GAO Study Hikes Pressure on SEC Process
Adding to the Chairman Gensler’s woes, the GAO today released a report finding that the SEC Division of Enforcement did not document its work reviewing staff procedure assessments, hindering future internal reviews. Republicans have been harshly critical of SEC procedures and processes, as well as of the Commission’s enforcement-focused approach to cryptoassets. The GAO’s finding adds fuel to a campaign sure to gain force next year, recommending as it does that the Division Director ensure that information is collected and reported in its memorandum as required by Dodd-Frank.
Fed Study Endorses Bank Supervision
A new Fed staff study uses their unique access to bank examination reports from banks with less than $10 billion in assets to evaluate the extent to which supervisory reports and associated CAMELS ratings predict bank outcomes. Looking at reports from 2004 through 2016 and thus capturing the great financial crisis, the study concludes that ratings for capital, assets, management, and earnings are effective even after controlling for factors including the ratings themselves. Ratings are also associated with bank improvement in areas censured in earlier supervisory reports. The analytical method is textual – i.e., based on a reading of supervisory reports then run through various models to determine impact.