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Bank Supervision: Lessons Learned from Remote Supervision during Pandemic Could Inform Future Disruptions

GAO-22-104659 Published: Sep 08, 2022. Publicly Released: Sep 08, 2022.
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Fast Facts

During the COVID-19 pandemic, federal banking regulators couldn't examine most banks and credit unions in person. So, they changed certain examination practices, especially at smaller institutions. For example, they rescheduled examinations and reviewed scanned copies of loan files.

We found that 3 of 5 regulators who have risk management programs also

  • Updated their programs to reflect pandemic-related changes in risk
  • Reviewed pandemic lessons learned

The other 2 regulators have completed one, but not both, of these steps.

Our recommendations would help regulators prepare for future disruptions to bank examinations.

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What GAO Found

To assess challenges that COVID-19 posed to their supervisory missions, the federal banking regulators convened working groups to assess risks related to conducting fully remote bank examinations, among other actions. The regulators are the Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Board of Governors of the Federal Reserve System, National Credit Union Administration (NCUA), and Office of the Comptroller of the Currency (OCC). Four regulators updated their enterprise risk management (ERM) frameworks to reflect pandemic-related risks. The Federal Reserve has been developing its ERM framework since 2017 and has not yet completed elements to capture risks to the agency's supervisory mission, including those related to the pandemic. The Federal Reserve said it planned to complete these elements but had not documented planned steps or timeframes as of June 2022. Office of Management and Budget guidance highlights the importance of updating ERM elements to reflect changes in risks. Including pandemic-related risks to supervision in its ERM framework would better position the Federal Reserve to manage future disruptions to examinations.

To manage pandemic-related challenges to their supervisory missions, banking regulators deferred examination activities, expanded off-site monitoring of institutions, adjusted telework policies, and provided technology tools and internal guidance to examiners (see figure). In 16 of 20 small group interviews GAO conducted, examiner staff at the agencies said the transition to remote work was smooth. Some examiners noted challenges examining institutions that lacked imaged loan files or technology to allow remote access to bank systems.

Federal Banking Regulators' Actions to Address Pandemic-Related Challenges to Conducting Fully Remote Examinations

Federal Banking Regulators' Actions to Address Pandemic-Related Challenges to Conducting Fully Remote Examinations

The Federal Reserve, FDIC, NCUA, and CFPB have taken or planned steps reflecting GAO-identified practices to identify and share lessons learned. Post-crisis assessments to identify lessons learned can help agencies develop strategies for future disruptions. As of June 2022, OCC had not yet undertaken or planned a review of lessons learned from its pandemic response. Taking additional steps to review lessons learned such as collecting, analyzing, and sharing information could help OCC better prepare for future disruptions.

Why GAO Did This Study

Limitations on in-person meetings and travel because of the COVID-19 pandemic presented challenges to federal banking regulators conducting on-site examinations of depository institutions.

The CARES Act includes a provision for GAO to monitor and oversee the federal government's response to COVID-19. This report examines how the federal banking regulators (1) identified and assessed risks and challenges the pandemic posed to their supervisory missions, (2) made changes to address these risks and challenges, and (3) assessed lessons learned from their pandemic responses.

GAO reviewed the five agencies' policies and guidance, analyzed agencies' reviews of their performance during the pandemic, and interviewed officials. GAO also conducted 20 small-group interviews with nongeneralizable samples of between two and five groups of examiners from each agency (total of 110 examiners across the five agencies).


GAO is making two recommendations, including that the Federal Reserve develop and document steps and timeframes to include pandemic-related risks to supervision in its ERM framework and that OCC review lessons learned from the pandemic to better prepare for future disruptions to examinations. The Federal Reserve neither agreed nor disagreed with GAO's recommendation and OCC said it would complete a review by March 2023.

Recommendations for Executive Action

Agency Affected Recommendation Status
Federal Reserve System The Federal Reserve's Chief Operating Officer should develop and document specific action steps and time frames for completing the components of the Federal Reserve's enterprise risk management framework related to identifying and assessing risks to its supervisory mission, such as those caused by the COVID-19 pandemic. (Recommendation 1)
Closed – Implemented
In March 2023, the Federal Reserve told us that as of year-end 2022, it had established an enterprise risk management (ERM) framework and an ERM program for its Division of Supervision and Regulation. The Federal Reserves' ERM program includes components related to identifying and assessing risks to its supervisory mission. For example, the Federal Reserve developed an overall risk profile for its Division of Supervision and Regulation, as well as risk profiles for the division's operations and policy functions. The Federal Reserve also provided risk reports for these division functions. Completing these components of its ERM framework will help ensure the Federal Reserve is well-positioned to respond to future crisis disruptions to its supervision activities.
Office of the Comptroller of the Currency OCC's Senior Deputy Comptrollers of Large Bank Supervision and Mid-Size and Community Bank Supervision should review potential lessons learned related to how OCC managed adjustments to supervisory activities during the COVID-19 pandemic. This review should include collection and analysis of information to identify aspects of fully remote examinations that worked well and areas for improvement. (Recommendation 2)
Closed – Implemented
In fall 2022, OCC's supervision units (Large Bank Supervision and Mid-Size and Community Bank Supervision) conducted analyses to identify lessons learned from their experience with remote supervision during the pandemic. A March 2023 OCC memo summarized the methodology and findings from these lessons learned analyses. The methodology included leveraging staff work to assess the pandemic's impacts on supervisory practices and surveying and holding discussions with bank examination staff to obtain their input on the most challenging aspects of adjusting supervisory practices and to identify lessons learned that could apply in the future. The memo summarized adjustments OCC made during the pandemic to address pandemic-related challenges related to technology and communication. It further identified areas that worked well with OCC's adjustments as well as areas for continued improvement. These OCC efforts to analyze information on its pandemic response will better position it to leverage strengths and address areas for improvement in the event of a future extended disruption to on-site supervision.

Full Report

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Bank supervisionBankingCompliance oversightCredit unionsFederal deposit insuranceFederal reserve systemLessons learnedpandemicsRisk managementPublic health emergencies