Priority Open Recommendations: Board of Governors of the Federal Reserve System
Each year, we make more than 1,000 recommendations to help improve the federal government. We alert department heads to where they can save the most money, address issues on our High Risk List, or significantly improve government operations.
This report outlines 3 priority open recommendations for the Federal Reserve, as of May 2022. These are related to financial technology and stress testing of banking institutions. For example, some lenders used alternative data in making credit decisions, which may present risks.
Since our previous letter in May 2021, the Federal Reserve has not implemented any of our priority recommendations.
What GAO Found
In May 2021, GAO identified 3 priority recommendations for the Federal Reserve that involve the following areas:
- Collaborating with other financial regulators to communicate with banks that have third-party relationships with financial technology lenders about using alternative data in underwriting.
- Communicating uncertainties surrounding stress testing capital ratio estimates.
- Communicating uncertainty surrounding stress testing tolerance levels for key risks, and the degree of uncertainty in projected estimates.
As of March 2022, the Federal Reserve has not implemented these priority recommendations. The Federal Reserve's attention to these issues could improve its ability to more effectively oversee risks to consumers and the safety and soundness of the U.S. banking system. We are not adding any additional priority recommendations this year.
Why GAO Did This Study
Priority open recommendations are the GAO recommendations that warrant priority attention from heads of key departments or agencies because their implementation could save large amounts of money; improve congressional and/or executive branch decision-making on major issues; eliminate mismanagement, fraud, and abuse; or ensure that programs comply with laws and funds are legally spent, among other benefits. Since 2015 GAO has sent letters to selected agencies to highlight the importance of implementing such recommendations.
For more information, contact Dan Garcia-Diaz at (202) 512-8678 or firstname.lastname@example.org.