Examination of Financial Statements of the Federal Home Loan Banking System:
A Favorable Opinion but Some Management Problems
FOD-77-15: Published: Oct 25, 1977. Publicly Released: Oct 25, 1977.
- Full Report:
The Comptroller General is required by legislation to examine the financial transactions of the federal home loan banks, the Federal Savings and Loan Insurance Corporation (FSLIC), and the Federal Home Loan Mortgage Corporation. The Federal Home Loan Bank Board (FHLBB) supervises the activities of the banks and both Corporations. During 1976, the Office of Examinations and Supervision examined 3,270 savings and loan institutions, and on the basis of the information, classified then as financially critical institutions (category I), and not financially critical but requiring aggressive supervisory attention (category II).
At December 3l, 1976, there were 13 category I and 70 category II problem institutions with estimated insured deposits of $658 million and $8,890 million, respectively. FHLBB supervises 2,019 federal savings and loan associations and 2,025 insured state-chartered savings and loan institutions. Total assets of the Board as of December 31, 1976, were $415.0 billion. The 12 federal home loan banks' earnings totaled $175 million in calendar year 1976, of which $130 million was returned to members as dividends; their net worth continued to increase, exceeding $3.5 billion. The net value of FSLIC for calendar year 1976 was $48,704 million. The Federal Home Loan Mortgage Corporation's balance of participations was $809 million at December 31, 1976. The financial statements presented fairly the positions of these organizations. However, the Bank Board's line management structure is not generally used by other federal agencies and is inconsistent with current congressional intent in the area. The Bank Board's imprest fund has financed, without congressional review, certain activities benefiting the Board.
Matter for Congressional Consideration
Comments: Please call 202/512-6100 for additional information.
Matter: The Chairman of the Federal Home Loan Bank Board should revise the Board's current internal audit organization structure so that maximum independence may be obtained. Congress should require the Board to submit all imprest fund budgets and expenditures information for consideration during its budget hearings. This would allow the identification of Board items being funded by other sources.