Federal Financial Institutions Examination Council Has Made Limited Progress Toward Accomplishing Its Mission

GGD-84-4: Published: Feb 3, 1984. Publicly Released: Feb 3, 1984.

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GAO assessed the progress of the Federal Financial Institutions Examination Council in accomplishing its congressional mandates. The Council was established to: (1) prescribe uniform federal examination principles, standards, and report forms for examinations of financial institutions; (2) recommend uniformity in other supervisory matters; (3) develop uniform financial institution reporting systems; and (4) develop a comprehensive examiner education program. The Council is composed of the Comptroller of the Currency, the Chairman of the Board of the Federal Deposit Insurance Corporation, a member of the Board of Governors of the Federal Reserve System, the Chairman of the Federal Home Loan Bank Board, and the Chairman of the Board of the National Credit Union Administration.

GAO found that the Council has made little progress in establishing examination uniformity. A study to identify major examination differences among the participating agencies was terminated without accomplishing its objectives. GAO believes that actions taken by the Council did not eliminate major differences that the study did identify and that many actions taken were unrelated to the affected agencies' basic safety and soundness examinations. GAO found that the most significant action taken toward uniformity in other supervisory matters was the establishment of a uniform policy for assessment of civil monetary penalties. The Council approved 13 actions in the area of financial institution reporting systems, including a uniform bank report of condition and income. The Council has not provided basic training for examination efforts because it has not established uniform principles and standards for examinations. Training efforts have been directed towards the development of peripheral courses. GAO believes that the need for uniformity in federal examinations of financial institutions has not lessened since the Council's inception and discussed the need to reevaluate the current regulatory structure.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: The issues relating to uniformity among the five member agencies in their examination and supervision functions remains a concern. FHLBB has recently taken steps toward making its examination process more similar to that used for banks.

    Matter: There are a number of proposals being considered to reorganize the federal structure for regulating financial institutions. In making its judgments on these proposals, Congress should consider that a coordinating mechanism such as the Council has not been effective in dealing with major policy differences in the examination process.


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