Recommendation: The Commissioner of Internal Revenue should update the FAQs issued in 2019 to include a statement that the FAQs may serve as a source of general information but cannot be relied upon by taxpayers as authoritative since they are not binding on IRS. (Recommendation 1)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS disagreed with this recommendation. In an August 2020 letter, IRS stated that the 2019 currency FAQs are illustrative of how longstanding tax principles apply to property transaction and IRS does not take positions contrary to public FAQs. However, if IRS intends the public FAQs on virtual currency to be binding on IRS it could address our recommendation by publishing the FAQs in the Internal Revenue Bulletin. Doing so would render a disclaimer statement unnecessary and would satisfy the intent of the recommendation. We will continue to follow up with IRS on this recommendation and will provide an update if IRS takes action.

Recommendation: The Commissioner of Internal Revenue should take steps to increase third-party reporting on taxable transactions involving virtual currency, which could include clarifying IRS's interpretation of existing third-party reporting requirements under the Internal Revenue Code and Treasury Regulations, or pursuing statutory or regulatory changes. (Recommendation 2)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS agreed with this recommendation. In August 2020, IRS informed us that IRS's Office of Chief Counsel and the Department of the Treasury are developing guidance that will address third-party reporting on certain taxable transactions involving virtual currency. IRS expects that this guidance will also propose rules to avoid duplicate reporting under other information reporting regimes that may apply to transactions involving virtual currency. We will continue to monitor IRS's efforts to increase third-party reporting on taxable transactions involving virtual currency.

Recommendation: The Commissioner of Internal Revenue should clarify the application of reporting requirements under FATCA to virtual currency. (Recommendation 3)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS disagreed with this recommendation. In an August 2020 letter, IRS said it intends to focus on developing guidance regarding information reporting on certain virtual currency transactions involving U.S. businesses instead of clarifying the application of reporting requirements under FATCA to virtual currency. IRS stated that additional guidance on FATCA requirements may be appropriate in the future as the workings of foreign virtual currency exchanges become more transparent over time. We found that many virtual currency stakeholders were uncertain about how, if at all, FATCA requirements apply to virtual currency and would benefit from clarifications to the guidance. We will continue to follow up with IRS on this recommendation and will provide an update if IRS takes action.

Recommendation: The Director of FinCEN, in coordination with IRS as appropriate, should make a statement about the application of foreign account reporting requirements under the Bank Secrecy Act to virtual currency readily available to the public. (Recommendation 4)

Agency: Department of the Treasury: Financial Crimes Enforcement Network
Status: Open

Comments: FinCEN agreed with this recommendation. When we can confirm that FinCEN has taken action we will provide updated information.

Recommendation: The SEC Chair should direct the Directors of the Division of Corporation Finance, Division of Enforcement, Office of Compliance Inspections and Examinations, and Office of Credit Ratings to develop written policies and processes to systematically assess the effectiveness of staff procedures (procedures applicable to staff who perform examinations of registered entities, enforcement investigations, and reviews of corporate financial securities filings). Examples of elements SEC could include in the policies and processes are the steps necessary to conduct such assessments, including time frames in which the assessments should be performed and reviewed; assignment of responsibilities related to the assessments; requirements for documenting assessments; and steps for staff to take to mitigate and report deficiencies identified as a result of the assessments. (Recommendation 1)

Agency: United States Securities and Exchange Commission
Status: Open

Comments: As of May 2020, SEC updated its Reference Guide for Compliance with Section 961 of the Dodd-Frank Act to require the Division of Corporation Finance, Division of Enforcement, Office of Compliance Inspections and Examinations, and Office of Credit Ratings to develop and maintain written policies and processes for conducting systematic assessments of the effectiveness of procedures applicable to the staff who perform examinations of registered entities, enforcement investigations, and reviews of corporate financial securities filings. The added requirement for each division and office to develop policies and processes is a positive step toward addressing this recommendation. However, until the divisions and offices establish such policies and processes, this recommendation remains open. SEC staff stated that the divisions and offices are currently working on developing their individual frameworks for assessing staff procedures and will likely be done by the end of fiscal year 2020. We will continue to monitor these efforts.

