Well, yes? The law says that the bank should do the thing and the bank does the thing to the best of it's ability, given what people usually work there.
Oh, you have no idea. It's not even about costs. In a 200 year old company the level of corporate disfunction and the average skill level of people is something else entirely. Nothing ever happens unless the regulator holds a blowtorch wired to a timer to the CEO's ass.
No they don't. At best, they do a cost-effective proxy for what should be done.