{"id":166,"date":"2026-10-08T13:30:12","date_gmt":"2026-10-08T13:30:12","guid":{"rendered":"https:\/\/law.petpolicyadvisors.com\/?p=166"},"modified":"2026-10-08T13:30:12","modified_gmt":"2026-10-08T13:30:12","slug":"banks-without-holding-companies-need-better-disclosure-rules-gao","status":"publish","type":"post","link":"https:\/\/law.petpolicyadvisors.com\/?p=166","title":{"rendered":"Banks without holding companies need better disclosure rules: GAO"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Such banks aren\u2019t subject to SEC review, and regulators aren\u2019t assessing those lenders\u2019 disclosures for investors\u2019 benefit, the watchdog said.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Dive Brief:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Government Accountability Office suggests Congress reassess the authority for reviewing annual financial disclosures for public banks that don\u2019t have holding companies, <a href=\"https:\/\/www.gao.gov\/assets\/gao-26-107719.pdf\">the watchdog said Thursday<\/a>.<\/li>\n\n\n\n<li>In a report to the House Financial Services Committee, the GAO said banks that operate without a holding company aren\u2019t subject to review by the Securities and Exchange Commission, and the regulators overseeing those banks don\u2019t assess their disclosures for investors\u2019 benefit.\u00a0<\/li>\n\n\n\n<li>Such a reassessment \u201ccould help Congress determine whether changes are needed to strengthen investor protection,\u201d the GAO said in its report.\u00a0<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Dive Insight:<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Of lenders that failed in spring 2023, <a href=\"https:\/\/www.bankingdive.com\/news\/first-republic-failure-testimony-roffler-contagion-svb-signature-fdic-gruenberg\/650533\/\">First Republic Bank<\/a> and <a href=\"https:\/\/www.bankingdive.com\/news\/signature-bank-closed-nydfs-fdic-fed-treasury-crypto-carmichael\/644785\/\">Signature Bank<\/a> operated without a holding company, the GAO noted. Shareholders lost some $29 billion in investments in those two banks between the end of 2022 and May 2023.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Those failures occurred shortly after the banks\u2019 financial statement audits were completed. \u201cSome observers raised questions about whether auditors had properly fulfilled their roles and whether the banks had clearly disclosed material information,\u201d the congressional watchdog said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The House committee asked the GAO to review oversight of public banks\u2019 and bank holding companies\u2019 disclosures of material information and their external auditors\u2019 role.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Eleven public banks \u2013 including two with more than $80 billion in assets \u2013 are not subject to SEC review because they operate without a bank holding company, the GAO said.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For banks without a holding company, Congress endowed banking regulators with certain functions and duties. But those agencies\u2019 review processes don\u2019t assess disclosures for investors\u2019 benefit, unlike the SEC, the GAO said.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Public companies are required to disclose information \u201cthat investors would find important when making investment decisions,\u201d including an annual audited financial statement and descriptions of risk factors and financial performance, the GAO said.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When accounting firms audit public companies, \u201ccertain auditor responsibilities \u2013 such as evaluating a company\u2019s accounting estimates and ability to continue as a going concern \u2013 can be particularly challenging in bank audits,\u201d according to Public Company Accounting Oversight Board staff and auditors, the GAO said.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Bank regulatory agencies don\u2019t assess whether disclosures provide sufficient detail to investors or are materially misleading, the GAO determined. \u201cAs a result, investors may have less information available for evaluating risk.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And investors flagged shortcomings in bank disclosures, such as those related to allowances for credit losses and liquidity, according to the GAO.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The watchdog also recommended the SEC offer guidance to help companies determine whether information related to interest rate and liquidity risks is material. But the SEC \u201cdisagreed with the recommendation, noting that staff provides post-disclosure feedback as warranted.\u201d&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cGAO maintains SEC should implement the recommendation,\u201d the report said.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Such banks aren\u2019t subject to SEC review, and regulators aren\u2019t assessing those lenders\u2019 disclosures for investors\u2019 benefit, the watchdog said. Dive Brief: Dive Insight: Of lenders that failed in spring 2023, First Republic Bank and Signature Bank operated without a holding company, the GAO noted. Shareholders lost some $29 billion in investments in those two [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":167,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-166","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-credit"],"_links":{"self":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts\/166","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=166"}],"version-history":[{"count":1,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts\/166\/revisions"}],"predecessor-version":[{"id":168,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts\/166\/revisions\/168"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/media\/167"}],"wp:attachment":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=166"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=166"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=166"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}