Recommendation: The Director of the Division of Corporation Finance should ensure that all internal supervisory controls include documentation requirements, detailed procedures, identified follow-up actions, implementation time frames, and assignment of control execution responsibility, in accordance with SEC guidance and federal internal control standards for implementing control activities through documented policies. (Recommendation 2)

Agency: United States Securities and Exchange Commission: Division of Corporation Finance
Status: Open

Comments: As of May 2020, SEC staff said that the Division of Corporation Finance is working to address this recommendation through its normal Risk and Control Matrix review process. Staff said that SEC would have an update for GAO in the Fall 2020. We will update the status of the recommendation when the Division of Corporation Finance provides documentation showing the implementation of responsive actions.

Recommendation: The Director of the Division of Enforcement should ensure that all internal supervisory controls include documentation requirements, detailed procedures, identified follow-up actions, implementation time frames, and assignment of control execution responsibility, in accordance with SEC guidance and federal internal control standards for implementing control activities through documented policies. (Recommendation 3)

Agency: United States Securities and Exchange Commission: Division of Enforcement
Status: Open

Comments: As of May 2020, SEC staff said that the Division of Enforcement is working to address this recommendation through its normal Risk and Control Matrix review process. Staff said that SEC would have an update for GAO in the Fall 2020. We will update the status of the recommendation when the Division of Enforcement provides documentation showing the implementation of responsive actions.

Recommendation: The Director of the Office of Compliance Inspections and Examinations should ensure that all internal supervisory controls include documentation requirements, detailed procedures, identified follow-up actions, implementation time frames, and assignment of control execution responsibility, in accordance with SEC guidance and federal internal control standards for implementing control activities through documented policies. (Recommendation 4)

Agency: United States Securities and Exchange Commission: Office of Compliance Inspections and Examinations
Status: Open

Comments: As of May 2020, SEC staff said that the Office of Compliance Inspections and Examinations is working to address this recommendation through its normal Risk and Control Matrix review process. Staff said that SEC would have an update for GAO in the Fall 2020. We will update the status of the recommendation when the Office of Compliance Inspections and Examinations provides documentation showing the implementation of responsive actions.

Recommendation: The Director of the Office of Credit Ratings should ensure that all internal supervisory controls include documentation requirements, detailed procedures, identified follow-up actions, implementation time frames, and assignment of control execution responsibility, in accordance with SEC guidance and federal internal control standards for implementing control activities through documented policies. (Recommendation 5)

Agency: United States Securities and Exchange Commission: Office of Credit Ratings
Status: Open

Comments: As of May 2020, SEC staff said that the Office of Credit Ratings is working to address this recommendation through its normal Risk and Control Matrix review process. Staff said that SEC would have an update for GAO in the Fall 2020. We will update the status of the recommendation when the Office of Credit Ratings provides documentation showing the implementation of responsive actions.

Recommendation: The Chair of the Securities and Exchange Commission should direct the Chief Operating Officer to develop and implement safeguards to better ensure transparency and fairness in SEC's new performance incentive bonus program. Such safeguards could include multiple levels of review of performance ratings and pay decisions and publishing aggregate data on the results of the performance cycle that allow employees to compare results across various groups within the agency while protecting the confidentiality of individual ratings and pay decisions. (Recommendation 1)

Agency: United States Securities and Exchange Commission
Status: Open
Priority recommendation

Comments: SEC stated that it concurred with, and plans to implement, our recommendation. In August 2020, SEC officials stated that they were continuing to design the performance incentive bonus program's framework and in the process of acquiring consultative services to assist in validating that its design, communication strategy, and operating practices reflect leading practice and support achieving desired outcomes. We will continue to monitor SEC's progress in ensuring transparency and fairness in its performance incentive bonus program.

Recommendation: The Securities and Exchange Commission's Co-Directors of Enforcement should develop written procedures for generating Enforcement's public reports, including procedures for compiling and verifying statistics used in the reports and documenting their implementation. (Recommendation 1)

Agency: United States Securities and Exchange Commission: Division of Enforcement
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Director of the Bureau of Land Management (BLM) should create and implement a policy for standard posting requirements regarding comments and their identity information, particularly for duplicate comments, and should clearly communicate this policy to the public on the BLM website. (Recommendation 1)

Agency: Department of the Interior: Bureau of Land Management
Status: Open

Comments: BLM concurred with the recommendation. In December 2019, BLM indicated that it will develop and issue policy for standard posting requirements regarding public comments and associated identity information as well as duplicative comments which will be available on BLM's website. BLM officials estimate that this will be completed in March 2020. Until these items are completed, our recommendation to BLM remains open.

