In the wake of financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) puts more emphasis on financial system stability and establishes two new regulating agencies to monitor systemic risk. Meanwhile, financial system transparency is advocated by researchers and practitioners and promoted by the banking regulators. However, the underlying assumption that transparency helps improve financial system stability is not warranted. Especially for disclosures from regulators, it is not clear whether such disclosures will improve the financial system stability, and no empirical evidence has been documented. In this project, we investigate the impact of public releases of enforcement actions on the stability of the entire banking system. Specifically, we investigate the impact of the public releases of bank regulators’ enforcement actions against a bank on the entire banking industry, the role of the peer bank’s financial reporting transparency in mitigating or intensifying the effects of public releases of enforcement actions on financial stability, and the cross-sectional variance of impact due to types and qualities of enforcement actions. Our project will contribute toward the debate on transparency in financial industry and have practical implications for financial regulators. Our evidence also provides rational explanations for some actions taken by the regulators in recent years. For example, during the financial crisis in 2008-2009, the Securities and Exchange Commission (SEC) deliberately halted the application of fair value accounting on some financial instruments to prevent further market crash.