By Matthew Bisanz and Jeffrey P. Taft
In March 2025, the US Government Accountability Office (“GAO”) released a report on how the US federal banking regulators participated in the development of the Basel III Endgame capital standards (“GAO Report”).[1] While the GAO Report sheds some light on the operations of the Basel Committee on Banking Supervision (“Basel Committee”), it also illustrates how many important regulatory reforms in the United States have been developed through opaque standard-setting processes. Longstanding concerns with the lack of transparency at international organizations may explain why Congress has again proposed legislation to require the federal banking regulators to disclose information concerning their involvement in Basel Committee activities.
In this post, we provide background on the Basel Committee, examine key issues raised by the GAO Report, and discuss legislative proposals for greater transparency in international standard-setting.
Background
The Basel Committee is a group of several dozen central banks and bank supervisors that sets standards for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters. It was formed in 1974 by the central bank governors of the Group of Ten countries and today is operated under the auspices of the central bank governors and heads of supervision from 28 jurisdictions.[2]
While the Basel Committee is hosted and staffed by the Bank for International Settlements (“BIS”), it is legally separate from BIS and has only been implicitly authorized under US law.[3] Under the International Lending Supervision Act (“ILSA”), Congress encouraged the US federal banking regulators to enhance international coordination and “consult with the banking supervisory authorities of other countries.”[4] ILSA also directs the Chair of the Board of Governors of the Federal Reserve and the Secretary of the US Department of the Treasury to “encourage governments, central banks, and regulatory authorities of other major banking countries” to maintain strong capital regimes.[5] ILSA does not expressly authorize the US federal banking regulators to join the Basel Committee to fulfill those obligations, but it includes a provision that ensures the Federal Deposit Insurance Corporation (“FDIC”) will be given equal representation with other US regulators on the Basel Committee.[6] The inclusion of this provision presupposes that the US federal banking regulators are authorized to become members of the Basel Committee. Accordingly, the United States currently is represented at the Basel Committee by the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York (collectively, the “Federal Reserve”), the Office of the Comptroller of the Currency (“OCC”), and the FDIC.[7]
Notably, neither the US Department of the Treasury nor the US Department of State is a member of the Basel Committee. Michael Barr, the former Vice Chair for Supervision at the Federal Reserve, has stated that this arrangement allows the US regulator participation in the Basel Committee to operate largely outside of the executive branch and with only limited Congressional oversight.[8] Secretary of the Treasury Scott Bessent recently criticized US participation in the Basel Committee as outsourcing US policymaking to international organizations while providing little in the way of public rationale or analysis.[9]
Standards developed by the Basel Committee do not have the force of law but, rather, must be adopted or transposed by its member jurisdictions into legal requirements that apply within a specific jurisdiction. The Basel Committee has promulgated and revised standards for capital and liquidity requirements for banking organizations for many years (in addition to other prudential standards), with the most recent major revisions occurring in 2017 (“Basel III Endgame”).[10] Historically, the federal banking regulators have adopted many Basel Committee standards with little variation.
GAO Report
In 2023, members of the House Financial Services Committee requested that the GAO examine the role the federal banking regulators played at the Basel Committee in developing the Basel III Endgame standards.[11] Among other issues, they noted that, for over 40 years, Congress has expressed concerns with the lack of transparency, accountability, and other risk posed by international forums like the Basel Committee and, therefore, had authorized the GAO in 1983 to audit each federal banking regulator’s participation in such international forums.[12]
The GAO initially completed the GAO Report in December 2024. However, the federal banking regulators determined that significant portions of the GAO’s analysis and findings were controlled information that should not be disseminated publicly. Controlled information in the initial GAO Report included:
- Statements related to the federal banking regulators’ specific actions or positions on reforms in response to external input or analyses during the development of the Basel III Endgame standards.
- Descriptions of the federal banking regulators’ positions on specific reforms and actions taken by the federal banking regulators to further their reform priorities during the development of the Basel III Endgame standards.
- Statements on the federal banking regulators’ role in the development of selected components of the proposed and final Basel III Endgame standards.
- Descriptions of the federal banking regulators’ actions or positions on reforms related to leading practices for development of high-quality and evidence-based analysis.
The GAO responded to these determinations by producing a revised version of the GAO Report that omitted the controlled information.
The revised GAO Report outlines the administrative structures that the Basel Committee used to develop the Basel III Endgame standards. For example, the GAO found that officials from each federal banking regulator participated in the major working groups and task forces that were tasked with completing the work for each reform in Basel III Endgame, and, in one case, a US official even led the working group. While the GAO Report does not expressly address access to and records for working group and task force meetings, we are not aware of a mechanism for the public to review such proceedings.
US officials participated actively at all levels of the Basel Committee structure. At the most senior level, officials from the federal banking regulators helped to determine US negotiating priorities, while subject matter experts from each federal banking regulator completed the technical work necessary to develop reform proposals in line with those priorities. The federal banking regulators jointly advocated for specific positions in Basel III Endgame, including by sending letters to components of the Basel Committee. The GAO stated its belief that these actions generally were consistent with best practices for interagency collaboration within the US government.[13]
One notable work product that is discussed in the GAO Report is a quantitative impact study that was supported by staff from the Federal Reserve. The GAO states that the Basel Committee used the Federal Reserve’s data to determine risk-weighted assets under various scenarios. This study “allowed Basel members to compare banks’ current capital positions to their projected capital positions under the proposed reforms.” The Federal Reserve also conducted four internal analyses in 2018 and 2019 that were shared with the OCC and FDIC, although it does not appear that these analyses have been made publicly available.
