We recommended in our  December 2011 report that federal financial regulators more fully  incorporate OMB’s regulatory guidance into their rulemaking polices. In examining the regulatory  analyses for the 12 rules, we found that the agencies reported conducting  the regulatory analysis pursuant to PRA when required—that is, the  agencies are required to minimize the paperwork burden of their  rulemakings and evaluate whether a proposed collection is necessary for  the proper performance of the functions of the agency. In some cases, they determined that they were not  required to conduct regulatory analyses pursuant to PRA because they  determined no new collection of information would be required. Regulators Are Not Required to Follow OMB Guidance but Included Most Key Elements of Cost-Benefit Analysis

Independent  federal financial regulators are not required to follow OMB’s  Circular A-4 when developing regulations, but they told us that they try to  follow this guidance in principle or spirit. To assess the extent to which the regulators follow Circular A-4, we  examined 5 major rules (see table 3 for a description of these rules). As shown in the following examples, the regulators  generally quantified some costs in all five of their respective rules and in  four instances they discussed some costs qualitatively. The three remaining rules did not  quantify benefits and noted data and other limitations to not doing so. Regulators Coordinated on Rulemakings as Required

The agencies reported coordinating as required or voluntarily on 19 of the  30 regulations that became effective between July 23, 2015, and July 22,  2016. According to regulators, most coordination for the rulemakings occurred  throughout the rulemaking process. Coordination on the Integrated Mortgage Disclosure Rule Followed CFPB’s Internal Guidance for Agency Consultation

With respect to the integrated mortgage disclosure rule, CFPB followed  its formal consultation process for working with agencies to develop  Dodd-Frank Act rules. Indicators of the Impacts of the Dodd- Frank Act on SIFIs and Swaps

Financial regulators continue to implement reforms pursuant to the Dodd- Frank Act, but a number of factors make the full impact of the act  uncertain. In particular, while many rules have been finalized, several  rules have not been finalized or have not yet been started. As of  December 2016, regulators had issued final rules for over 75 percent of  the 236 provisions of the act that we are monitoring. Indicators Suggest Large Bank SIFIs Have Become Larger but Less Vulnerable to Financial Distress

According to the legislative history, the Dodd-Frank Act contains  provisions intended to reduce the risk of failure of a large, complex  financial institution and the damage that such a failure could do to the  economy. Rather, the indicators track changes in the size,  interconnectedness, leverage, and liquidity of designated nonbanks since  the passage of the act to examine if the changes have been consistent  with the goals of the act. This report discusses the  regulatory analyses conducted by federal financial regulators  (financial regulators) in their Dodd-Frank Act rulemakings, including  their assessments of which rules they considered to be major rules; coordination between and among federal regulators on these  indicators of the impact of selected Dodd-Frank Act provisions and  their implementing regulations on financial market stability. In  some instances, the regulators determined that the analysis was not  required or not applicable and indicated this in their final rulemaking. Using GAO’s Federal Rules database,  we found that 9 of the 30 rules were identified as major rules, per the  Office of Management and Budget (OMB) guidance, under the  Congressional Review Act because they resulted in or are likely to result  in an annual impact on the economy of $100 million or more; a major  increase in costs or prices; or significant adverse effects on competition,  employment, investment, productivity, innovation, or on the ability of U.S.- based enterprises to compete with foreign-based enterprises in domestic  and export markets. For agencies subject to Executive Order (E.O.) We also selected three rules for in-depth review of interagency  coordination: CFTC’s and the prudential regulators’ respective rules on  margin requirements for uncleared swaps and CFPB’s rule on integrated  mortgage disclosures. We selected these rules based on the opportunity  for extensive interagency coordination. Appendix III: Coordination for Dodd-Frank Act Rules Effective as of July 22, 2016

