**GAO-10-555T**                      Published: May 06, 2010. Publicly Released: May 06, 2010.                  

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## Highlights

In 2009 GAO conducted a study on the role of leverage in the recent financial crisis and federal oversight of leverage, as mandated by the Emergency Economic Stabilization Act. This testimony presents the results of that study, and discusses (1) how leveraging and deleveraging by financial institutions may have contributed to the crisis, (2) how federal financial regulators limit the buildup of leverage; and (3) the limitations the crisis has revealed in regulatory approaches used to restrict leverage and regulatory proposals to address them. To meet these objectives, GAO built on its existing body of work, reviewed relevant laws and regulations and academic and other studies, and interviewed regulators and market participants.

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## Topics

Auditing and Financial Management

Bank managementBanking regulationCapitalFederal regulationsFederal reserve banksFinancial analysisFinancial institutionsFinancial managementFinancial markets regulationFinancial regulationFunds managementInsurance regulationLending institutionsLoansRisk managementSystems analysisHedge funds