The GAO Report notes that the Basel Committee solicited public comments on aspects of Basel III Endgame and generally published the comments it received on its website, unless an author requested that their comment be withheld from public dissemination. It also notes that the Federal Reserve initiated meetings with US global systemically important banks to obtain their views on the Basel Committee’s work, and the OCC held more than 20 meetings with banks and industry groups on the development of Basel III Endgame. However, it does not appear that any of these meetings were disclosed or memorialized in the public comment file for the proposed US implementation of Basel III Endgame.[14]
Legislative Proposals
The 118th Congress put forward at least six proposals to require US banking regulators to disclose information about their participation in the Basel Committee.[15] Additionally, the House Financial Services Committee held a hearing in September 2024 on the transparency of US regulatory participation in international standard-setters.[16] While these initiatives did not result in the enactment of legislation, they demonstrated the widespread concern with the lack of transparency in US participation in the Basel Committee.
In the 119th Congress, Senator Kennedy introduced the Transparency in Banking Act.[17] It would require the four US regulators participating in the Basel Committee (i.e., Federal Reserve, OCC, FDIC) to publish an annual report on their participation in the Basel Committee. The report would be required to disclose substantial amounts of information, including their goals for Basel Committee meetings, as well as:
- Who from each federal banking regulator will be attending the meetings;
- The various problems to be addressed at the meetings;
- The various options likely to be considered at the meetings;
- The nature of the standards being considered for application in the United States or affecting United States persons or businesses;
- What authority will be relied upon to implement the proposed standards in the United States; and
- The activities or proposed activities of all of the subcommittees that report to the Basel Committee.
Federal banking regulators also would be required to inform Congress within 30 days of any significant change in the planned activities of the Basel Committee, including a summary of the minutes of the Basel Committee meeting where the change took place, the positions and votes of the federal banking regulator representatives attending the meetings, and the results of the meeting.
The revised GAO Report, while not fully disclosing the activities of the federal banking regulators at the Basel Committee, describes many actions and analyses that were not disclosed to the public as part of the proposed US implementation of Basel III Endgame. The fact that the federal banking regulators compelled the GAO to redact the initial GAO Report indicates that this was not an inadvertent oversight but, rather, a conscious decision to prevent the public from reviewing data on which Basel III Endgame was based and the parts of the process through which it was developed.
The Transparency in Banking Act would not subject federal banking regulator participation in the Basel Committee to the full extent of notice and comment rulemaking under the Administrative Procedure Act, public records access under the Freedom of Information Act, or public meeting access under the Government in the Sunshine Act. It would, however, provide important insights into the activities of the federal banking regulators, particularly when those activities result in proposals to impose legal obligations on US banking organizations. It also could help US banking organizations in providing better comments on those proposals and courts in better evaluating the manner in which the federal banking regulators comply with their rulemaking obligations under US law.
Matthew Bisanz and Jeffrey Taft are Partners at Mayer Brown LLP. They may be reached at mbisanz@mayerbrown.com and jtaft@mayerbrown.com, respectively. The views and ideas expressed in this post are those of the authors and do not necessarily represent those of Mayer Brown LLP, the Wharton School, or the Wharton Initiative on Financial Policy and Regulation.
[1] GAO, US Agencies’ Participation in the Development of the International Basel Committee Standards, GAO-25-107995 (Mar. 26, 2025), https://www.gao.gov/products/gao-25-107995.
[2] Basel Committee, History of the Basel Committee (last visited Apr. 23, 2025), https://www.bis.org/bcbs/history.htm.
[3] See Robert R. Bench, International Lending Supervision, 11 N.C. J. Int’l L. & Com. Reg. 427, 443 (1986) (“The existence and importance of the Committee was, however, indirectly recognized by Congress”).
[4] 12 U.S.C. § 3901.
[5] 12 U.S.C. § 3907(b)(3)(C).
[6] 12 U.S.C. § 3911(a).
[7] Id.. See also, Basel Committee, Basel Committee membership (May 14, 2024).
[8] Michael S. Barr & Geoffrey P. Miller, Global Administrative Law: The View from Basel, 17 Eur. J. Int’l L. 15, 33-34 (2006) (“In the context of discussions in the Basel Committee, this is somewhat problematic, because the Federal Reserve Board, as an independent agency and in effect the lead agency in negotiations, is not representing the President. … Congressional oversight through hearings is a rather weak form of control.”).
[9] Scott Bessent, Remarks before the American Bankers Association (Apr. 9, 2025), https://home.treasury.gov/news/press-releases/sb0078.
[10] Basel Committee, Basel III: Finalising post-crisis reforms (Dec. 7, 2017).
[11] HFSC, McHenry, Barr Demand GAO Examine Role of U.S. Regulators in Basel Committee, Basel III Endgame Proposals (Oct. 24, 2023), https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409006.
[12] Id. (citing 12 U.S.C. § 3910(a)(2) (“An audit under this subsection may include a review or evaluation of … the coordination of such activities with similar activities of regulatory authorities of a foreign government or international organization.”)).
[13] The GAO noted that it had applied these best practices, because it could not identify leading practices for international standard-setting bodies.
[14] Arguably these materials were not required to be included in the public comment file, because they predated the release of the proposal.
[15] See H.R.9512, H.R.4823, S.3446, H.R.4649, H.R.4601, H.R.4642.
[16] HFSC, Transparency in Global Governance (Sept. 11, 2024), https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=409348.
[17] S.940 (Mar. 11, 2025), https://www.congress.gov/bill/119th-congress/senate-bill/940/text.