Regulatory Agencies:

Administrative Expenses at FHLBB and FRB for 1985 and 1986

AFMD-88-33: Published: Jun 15, 1988. Publicly Released: Jun 22, 1988.

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In response to a congressional request, GAO reviewed the Federal Home Loan Bank Board (FHLBB) and the Federal Reserve Board (FRB) to determine: (1) the policies and procedures governing their administrative expenses and their compliance with them; (2) applicable laws and regulations; and (3) their budget and related disclosure processes.

GAO found that FHLBB: (1) illegally augmented its budget authority to allow its district banks to pay some of its administrative expenses through their shared expense fund; (2) failed to inform or receive authorization from Congress on these activities; (3) allowed district banks to pay $368,000 in travel expenses over its approved budget amount for these expenses; (4) temporarily filled FHLBB vacancies with district bank employees and allowed the banks to continue paying their salaries, resulting in an illegal augmentation of FHLBB funding authorization; and (5) paid for studies which analyzed its activities through the shared expense fund. GAO also found that: (1) although FHLBB discontinued the shared expense fund in 1986, the district banks established a new joint expenditures fund; and (2) with the exceptions noted for FHLBB, both boards had adequate internal policies governing administrative expenditures and adequately complied with these policies.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: FHLBB policy is to eliminate any further use of shared expense funds. All other administrative expenses are budgeted, accounted for, and reported to Congress. Accordingly, the thrust of this recommendation has been met.

    Recommendation: To ensure the completeness of the FHLBB budget, full congressional oversight, and compliance with the administrative budget limitation, the Chairman, FHLBB, should budget and account for all administrative expenditures and report such expenditures to Congress.

    Agency Affected: Federal Home Loan Bank Board

  2. Status: Closed - Implemented

    Comments: FHLBB policy is to eliminate any further use of shared expense funds. All other administrative expenses are budgeted, accounted for, and reported to Congress. Accordingly, the thrust of this recommendation has been met.

    Recommendation: To ensure the completeness of the FHLBB budget, full congressional oversight, and compliance with the administrative budget limitation, the Chairman, FHLBB, should provide that expenses shared among the district banks may not include expenses for activities related to functions or responsibilities of FHLBB to a significant degree unless the banks' payments are limited to the portion of the activity that relates solely to their functions or responsibilities.

    Agency Affected: Federal Home Loan Bank Board

  3. Status: Closed - Implemented

    Comments: FHLBB policy is to eliminate any further use of shared expense funds. All other administrative expenses are budgeted, accounted for, and reported to Congress. Accordingly, the thrust of this recommendation has been met.

    Recommendation: To ensure the completeness of the FHLBB budget, full congressional oversight, and compliance with the administrative budget limitation, the Chairman, FHLBB, should provide that criteria be established for determining what types of expenses may be shared among FHLBB and the district banks.

    Agency Affected: Federal Home Loan Bank Board

  4. Status: Closed - Implemented

    Comments: FHLBB policy is to eliminate any further use of shared expense funds. All other administrative expenses are budgeted, accounted for, and reported to Congress. Accordingly, the thrust of this recommendation has been met.

    Recommendation: To ensure the completeness of the FHLBB budget, full congressional oversight, and compliance with the administrative budget limitation, the Chairman, FHLBB, should provide that the guidance provided in the March 2, 1987, Comptroller General decision regarding FHLBB travel expenses paid from the shared expense fund be incorporated in developing these orders.

    Agency Affected: Federal Home Loan Bank Board

  5. Status: Closed - Implemented

    Comments: FHLBB policy is to eliminate any further use of shared expense funds. All other administrative expenses are budgeted, accounted for, and reported to Congress. Accordingly, the thrust of this recommendation has been met.

    Recommendation: To ensure the completeness of the FHLBB budget, full congressional oversight, and compliance with the administrative budget limitation, the Chairman, FHLBB, should provide that any shared expense arrangements must be fully disclosed to Congress.

    Agency Affected: Federal Home Loan Bank Board

  6. Status: Closed - Implemented

    Comments: The Inspector General agreed to make periodic compliance reviews, as recommended.

    Recommendation: Because FHLBB has a history of establishing joint funding arrangements with its district banks and not disclosing them to Congress, the FHLBB Inspector General should make periodic compliance reviews of policies applicable to budgeting and disclosure of all administrative expenses.

    Agency Affected: Federal Home Loan Bank Board

 

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