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A review was conducted to assess the Federal Home Loan Bank Board's (FHLBB) examination and supervisory functions. The review addressed the FHLBB requirements for chartering mutual associations, the Office of Industry Development's (OID) and the District banks' analyses of charter applications, the Board's decisionmaking process for chartering new mutual savings and loan associations, the FHLBB minimum financial requirements for organizers of new mutual associations, and the extent to which the financial requirements reflect the associations' potential for success.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Federal Home Loan Bank Board 1. FHLBB should require organizers of new mutual associations it charters to pledge accounts in amounts greater than the minimum requirement when a district bank and OID disagree about the likelihood of an association's success.
Closed - Not Implemented
It is apparent that FHLBB will not adopt the recommendation because it is unwilling to alter its policies. In addition, subsequent to the GAO audit the FHLBB actions appear to have been somewhat consistent to the recommendation. Continued monitoring of this recommendation is not necessary.

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