Examinations of Financial Institutions Do Not Assure Compliance With Consumer Credit Laws

Highlights

Consumer credit protection laws set forth basic principles to protect and inform consumers seeking credit. Financial institutions are responsible for complying with these laws. Federal financial institution regulatory agencies supervise institutions that extend credit and have responsibilities for ensuring that financial institutions comply with the laws.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Internal Revenue Service	The Comptroller of the Currency, the Federal Home Loan Bank Board, the National Credit Union Administration, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System should provide such standards to the institutions they supervise.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Deposit Insurance Corporation	The Comptroller of the Currency, the Federal Home Loan Bank Board, the National Credit Union Administration, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System should provide such standards to the institutions they supervise.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Home Loan Bank Board	The Comptroller of the Currency, the Federal Home Loan Bank Board, the National Credit Union Administration, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System should provide such standards to the institutions they supervise.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Reserve System	The Comptroller of the Currency, the Federal Home Loan Bank Board, the National Credit Union Administration, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System should provide such standards to the institutions they supervise.	Closed GAO has no information on the actions taken in response to this recommendation.
National Credit Union Administration	The Comptroller of the Currency, the Federal Home Loan Bank Board, the National Credit Union Administration, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System should provide such standards to the institutions they supervise.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Financial Institutions Examination Council	The Federal Financial Institutions Examination Council should monitor the progress of the Office of the Comptroller of the Currency task force on consumer examination to determine the applicability and value of such a review for the other financial institution regulatory agencies.	Closed GAO has no information on the actions taken in response to this recommendation.
Internal Revenue Service	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration, and the Comptroller of the Currency under the direction of the Federal Financial Institutions Examination Council should establish and, to the maximum extent practicable, use uniform enforcement standards to correct violations of consumer laws. Such standards should recognize variations in significance of violations and the persistence of violations. The standards should also include probable penalties that will be invoked for noncompliance.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Deposit Insurance Corporation	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration, and the Comptroller of the Currency under the direction of the Federal Financial Institutions Examination Council should establish and, to the maximum extent practicable, use uniform enforcement standards to correct violations of consumer laws. Such standards should recognize variations in significance of violations and the persistence of violations. The standards should also include probable penalties that will be invoked for noncompliance.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Home Loan Bank Board	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration, and the Comptroller of the Currency under the direction of the Federal Financial Institutions Examination Council should establish and, to the maximum extent practicable, use uniform enforcement standards to correct violations of consumer laws. Such standards should recognize variations in significance of violations and the persistence of violations. The standards should also include probable penalties that will be invoked for noncompliance.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Reserve System	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration, and the Comptroller of the Currency under the direction of the Federal Financial Institutions Examination Council should establish and, to the maximum extent practicable, use uniform enforcement standards to correct violations of consumer laws. Such standards should recognize variations in significance of violations and the persistence of violations. The standards should also include probable penalties that will be invoked for noncompliance.	Closed GAO has no information on the actions taken in response to this recommendation.
National Credit Union Administration	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration, and the Comptroller of the Currency under the direction of the Federal Financial Institutions Examination Council should establish and, to the maximum extent practicable, use uniform enforcement standards to correct violations of consumer laws. Such standards should recognize variations in significance of violations and the persistence of violations. The standards should also include probable penalties that will be invoked for noncompliance.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Financial Institutions Examination Council	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration, and the Comptroller of the Currency under the direction of the Federal Financial Institutions Examination Council should establish and, to the maximum extent practicable, use uniform enforcement standards to correct violations of consumer laws. Such standards should recognize variations in significance of violations and the persistence of violations. The standards should also include probable penalties that will be invoked for noncompliance.	Closed GAO has no information on the actions taken in response to this recommendation.
