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 resulted in various reforms including

  • The creation of new organization to monitor for systemic risks: the Financial Stability Oversight Council, which includes representatives of the various financial regulators. This council 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.
  • The creation of a the 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.
  • 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, that various financial regulators have been issuing as proposed or final regulations since 2010.

While considerable progress has been made,, many reforms called for by the act are not yet complete or have yet 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.
Housing Finance System: A Framework for Assessing Potential Changes

GAO-15-131: Published: Oct 7, 2014. Publicly Released: Oct 7, 2014.

More Reports

Troubled Asset Relief Program: Status of Prior GAO Recommendations

GAO-16-831: Published: Sep 6, 2016. Publicly Released: Sep 6, 2016.
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    • Orice Williams Brown
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    • Lawrance L. Evans, Jr
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