The Federal Structure for Examining Financial Institutions Can Be Improved

GGD-81-21: Published: Apr 24, 1981. Publicly Released: Apr 24, 1981.

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Congress took a giant step to improve coordination among federal regulators by establishing the Federal Financial Institutions Examination Council. GAO reviewed the field office structure of the bank regulatory agencies to determine if there were inherent problems with each agency having its own national network of examiners.

GAO identified problems with the present field office structure which include: (1) there are no field offices in some cities and separate field offices in other cities because the agencies do not share their examining capabilities or colocate their field offices; (2) high costs are incurred in examining some banks because of the scattered distribution of financial institutions which each agency examines; (3) the agencies have experienced some difficulties in managing their examination work load; and (4) many examiners have to travel quite extensively. This frequent travel creates an undesirable quality of life which results in high turnover and makes it difficult to maintain an experienced staff. GAO believes that consolidation of the federal regulatory agencies' examiner forces is a reasonable solution to overcome the inherent problems of each agency maintaining separate networks of examiners.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The Council planned no action on the recommendation because of numerous practical and institutional obstacles. This question was also considered as part of a study completed by a task force headed by Vice President Bush. The task force has issued a report calling for the restructuring of federal bank regulatory agencies.

    Recommendation: The Federal Financial Institutions Examination Council should establish a task force to determine the feasibility of consolidating the examination forces of the federal regulatory agencies.

    Agency Affected: Federal Financial Institutions Examination Council

  2. Status: Closed - Not Implemented

    Comments: The Office of the Comptroller of the Currency said that it did not establish such procedures, but said its annual operating plans always include a review of the internal organizational structure.

    Recommendation: The Board of Directors of the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, and the Comptroller of the Currency should establish procedures for making periodic evaluations of their internal organizational structure and take actions to realign their field structure whenever opportunities exist to improve the dispersal of their examiner forces.

    Agency Affected: Department of the Treasury: Office of the Comptroller of the Currency

  3. Status: Closed - Not Implemented

    Comments: FDIC indicated that it had a procedure to realign its field structure. Therefore, it has not acted on this recommendation.

    Recommendation: The Board of Directors of the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, and the Comptroller of the Currency should establish procedures for making periodic evaluations of their internal organizational structure and take actions to realign their field structure whenever opportunities exist to improve the dispersal of their examiner forces.

    Agency Affected: Federal Deposit Insurance Corporation

  4. Status: Closed - Not Implemented

    Comments: The Federal Reserve System indicated that it had under consideration the feasibility and potential benefits from opening offices in other locations. Therefore, it has not acted on this recommendation.

    Recommendation: The Board of Directors of the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, and the Comptroller of the Currency should establish procedures for making periodic evaluations of their internal organizational structure and take actions to realign their field structure whenever opportunities exist to improve the dispersal of their examiner forces.

    Agency Affected: Federal Reserve System: Board of Governors

  5. Status: Closed - Not Implemented

    Comments: The Council planned no action on the recommendation because of numerous practical and institutional obstacles.

    Recommendation: The Federal Financial Institutions Examination Council should prepare a plan, including proposed legislation, whereby bank examinations would be conducted, to the extent feasible, by the closest federal regulatory agency.

    Agency Affected: Federal Financial Institutions Examination Council

 

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