The agency created to ensure that risks to the stability of theU.S. financial system are quickly identified and dealt with needsgreater transparency to do its job correctly, the GovernmentAccountability Office said in a new study.

It also needs to create a better system of coordination, andshare more information with the public, the study reported.

The GAO said that is necessary because the agency, the Financial Stability Oversight Council iscomposed of the heads of a number of disparate agencies whoseprimary responsibility is to oversee various components of the U.S.financial services system.

The report also voiced concern with the work of the Office of Financial Research. This bureau,which is located in the Treasury Department, was created to be the“back office” of the FSOC, producing financial data andestablishing metrics that members of the FSOC can use to measurefinancial risk within the system.

The GAO recommended that the FSOC and the OFR strengthentransparency and accountability by collecting and sharing financialrisk indicators, keeping detailed records of closed-door sessionsand developing forward-looking plans to help “prioritize thethreats.”

The report prompted two reactions. As part of the report, MaryMiller, Treasury undersecretary for domestic finance, said thatTreasury supports the recommendations.

She also said that the FSOC has already “moved quickly tofulfill its statutory mission” and “promote greater collaborationamong its members.”

Rep. Spencer Bachus, R-Ala., chairman of the House FinancialServices Committee, asked that the FSOC and the OFR “operatetransparently and efficiently, without imposing an undue burden onthe nation's financial system.”

Bachus's letter was sent to Timothy Geithner, secretary of theTreasury Department. Under the Dodd-Frank Act provision whichestablished the two agencies, the Treasury secretary heads theFSOC.

Bachus also demanded additional information.

The letter said that the OFR has not filled three of its topeight leadership positions, and asked what steps the TreasuryDepartment is taking to fill those spots.

He also said that the GAO report found that the FSOC has nostrategic plan and uses its annual report as the only documentationfor its strategic framework. Moreover, the report found that theFSOC's annual reports are “vague with regard to recommendations andfail to identify entities responsible for implementing—and thetimeframes for completing—the recommendations.”

“Will the FSOC commit to making more detailed and specificrecommendations in its annual reports that specify whichmember-agencies are responsible for the implementations of therecommendations and the timeframes for implementing them?”

“If not, please state with specificity the FSOC's reasons fornot doing so,” Bachus said.

The report acknowledged that the FSOC and the OFR face“challenges” in doing their jobs.

The GAO said that is because the key FSOC missions areidentifying risks and responses to emerging threats to financialstability.

However, the report said, risks to financial stability do notdevelop in precisely the same way in successive crises.

It also acknowledges that collaboration among FSOC members canalso be challenging at times, as almost all of them representindependent agencies that retained existing authorities.

For its part, the GAO said in the report that the OFR “faces thechallenge of trying to establish and build a world-class researchorganization while meeting shorter-term goals andresponsibilities.”

The FSOC needs a more systematic approach, and it needs toprovide comprehensive information to the FSOC member agencies, theGAO said.

That's because, on their own, the member agencies “may not bewell positioned to judge which potential threats will benefit frominteragency discussions.”

To better accomplish its task, the GAO recommends that the FSOCcollect and share key financial risk indicators as part of asystematic approach to help identify potential threats to financialstability.

This article was originall posted at LifeHealthPro.com, asister site of Credit Union Times.