Minority-Owned Financial Institutions:
Status of Federal Efforts to Preserve Minority Ownership
GGD-94-1, Nov 3, 1993
Pursuant to a congressional request, GAO reviewed the implementation of legislation that is designed to preserve minority ownership of financial institutions and assist minority-owned institutions and minority investors in acquiring failed institutions, focusing on: (1) Department of the Treasury, Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS), and Resolution Trust Corporation (RTC) efforts to satisfy the legislative requirements; and (2) minority-owned businesses' views on the effectiveness of their actions.
GAO found that: (1) Treasury, FDIC, OTS, and RTC have taken actions to satisfy the statutory requirements and improve minority ownership in financial institutions; (2) Treasury is facilitating communication between federal regulatory agencies and RTC, FDIC is preserving minority-owned banks under its normal supervisory and resolution policies and procedures, OTS is helping existing institutions remain viable and profitable through its supervisory process, and RTC is extending preferences to minority bidders of failed thrifts and offering capital assistance to winning minority businesses; (3) the regulatory agencies believe that their efforts have had a positive effect on preserving minority ownership and increasing the overall size and number of minority-owned banks; (4) between 1989 and 1993, the number of minority-owned banks increased and the number of nonminority-owned banks decreased; (5) 12 of the 26 financial institutions that RTC has resolved are minority-owned banks; (6) the minority banking community believes that federal actions could be increased and regulatory agencies have not proactively satisfied the statutory requirements; and (7) minority-owned businesses suggest that federal agencies can improve examiners' sensitivity toward the unique circumstances of minority-owned financial institutions, provide more technical assistance, and help minority-owned financial institutions gain access to needed capital.
- Closed - implemented
- Closed - not implemented
Recommendation for Executive Action
Recommendation: The Secretary of the Treasury should consult with FDIC, OTS, and RTC to systematically assess the effectiveness of their approaches to preserve minority-owned financial institutions. This effort should include surveys of minority-owned financial institutions to obtain their views on the efforts that are employed to preserve their institutions.
Agency Affected: Department of the Treasury
Status: Closed - Implemented
Comments: On February 14, 1994, Treasury met with officials from FDIC, OTS, and RTC to discuss planned actions to address GAO's recommendation. In December 1994, Treasury met with officials from FDIC, OTS, and RTC to discuss the results of a survey of minority-owned financial institutions. It was decided that each agency would continue outreach to owners of minority financial institutions.