On May 23, the Government Accountability Office (GAO), in a letter to Senator Patrick Toomey, R-Pa., agreed to determine whether the Guidance on Leveraged Lending jointly issued in 2013 by the Board of the Governors of the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation was lawfully adopted.

The GAO’s letter was in response to a March 31 request by Senator Toomey to the GAO that it declare that the Leveraged Lending Guidance is a “rule” for the purpose of the Congressional Review Act, not simply guidance. If the Leveraged Lending Guidance is a rule under the Congressional Review Act, Congress should have been permitted the right to disapprove the guidance within 60 days of it being finalized. Senator Toomey requested the GAO ruling in order to require that the Leveraged Lending Guidance be resubmitted to the current Congress for review.

In the letter, the GAO stated that the “GAO accepts your request as work that is within the scope of its authority.” In a related statement, GAO spokesman Chuck Young said, “We expect it will be at least a few months before the opinion is completed and issued.”

Given current Republican control of Congress, if the GAO determines that the Leveraged Lending Guidance should be recharacterized as a rule, it is quite possible (perhaps even likely) the guidance would be invalidated. While the full implications of invalidation are uncertain, it is likely that the onerous restrictions on and regulatory interference with leveraged lending by the regulated banks endured since 2013 would ease dramatically.

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