Examining the GAO Study on Government Support for Bank Holding Companies

by Simon Johnson, Peterson Institute for International Economics

January 8, 2014

The US Government Accountability Office Report "Government Support for Bank Holding Companies: Statutory Changes to Limit Future Support Are Not Yet Fully Implemented" (GAO-14-18) provides some useful detail on the wide variety of support provided by the official sector to large bank holding companies during the financial crisis of 2007–10. The GAO is also correct that, even under the most favorable interpretation, there has been slow implementation of various key measures designed subsequently to make the financial system less risky. More than five years after the worst crisis since the 1930s, it is remarkable how little has been achieved by regulators.

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