Skip to Highlights
Highlights

GAO provided information on small business bank credit and the impact that regulations have on its availability, focusing on whether regulations on small business lending can be safely reduced.

Skip to Recommendations

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of the Comptroller of the Currency In order to remove regulatory and supervisory impediments to small business lending by banks, the Comptroller of the Currency, Chairman, Federal Reserve Board, and Acting Chairman, Federal Deposit Insurance Corporation, should clarify the guidance provided to banks for evaluation of real estate pledged as supplementary collateral for small business loans that are not material to the condition of a bank.
Closed - Implemented
The revised regulation increasing the real estate appraisal threshold to $250,000 was finalized June 7, 1994. Revision of interagency guidelines for evaluating real estate pledged as collateral is complete.
Federal Deposit Insurance Corporation In order to remove regulatory and supervisory impediments to small business lending by banks, the Comptroller of the Currency, Chairman, Federal Reserve Board, and Acting Chairman, Federal Deposit Insurance Corporation, should clarify the guidance provided to banks for evaluation of real estate pledged as supplementary collateral for small business loans that are not material to the condition of a bank.
Closed - Implemented
The revised regulation increasing the real estate appraisal threshold to $250,000 was finalized June 7, 1994. Revision of interagency guidelines for evaluating real estate pledged as collateral is complete.
Federal Reserve System In order to remove regulatory and supervisory impediments to small business lending by banks, the Comptroller of the Currency, Chairman, Federal Reserve Board, and Acting Chairman, Federal Deposit Insurance Corporation, should clarify the guidance provided to banks for evaluation of real estate pledged as supplementary collateral for small business loans that are not material to the condition of a bank.
Closed - Implemented
The revised regulation increasing the real estate appraisal threshold to $250,000 was finalized June 7, 1994. Revision of interagency guidelines for evaluating real estate pledged as collateral is complete.
Office of the Comptroller of the Currency In order to remove regulatory and supervisory impediments to small business lending by banks, the Comptroller of the Currency, Chairman, Federal Reserve Board, and Acting Chairman, Federal Deposit Insurance Corporation, should focus examinations of small business lending activities on the adequacy of banks' internal control systems.
Closed - Not Implemented
The agency does not plan any action. As stated in the Office of the Comptroller of the Currency's (OCC) response to the draft report, the Comptroller's Handbook for National Bank Examiners includes comprehensive review procedures for determining the effectiveness of all principal aspects of a bank's internal control systems. OCC believes that its current procedures are sufficient.
Federal Deposit Insurance Corporation In order to remove regulatory and supervisory impediments to small business lending by banks, the Comptroller of the Currency, Chairman, Federal Reserve Board, and Acting Chairman, Federal Deposit Insurance Corporation, should focus examinations of small business lending activities on the adequacy of banks' internal control systems.
Closed - Not Implemented
The agency believes that it already focuses attention on internal control systems, particularly in its review of small business lending. In addition, the agency states that some testing of actual transactions is part of that process.
Federal Reserve System In order to remove regulatory and supervisory impediments to small business lending by banks, the Comptroller of the Currency, Chairman, Federal Reserve Board, and Acting Chairman, Federal Deposit Insurance Corporation, should focus examinations of small business lending activities on the adequacy of banks' internal control systems.
Closed - Implemented
An internal project to formalize and better document the agency's overall examination of banks' internal controls was completed.

Full Report