, given the requirement to make reports publicly available.
On the positive side, consumers and investors may gain from improved access to information about these banks, which could aid in making informed financial decisions. The emphasis on diversity and environmental policies could encourage banks to adopt more sustainable and inclusive practices.
Overall, while the bill aims to strengthen supervision and accountability within the banking sector, balancing transparency with the potential administrative burden and privacy concerns will be crucial for its successful implementation.
Issues
The bill lacks clarity and specificity in certain definitions and terms, such as 'global systemically important bank holding company' and 'forced arbitration clauses,' which could lead to legal ambiguities and challenges in enforcement and interpretation (Sections 2, 15).
The requirement for bank holding companies to report detailed executive compensation information could raise privacy concerns and might be seen as intrusive, especially without clear guidelines or benefits, which could impact employee morale and public perception (Sections 2, 15).
The bill imposes extensive and possibly redundant reporting requirements that could be overly burdensome for companies, diverting resources away from other important activities, potentially resulting in increased operational costs (Sections 2, 15).
The absence of specified consequences or accountability measures for failure to issue the required report could weaken enforcement and undermine the law's efficacy (Section 15).
The requirement to include detailed diversity policies and metrics may lack clear standards, leading to inconsistent reporting and difficulty in ensuring meaningful improvement across companies (Sections 2, 15).
Reporting on internal whistleblower complaints may infringe on privacy and confidentiality, raising ethical concerns about how such sensitive information will be handled and protected (Section 15).
The bill mandates complex climate risk reporting and reliance on speculative climate modeling, potentially resulting in non-uniform interpretations and responses that could affect financial stability assessments (Section 15).
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 specifies that the official short title of the legislation is the “Greater Supervision In Banking Act of 2024” or simply the “GSIB Act of 2024.”
2. GSIB annual reports Read Opens in new tab
Summary AI
The section mandates that each global systemically important bank holding company must submit an annual report detailing their activities, goals, financial details, employee compensation, diversity policies, environmental actions, and any significant changes such as mergers or acquisitions. The Board is required to make these reports publicly accessible online.
15. GSIB annual reports Read Opens in new tab
Summary AI
Each global systemically important bank holding company is required to submit an annual report to the Board detailing their past year's activities and future plans. This report must cover numerous aspects like the company's size, its enforcement actions, employee compensation, diversity policies, cybersecurity measures, climate action commitments, and any mergers or acquisitions. The public can access these reports, and the definition of such a bank holding company is specified in the regulations.