Regulations of banks

Explain how various government and quasi-government agencies protect consumers, service providers and the economy by establishing consistent standards, including definitions, reporting, and financial condition monitoring. Economists believe that access to a government backstop creates a moral hazard problem, meaning that federal backing gives a bank's creditors (such as depositors) less incentive to monitor the risks that the bank is taking. For example, what would be the impact if there was no Financial Accounting Standard Board and accounting terms could mean different things to different firms, companies, and reports?