Key Issues > Financial System Stability and Reform
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Financial System Stability and Reform

In response to the worst financial crisis in more than 75 years, U.S. policymakers have created programs involving billions of dollars to stabilize the financial system, and are in the process of implementing wide-ranging reforms across numerous areas of the financial regulatory system.


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GAO initially designated modernization of the U.S. financial regulatory system as a high-risk area in 2009 because the system failed to adapt to significant changes ahead of the recent financial crisis. During the financial crisis, the federal government offered substantial support to the financial sector, including guarantees and other support through the Federal Reserve's emergency programs and the Treasury Department's Troubled Asset Relief Program (TARP).GAO expanded this high-risk area to include the federal role in housing finance because key housing finance entities (Fannie Mae, Freddie Mac, and the Federal Housing Administration) face unresolved challenges relating to their future structures, roles, and financial conditions. In 2010, Congress passed and the President signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which aims to address regulatory gaps revealed during the crisis and may better position the financial regulatory system to address the recent changes to the financial system and associated risks. The Dodd-Frank Act's reforms that continue to be implemented include

  • The new Financial Stability Oversight Council, which includes representatives of the various financial regulators, has begun holding regular meetings to carry out its mission of identifying risks to U.S. financial stability, has issued reports outlining risks to the U.S financial system, and has designated certain financial market participants as systemically important.
  • New requirements intended to enhance oversight over markets such as over-the-counter derivatives markets, and market participants such as non-bank mortgage lenders, hedge fund advisers, and credit rating agencies, continue to be finalized.
  • The new Bureau of Consumer Financial Protection, which has broad regulatory responsibilities for providers of residential mortgage loans and other consumer financial products and services, has also begun operations, including examining financial institutions and levying fines against various organizations for inappropriate activities.

However, implementation of the many reforms called for by the act has faced various challenges, and many reform areas have yet to be finalized or to take effect.  In addition, actions needed to resolve the role of the government in housing finance have yet to be taken.

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.

International Financial Reforms:

U.S. and Other Jurisdictions' Efforts to Develop and Implement Reforms
Published: Apr 3, 2014. Publicly Released: Apr 3, 2014.

Federal Housing Administration:

Analysis of Options for Modifying Its Products, Market Presence, and Powers
Published: Sep 9, 2013. Publicly Released: Oct 22, 2013.

Financial Regulatory Reform:

Regulators Have Faced Challenges Finalizing Key Reforms and Unaddressed Areas Pose Potential Risks
Published: Jan 23, 2013. Publicly Released: Jan 23, 2013.

Financial Regulatory Reform:

Financial Crisis Losses and Potential Impacts of the Dodd-Frank Act
Published: Jan 16, 2013. Publicly Released: Feb 14, 2013.

Fannie Mae and Freddie Mac:

Analysis of Options for Revising the Housing Enterprises' Long-term Structures
Published: Sep 10, 2009. Publicly Released: Sep 10, 2009.

More Reports

Troubled Asset Relief Program:

Treasury Could Better Analyze Data to Improve Oversight of Servicers' Practices
Published: Oct 6, 2014. Publicly Released: Oct 6, 2014.

Financial Stability Oversight Council:

Status of Efforts to Improve Transparency, Accountability, and Collaboration
Published: Sep 17, 2014. Publicly Released: Sep 17, 2014.

Troubled Asset Relief Program:

Government's Exposure to Ally Financial Lessens as Treasury's Ownership Share Declines
Published: Aug 5, 2014. Publicly Released: Aug 5, 2014.

Large Bank Holding Companies:

Expectations of Government Support
Published: Jul 31, 2014. Publicly Released: Jul 31, 2014.

Conflict Minerals:

Stakeholder Options for Responsible Sourcing Are Expanding, but More Information on Smelters Is Needed
Published: Jun 26, 2014. Publicly Released: Jun 26, 2014.

Consumer Financial Protection Bureau:

Opportunity Exists to Improve Transparency of Civil Penalty Fund Activities
Published: Jun 26, 2014. Publicly Released: Jul 28, 2014.

Community Development Capital Initiative:

Status of the Program and Financial Health of Remaining Participants
Published: Jun 6, 2014. Publicly Released: Jun 6, 2014.

Inspectors General:

Oversight of Small Federal Agencies and the Role of the Inspectors General
Published: Apr 10, 2014. Publicly Released: Apr 10, 2014.

Troubled Asset Relief Program:

Status of the Wind Down of the Capital Purchase Program
Published: Apr 7, 2014. Publicly Released: Apr 7, 2014.

Programa Para Mitigar Activos Problemáticos:

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