Efforts to update the financial services regulatory structure should focus on making regulators more accountable, according to officials at the U.S. Government Accountability Office.
GAO officials give that assessment in a new report to members of Congress that describes a framework for crafting and assessing proposals for modernizing the financial regulatory system.
Policymakers also should ensure that “appropriate determinations are made about how extensive such regulations should be, considering that some activities may require less regulation than others,” GAO officials write in the report.
Today, “responsibilities for overseeing the financial services industry are shared among almost a dozen federal banking, securities, futures, and other regulatory agencies, numerous self-regulatory organizations, and hundreds of state financial regulatory agencies,” officials write.
In the insurance sector alone, 55 state, territorial and other local jurisdictions share regulatory responsibilities, officials write.
“The portion of firms operating as conglomerates that cross financial sectors of banking, securities, and insurance increased significantly in recent years, but none of the regulators is tasked with assessing the risks posed across the entire financial system,” officials write.
The American Council of Life Insurers, Washington, is one of the organizations that reviewed a draft of the report.