Oct 22 2019


The Government Accountability Office said today that Congress has the right to review three guidance documents issued by the Federal Reserve on large bank supervision, the latest victory for Republicans in their bid to rein in the use of regulatory guidance.
Five senators, including Sen. Thom Tillis (R-N.C.) and Senate Banking Chairman Mike Crapo (R-Idaho), earlier this year flagged multiple guidance documents to the GAO as potentially subject to the Congressional Review Act. That law allows lawmakers to overturn certain regulations through a resolution passed by both chambers.
The government watchdog said two of those three documents, published in December 2012 and September 2014, respectively, should be counted as rules under the review act. The GAO also said April 2011 guidance on model risk management, flagged by Tillis in a subsequent letter, qualified as a rule.
Congress now has 60 legislative days in which to overturn the guidance, if it wants. However, much of the substance of these documents has since been overtaken by other actions from the Fed.
For example, the December 2012 guidance predated more formal capital and liquidity rules put out by the Fed in response to the financial crisis. That guidance formed the foundation of the central bank’s updated bank ratings system finalized late last year, which is used to grade large banks’ capital, liquidity and corporate governance.
“I applaud the GAO for holding the Federal Reserve to the same standard as all government agencies and ensuring they abide by the Administrative Procedure Act to remain transparent and accountable to Congress,” Tillis said in a statement.
A Fed spokesperson said the central bank is reviewing the letters.

Read the article here.