The Federal Home Loan Bank System (System) faces additional risks due to the development of new products such as direct mortgage purchase programs. Responding to concern about the methods used for administrative decisionmaking, and the ability of the Federal Housing Finance Board (FHFB) to fulfill its critical mission to regulate the safety and soundness of the System, GAO was asked to (1) compare the FHFB chair's administrative authorities with those of other financial regulators and discuss the basis for that authority, (2) assess FHFB's compliance with selected statutes and regulations in connection with an August 2002 reduction-in-force (RIF) carried out as part of an agency reorganization, and (3) assess FHFB's progress in enhancing its FHLBank safety and soundness examination program.
Recommendations for Executive Action
|Federal Housing Finance Board||To ensure full board participation in key administrative decisions that have policy implications, such as senior appointments and major reorganizations, FHFB should consider a range of options that could be implemented within the current delegation of authority. These options include the chair (1) notifying, briefing, and/or soliciting input from other board members on major administrative decisions prior to their implementation and (2) submitting key administrative decisions to the board for a vote or approval.|
|Federal Housing Finance Board||FHFB members and their staffs should hold discussions on approaches--including potential revisions to the delegation of authority--that would ensure board participation in key administrative decisions while preserving the chair's authority to administer the agency on a day-to-day basis.|
|Federal Housing Finance Board||FHFB should fully comply with applicable federal age discrimination statutes and regulations in offering settlement agreements to employees subject to RIFs.|