When Banks Fail: New Bill Demands Detailed Reports on Executive Pay and Regulator Mistakes Within 60 Days

When a major bank fails and the government steps in to prevent a financial crisis—what they call a “systemic risk exception”—this bill demands a massive transparency effort. The Systemic Risk Authority Transparency Act requires two separate, detailed reports to be delivered to Congress shortly after that big financial decision is made. This isn't just about accounting; it's about forcing regulators and the failed bank’s leadership to publicly answer for what went wrong, including executive pay and regulatory missteps.

The Post-Mortem Power Play

Think of this as the ultimate financial system post-mortem. First, the Government Accountability Office (GAO) gets 60 days to report back to Congress on the failure. This report has to cover everything: why the systemic risk decision was made, what the impact was on other banks, and, crucially, any mismanagement by the failed bank’s executives that led to the collapse. They also have to look at how much the executives were paid and whether the bank’s main federal regulator dropped the ball on supervision. It’s a complete look at who was driving the bus and who was supposed to be watching the road.

Regulator Report Card

Second, the federal banking agency responsible for supervising the failed bank has to submit its own report within 90 days. This is where things get really interesting for accountability. This agency report must include all examination and inspection reports from the past three years, plus formal communications about major supervisory decisions. Essentially, the regulators have to hand over their own report card, detailing any shortcomings they had in supervising the bank. For bank executives, this means their actions and compensation are going under the microscope, and for regulators, it means facing scrutiny over potential blind spots.

Transparency vs. Privacy: The Fine Print

The goal here is maximum transparency, but the bill recognizes that privacy matters. The banking agency can redact personally identifiable customer information before sharing documents. However, if they want to withhold other sensitive materials—even after removing personal data—they have to consult with the leaders of the House and Senate banking committees first. If they still decide not to publish, they must provide the materials to the committees with a written explanation for the secrecy. This keeps the pressure on for disclosure, though it introduces a potential point where political negotiation could slow down or limit what the public ultimately sees. Importantly, providing this information to Congress doesn't automatically waive legal privileges like attorney-client privilege, meaning the agencies can still protect sensitive legal strategy while fulfilling the reporting requirement.

What This Means for the Rest of Us

If you’re a taxpayer, this bill is a win for accountability. When the government steps in to prevent a financial meltdown, the public needs to know exactly why, who was responsible, and what regulators missed. This bill ensures that in the high-stakes situation of a major bank failure, there will be a mandated, rapid, and comprehensive public accounting. It doesn’t stop the failure, but it makes sure that the people who caused it, and the agencies that were supposed to prevent it, have to face the music quickly and publicly.