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A structural exception covered 11 public banks
GAO identified 11 publicly traded banks without a bank holding company. Their annual disclosures are reviewed by federal banking regulators rather than the Securities and Exchange Commission.
Two of those 11 banks failed in spring 2023 after publishing audited statements. Shareholders lost more than $29 billion in the two institutions between the end of 2022 and May 2023.
| Measure | Count or amount | Meaning |
|---|---|---|
| Public banks outside SEC review | 11 | No holding-company structure |
| 2023 failed banks in that group | 2 | 18.2% of the identified group |
| Shareholder investment loss | >$29B | Two banks, end-2022 to May 2023 |
The review purpose differs
Congress assigned certain SEC-like functions to banking regulators for these institutions. GAO found those review processes, unlike SEC’s, do not assess disclosures for investors’ benefit.
GAO’s review of all three major 2023 bank failures also found the banks described interest-rate or liquidity thresholds but did not disclose when thresholds were breached or how breaches were addressed.
This is an oversight gap, not a causal verdict
The records establish a narrow but consequential exception: 11 public banks operate under disclosure review that serves a different purpose, and two failed with major shareholder losses.
GAO did not say missing disclosures alone caused the failures or that every one of the 11 banks is unsafe. Weak risk management and rapidly changing market conditions also mattered.
Method and responses
The newsroom calculated two of 11 as 18.2% and relied on GAO’s review of regulator processes, company disclosures and interviews. GAO urged Congress to reassess authority and recommended SEC guidance on material risk-tolerance breaches.
SEC disagreed that additional guidance was needed, citing post-disclosure feedback. GAO maintained the recommendation, which remained open on the report page.