Despite Recent Improvements, Bank Supervision Could Be More Effective and Less Burdensome
GGD-82-21
Published: Feb 26, 1982. Publicly Released: Feb 26, 1982.
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Highlights
GAO evaluated changes made in the supervision of banks since the 1976 study by its Task Force on Federal Supervision of Banks.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should eliminate the requirement under the Federal Reserve Act for banks to submit periodic reports to their primary regulators on loans made to their executive officers, unless Congress remains convinced of the value of public disclosure, in addition to supervisory oversight as a deterrent to insider abuses. In addition, Congress should eliminate the requirements under the Federal Deposit Insurance Act that a bank report to its primary regulator a list of certain stockholders and a list of executive officers and shareholders who have extensions of credit from the bank and the aggregate amount of such credit, and that the banks and the agencies make the information available to the public on request. If Congress believes in the value of retaining public disclosure by the banks themselves, Congress should only eliminate the requirement for banks to submit periodic reports to their primary regulator on loans made to their executive officers while retaining the requirements for reports on extensions of credit and public disclosure of such reports. |
Closed – Implemented
|
Please call 202/512-6100 for information. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of the Comptroller of the Currency | The Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Federal Deposit Insurance Corporation should require examiners to make nonbinding but specific written recommendations to banks in examination reports or related correspondence on ways to improve management weaknesses. |
Closed – Not Implemented
The agencies disagreed with the recommendation. The issue will be reconsidered in a future overall assessment of the state of supervision with an as yet undetermined start date. It is not considered a time critical recommendation.
|
| Federal Deposit Insurance Corporation | The Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Federal Deposit Insurance Corporation should require examiners to make nonbinding but specific written recommendations to banks in examination reports or related correspondence on ways to improve management weaknesses. |
Closed – Not Implemented
The agencies disagreed with the recommendation. The issue will be reconsidered in a future overall assessment of the state of supervision with an as yet undetermined start date. It is not considered a time critical recommendation.
|
| Federal Reserve System | The Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Federal Deposit Insurance Corporation should require examiners to make nonbinding but specific written recommendations to banks in examination reports or related correspondence on ways to improve management weaknesses. |
Closed – Not Implemented
The agencies disagreed with the recommendation. The issue will be reconsidered in a future overall assessment of the state of supervision with an as yet undetermined start date. It is not considered a time critical recommendation.
|
| Office of the Comptroller of the Currency | The Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Federal Deposit Insurance Corporation should ascertain the impact of modified scope examinations on staff training and develop policies on their use that consider training needs. |
Closed – Not Implemented
FDIC has revised the types and frequencies of examinations. Trainees would concentrate on full scope examinations, and modified scope examinations no longer exist. Other agencies believed that their training needs were being served. The issue will be reconsidered in future planning period work.
|
| Federal Deposit Insurance Corporation | The Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Federal Deposit Insurance Corporation should ascertain the impact of modified scope examinations on staff training and develop policies on their use that consider training needs. |
Closed – Not Implemented
FDIC has revised the types and frequencies of examinations. Trainees would concentrate on full scope examinations, and modified scope examinations no longer exist. Other agencies believed that their training needs were being served. The issue will be reconsidered in future planning period work.
|
| Federal Reserve System | The Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Federal Deposit Insurance Corporation should ascertain the impact of modified scope examinations on staff training and develop policies on their use that consider training needs. |
Closed – Not Implemented
FDIC has revised the types and frequencies of examinations. Trainees would concentrate on full scope examinations, and modified scope examinations no longer exist. Other agencies believed that their training needs were being served. The issue will be reconsidered in future planning period work.
|
| Office of the Comptroller of the Currency | The Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Federal Deposit Insurance Corporation should formally assess the costs and benefits of their surveillance systems using recognized methods of systems analysis. |
Closed – Not Implemented
While the Comptroller will assess cost/benefits in the future, the Federal Reserve and FDIC did not accept the recommendation. A future job, as yet with no start date but in the program plan, will make an indepth study of the surveillance systems.
|
| Federal Deposit Insurance Corporation | The Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Federal Deposit Insurance Corporation should formally assess the costs and benefits of their surveillance systems using recognized methods of systems analysis. |
Closed – Not Implemented
While the Comptroller will assess cost/benefits in the future, the Federal Reserve and FDIC did not accept the recommendation. A future job, as yet with no start date but in the program plan, will make an indepth study of the surveillance systems.
|
| Federal Reserve System | The Comptroller of the Currency, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Federal Deposit Insurance Corporation should formally assess the costs and benefits of their surveillance systems using recognized methods of systems analysis. |
Closed – Not Implemented
While the Comptroller will assess cost/benefits in the future, the Federal Reserve and FDIC did not accept the recommendation. A future job, as yet with no start date but in the program plan, will make an indepth study of the surveillance systems.
|
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