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PAD-81-25 1 (1981-02-13)

handle is hein.gao/gaobabbqg0001 and id is 1 raw text is: 


RELEASED


               REPO RT ouffOf~t Cxcept on tie b:.a ct, t:;O;itatic Aiotevll


Corne We-a


OF THE UNITED STATES


An Economic Overview Of

Bank Solvency Regulation


Depository financial institutions in the United
States are subject to extensive regulation. One
aim of certain of these regulations is to main-
tain the safety and soundness of financial
institutions. The cost of solvency regulation,
however, is its inhibiting effect on competition.
Serious questions have been raised as to
whether the benefits of all the current types
of solvency regulations justify this cost.

In this report, GAO discusses the consider-
ations that justify solvency regulation of de-
pository financial institutions. The report
shows that some of the goals of this regulation
are achieved by the existence of a deposit
insurance system and that many regulations
car be justified only as a necessary adjunct
of such a system. The costs and benefits of
these regulations are discussed within this
cohitext. GAO also reviews some criticisms
of, and proposed changes in, the existing
deposit insurance system.


        PAD-81-25
FEBRUARY 13, 1981


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