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Formal Supervisory Process for Savings and Loan Associations Should Be Strengthened

GGD-81-91 Published: Sep 17, 1981. Publicly Released: Sep 17, 1981.
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Highlights

 

GAO assessed the ability of the Federal Home Loan Bank Board (FHLBB) to examine and supervise members of the savings and loan industry. The effectiveness of the Board's supervision of savings and loan associations is extremely critical at this time since many industry members are experiencing financial difficulties.

 

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Federal Home Loan Bank Board The FHLBB should delegate to supervisory agents the authority to use supervisory agreements for problems other than net worth failure.
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Federal Home Loan Bank Board The FHLBB should clarify its position on the extent to which formal enforcement actions should be pursued in supervising the savings and loan industry.
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Federal Home Loan Bank Board The FHLBB should direct the Office of Examinations and Supervision (OES) to prescribe the uniform principles and standards for supervisory agents and OES personnel as to how and when formal supervisory tools, including an expanded supervisory agreement, should be used.
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Federal Home Loan Bank Board The FHLBB should accept the recommendations of the Office of General Counsel Compliance Division to eliminate prior FHLBB approval for formal investigations and the negotiation of consent cease and desist orders.
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Federal Home Loan Bank Board The FHLBB should assume greater control over the selection of the states from which examiners are trained.
Closed – Not Implemented
The FHLBB believes it exerts as much control over the subject program as the legislation provides. More recent FHLBB actions since this review indicate the FHLBB has assumed greater control than GAO had recommended. Further followup is unnecessary.
Federal Home Loan Bank Board The FHLBB should select the states from which examiners are trained on the basis of criteria which will give priority to examiners needing training from those states participating in or offering the greatest potential for participation in joint examination or shared reporting programs.
Closed – Not Implemented
The FHLBB believes it is following the thrust of the recommendation and, based upon GAO observations, it probably is. The presence of GAO during the audit made FHLBB more aware of proper actions in this area; FHLBB awareness has been increased. Further followup is unnecessary.

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Bank examinationBank managementBanking regulationEducationstate relationsHomeowners loansMonitoringMortgage protection insuranceSavings and loan associationsHome loans