Bank Financial Disclosures: Actions Needed to Improve Oversight of Information Provided to Investors

Filed 16h ago · Via GAO · The Buffoon Desk

THIS STORY IS SCORED

Covert Affair

Kevin MacLeod · incompetech.com · CC BY 4.0

Photo: Crisco 1492 · CC BY-SA 4.0 · via Wikimedia Commons

A GAO report finds 11 publicly traded banks, including two with over $80 billion in assets, escape SEC disclosure review because they lack a bank holding company, leaving oversight instead to banking regulators whose review process is not investor-focused. Two of the three banks that failed in spring 2023 fell into exactly this gap, and shareholders lost more than $29 billion between them.

GAO examined the failed banks' 2021 and 2022 disclosures on interest rate and liquidity risk and found each described setting internal thresholds but never disclosed when those thresholds were breached or how the banks responded. The SEC has not issued public guidance on when such breaches should be considered material to investors.

GAO recommends Congress reassess who reviews these banks' disclosures and that the SEC issue clearer guidance; the SEC disagreed, saying it already gives informal feedback when warranted.

The full dispatch is available from the source below.

✒ FROM THE EDITORIAL DESK

A bank can lose eighty billion dollars of other people's money and never once get the kind of disclosure review Congress meant for public companies, all because of how its ownership paperwork is drawn up. That's not a loophole, that's a trapdoor with a welcome mat. The SEC's response amounts to insisting the smoke detector works fine, it just doesn't happen to be plugged in over by the stove.

Source: Read the original at GAO → Scored: Covert Affair · Kevin MacLeod · CC BY 4.0

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