Statutory Requirements for Examining International Banking Institutions Need Attention
GGD-84-39: Published: Jul 11, 1984. Publicly Released: Jul 11, 1984.
- Full Report:
GAO reviewed the Federal Reserve's supervision of Edge Act banking institutions and the Office of the Comptroller of the Currency's (OCC) supervision of federally licensed branches and agencies of foreign banks.
GAO found that the statutory requirements to examine annually Edge Act corporations and federally licensed branches and agencies of foreign banks are less flexible than the frequency standards set by the Federal Reserve and OCC for other institutions and limit the optimal use of scarce resources. In addition, GAO found that the Federal Reserve does not comply with its legal requirement to bill Edge Act corporations for examination costs.
Matter for Congressional Consideration
Status: Closed - Not Implemented
Comments: Within the next 2 years, new banking legislation will cause reevaluation of total regulatory strategy. This will supercede this particular issue.
Matter: Congress should repeal the legal requirements to conduct annual examinations of Edge Act corporations and federally licensed branches and agencies of foreign banks, thereby allowing the Federal Reserve and OCC to schedule these examinations on the basis of the soundness of the institution. Specifically, with regard to Edge Act corporations, Congress should further amend section 25(a), paragraph 19, of the Federal Reserve Act, as amended (12 U.S.C. 625), to eliminate the annual examination requirement and require examinations at such times as may be deemed necessary by the Federal Reserve System. With regard to federally licensed branches and agencies of foreign banks, Congress should amend section 4(b) of the International Banking Act of 1978 (12 U.S.C. 3102) to eliminate the annual examination requirement and thereby allow OCC more flexibility in scheduling examinations.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: The Federal Reserve sent out revised policy for public comment as part of a comprehensive package of new fee proposals. Comments were received, but the Board has taken no action as yet.
Recommendation: The Chairman of the Board of Governors of the Federal Reserve System should comply with the statutory requirements to bill Edge Act corporations for examination costs, including the compensation of examiners, as provided in section 25(a) of the Federal Reserve Act.
Agency Affected: Federal Reserve System: Board of Governors