Internal Revenue Service	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration and the Comptroller of the Currency should work together, under the direction of the Federal Financial Institutions Examination Council, to develop and administer a consistent, effective consumer law compliance examination program. The agencies should (1) reassess the nature and objectives of consumer law compliance examinations and define criteria for examination frequency; (2) develop uniform examination procedures and instructions for all consumer laws that detail specific worksteps to assess the substantive as well as the technical provisions of the laws and regulations; (3) determine and allocate the level of resources necessary to implement uniform examination procedures; (4) continue, or in the case of FHLBS establish, programs providing separate career paths for consumer law compliance examiners or establish extended staff rotation programs of 18 months or more, to ensure consistent deployment of highly qualified examiners and (5) place more emphasis on examination techniques to assess the substantive requirements of the laws and regulations in the consolidated training program for consumer law compliance examiners.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Deposit Insurance Corporation	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration and the Comptroller of the Currency should work together, under the direction of the Federal Financial Institutions Examination Council, to develop and administer a consistent, effective consumer law compliance examination program. The agencies should (1) reassess the nature and objectives of consumer law compliance examinations and define criteria for examination frequency; (2) develop uniform examination procedures and instructions for all consumer laws that detail specific worksteps to assess the substantive as well as the technical provisions of the laws and regulations; (3) determine and allocate the level of resources necessary to implement uniform examination procedures; (4) continue, or in the case of FHLBS establish, programs providing separate career paths for consumer law compliance examiners or establish extended staff rotation programs of 18 months or more, to ensure consistent deployment of highly qualified examiners and (5) place more emphasis on examination techniques to assess the substantive requirements of the laws and regulations in the consolidated training program for consumer law compliance examiners.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Home Loan Bank Board	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration and the Comptroller of the Currency should work together, under the direction of the Federal Financial Institutions Examination Council, to develop and administer a consistent, effective consumer law compliance examination program. The agencies should (1) reassess the nature and objectives of consumer law compliance examinations and define criteria for examination frequency; (2) develop uniform examination procedures and instructions for all consumer laws that detail specific worksteps to assess the substantive as well as the technical provisions of the laws and regulations; (3) determine and allocate the level of resources necessary to implement uniform examination procedures; (4) continue, or in the case of FHLBS establish, programs providing separate career paths for consumer law compliance examiners or establish extended staff rotation programs of 18 months or more, to ensure consistent deployment of highly qualified examiners and (5) place more emphasis on examination techniques to assess the substantive requirements of the laws and regulations in the consolidated training program for consumer law compliance examiners.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Reserve System	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration and the Comptroller of the Currency should work together, under the direction of the Federal Financial Institutions Examination Council, to develop and administer a consistent, effective consumer law compliance examination program. The agencies should (1) reassess the nature and objectives of consumer law compliance examinations and define criteria for examination frequency; (2) develop uniform examination procedures and instructions for all consumer laws that detail specific worksteps to assess the substantive as well as the technical provisions of the laws and regulations; (3) determine and allocate the level of resources necessary to implement uniform examination procedures; (4) continue, or in the case of FHLBS establish, programs providing separate career paths for consumer law compliance examiners or establish extended staff rotation programs of 18 months or more, to ensure consistent deployment of highly qualified examiners and (5) place more emphasis on examination techniques to assess the substantive requirements of the laws and regulations in the consolidated training program for consumer law compliance examiners.	Closed GAO has no information on the actions taken in response to this recommendation.
National Credit Union Administration	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration and the Comptroller of the Currency should work together, under the direction of the Federal Financial Institutions Examination Council, to develop and administer a consistent, effective consumer law compliance examination program. The agencies should (1) reassess the nature and objectives of consumer law compliance examinations and define criteria for examination frequency; (2) develop uniform examination procedures and instructions for all consumer laws that detail specific worksteps to assess the substantive as well as the technical provisions of the laws and regulations; (3) determine and allocate the level of resources necessary to implement uniform examination procedures; (4) continue, or in the case of FHLBS establish, programs providing separate career paths for consumer law compliance examiners or establish extended staff rotation programs of 18 months or more, to ensure consistent deployment of highly qualified examiners and (5) place more emphasis on examination techniques to assess the substantive requirements of the laws and regulations in the consolidated training program for consumer law compliance examiners.	Closed GAO has no information on the actions taken in response to this recommendation.
Federal Financial Institutions Examination Council	The Chairmen of the Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, Federal Reserve Board, and National Credit Union Administration and the Comptroller of the Currency should work together, under the direction of the Federal Financial Institutions Examination Council, to develop and administer a consistent, effective consumer law compliance examination program. The agencies should (1) reassess the nature and objectives of consumer law compliance examinations and define criteria for examination frequency; (2) develop uniform examination procedures and instructions for all consumer laws that detail specific worksteps to assess the substantive as well as the technical provisions of the laws and regulations; (3) determine and allocate the level of resources necessary to implement uniform examination procedures; (4) continue, or in the case of FHLBS establish, programs providing separate career paths for consumer law compliance examiners or establish extended staff rotation programs of 18 months or more, to ensure consistent deployment of highly qualified examiners and (5) place more emphasis on examination techniques to assess the substantive requirements of the laws and regulations in the consolidated training program for consumer law compliance examiners.	Closed GAO has no information on the actions taken in response to this recommendation.

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Topics

Business Regulation and Consumer Protection

Bank examinationBanking regulationConsumer protectionCreditInformation disclosureLaw enforcementLending institutionsNoncomplianceUniformityFinancial institutions