The following table lists the 30 Dodd-Frank Wall Street Reform and  Consumer Protection Act (Dodd-Frank Act) rules that we identified as  having effective dates during the scope of our review (from July 23, 2015,  through July 22, 2016), whether we found evidence of coordination during  the rulemaking process, whether the Dodd-Frank Act required  interagency or international coordination, and the nature of coordination, if  any.
Why GAO Did This Study

The Dodd-Frank Act requires or authorizes various federal agencies to issue hundreds of rules to implement reforms intended to strengthen the financial services industry. Congress included a provision in statute for GAO to study these financial services regulations annually. This sixth annual report discusses (1) the regulatory analyses federal agencies conducted for the 30 rules issued pursuant to the Dodd-Frank Act that became effective between July 2015 and July 2016, (2) coordination among the regulators on these rules, and (3) indicators of the impact of select Dodd-Frank Act rules on financial market stability.
GAO assessed the extent to which regulators followed OMB's cost-benefit guidance for five major rules selected because they covered a variety of agencies and topics. GAO also examined coordination for three rules selected because they involved extensive interagency coordination and covered many regulators required to coordinate under the Dodd-Frank Act. GAO also reviewed documentation and interviewed regulatory staff.

What GAO Found

Federal financial regulators reported conducting the required regulatory analyses for rules issued pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) as part of the rulemaking process. For example, of the 30 rules GAO reviewed, which became effective between July 2015 and July 2016, the regulators analyzed the paperwork burden imposed for 12 rules for which they determined this analysis was required. For the remaining 18 rules, they determined that this analysis was not required or applicable. For instance, in some cases they determined that no new collection of information was required. As independent regulatory agencies, the federal financial regulators are not subject to executive orders requiring federal agencies to conduct detailed cost-benefit analysis in accordance with Office of Management and Budget (OMB) guidance, but regulators told GAO that they generally follow this guidance in spirit. GAO reviewed five of the nine rules considered major—that is, rules likely to result in an annual impact on the economy of $100 million or more, among other things—and found that regulators addressed most key elements of OMB guidance in their regulatory analyses. For instance, these agencies generally quantified some costs related to these rules. However, they did not quantify benefits in each rule and noted data and other limitations to doing so. In 2011, GAO recommended that the regulators more fully incorporate OMB's regulatory guidance into their written rulemaking policies, but not all regulators have implemented this recommendation.
Regulators reported coordinating, as required or voluntarily, on 19 of the 30 rules GAO reviewed. The Dodd-Frank Act and the rulemaking process did not require regulators to coordinate on the remaining 11 rules. GAO focused in particular on coordination efforts involving three rulemakings: the Commodity Futures and Trade Commission's and the prudential regulators' rules on margin requirements for over-the-counter swaps, and the Bureau of Consumer Financial Protection's (CFPB) rule on integrated mortgage disclosures. For the swaps rules, regulators coordinated domestically and internationally and, according to regulators, they largely harmonized their respective rules. For the integrated mortgage disclosure rule, CFPB followed its internal guidance for coordinating with relevant agencies throughout the rulemaking process.
The full impact of the Dodd-Frank Act remains uncertain because some of its rules have not been finalized and insufficient time has passed to evaluate others. As of December 2016, regulators had issued final rules for about 75 percent of the 236 provisions of the act that GAO is monitoring. Using recently released data, GAO updated indicators from its prior reports, including those that monitor systemic risk characteristics of large U.S. bank holding companies. These indicators track changes in characteristics of these companies such as size, interconnectedness, leverage, and liquidity since the passage of the act to examine if the changes have been consistent with the goals of the act. While changes in the indicators are not necessarily evidence of the impacts of the act's provisions, trends in indicators suggested large bank holding companies have become larger but less vulnerable to financial distress.

What GAO Recommends

GAO makes no new recommendations but continues to monitor the implementation of five prior recommendations intended to improve, among other things, financial regulators' cost-benefit analysis, interagency coordination, and impact analysis associated with Dodd-Frank regulations. Not all regulators have implemented these recommendations.