Recommendation: The Administrator of Centers for Medicare & Medicaid Services (CMS) should create and implement a policy for standard posting requirements regarding comments and their identity information, particularly for duplicate comments, and should clearly communicate this policy to the public on the CMS website. (Recommendation 2)

Agency: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Open

Comments: In January 2020, the Department of Health and Human Services stated that CMS already has policies for standard posting requirements, and noted that they would update their policy and communicate it on the CMS website. However, while CMS provided us with an excerpt of the updated language, as written, it does not include information about how the agency posts duplicate comments. Further, CMS did not provide us with this policy, and our review of the website does not indicate any changes have been made. HHS stated it would provide additional follow up actions by 7/23/2020. Given that we found significant variation in the way that CMS posts comments, even within a single docket, we continue to believe that it is important for CMS to develop and implement a standard policy for posting duplicate comments and their identity information, in addition to communicating this policy to the public on the CMS website.

Recommendation: The Director of the Consumer Financial Protection Bureau (CFPB) should finalize its draft policy for posting comments and their identity information, particularly for duplicate comments, and clearly communicate it to the public on the CFPB website. (Recommendation 3)

Agency: Consumer Financial Protection Bureau
Status: Open

Comments: CFPB concurred with the recommendation. In December 2019, CFPB indicated that it will develop new language for consumerfinance.gov to better explain the Bureau's "post all" policy, and any exceptions to it. Additionally, CFPB is finalizing internal procedures for posting comments. Until these items are completed, our recommendation to CFPB remains open.

Recommendation: The Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA) should
1. create and implement a policy for standard posting requirements regarding comments and their identity information, particularly for duplicate comments;
2. clearly communicate this policy to the public on the EBSA website; and
3. evaluate the duplicative practice of replicating rulemaking dockets on the EBSA website, to either discontinue the practice or include a reference to Regulations.gov and explanation of how the pages relate to one another. (Recommendation 4)

Agency: Department of Labor: Employee Benefits Security Administration
Status: Open

Comments: EBSA concurred with the recommendation. In September 2019, EBSA stated that it will develop a written policy regarding posting of comments, including that of duplicate comments. This information will be available on their website. Additionally, EBSA will post a reference to Regulations.gov as part of each Notice of Proposed Rulemaking (NPRM) webpage that includes public comments together with an explanation of its relation to Regulations.gov as a means to access public comments on EBSA's rulemaking initiatives. EBSA officials did not provide a date by which these actions will be implemented. Additionally, while EBSA noted that internal and external users prefer the agency's current practice of replicating rulemaking dockets, the agency did not provide evidence that a formal evaluation had been conducted, and did not identify plans to do so. As a result, at this time our recommendation to EBSA remains open.

Recommendation: The Administrator of the Environmental Protection Agency (EPA) should finalize its draft policy for posting comments and their identity information, particularly for duplicate comments, and clearly communicate it to the public on the EPA website. (Recommendation 5)

Agency: Environmental Protection Agency
Status: Open

Comments: EPA concurred with the recommendation. In January 2020, EPA indicated that it will finalize its Docket Center's Document Processing Standard Operating Procedure as well as its website. This update will include information detailing when all duplicate comments are posted to Regulations.gov and when just one representative sample of a duplicate comment is posted. EPA officials estimate that this will be completed in February 2020. Until these items are completed, our recommendation to EPA remains open.

Recommendation: The Director of the Fish and Wildlife Service (FWS) should create and implement a policy for standard posting requirements regarding comments and their identity information, particularly for duplicate comments, and should clearly communicate this policy to the public on the FWS website. (Recommendation 6)

Agency: Department of the Interior: United States Fish and Wildlife Service
Status: Open

Comments: FWS concurred with the recommendation. In December 2019, FWS stated that it will update its service manual to include all standard posting requirements regarding public comments and their identity information. Additionally, FWS will include a statement on the FWS' website to inform the public about posting of public comments and identity information to regulations.gov. FWS officials estimate that this will be completed in June 2020. Until these items are completed, our recommendation to FWS remains open.

Recommendation: The Administrator of the Wage and Hour Division (WHD) should clearly communicate its policy for posting comments and their identity information, particularly for duplicate comments, to the public on the WHD website. (Recommendation 8)

Agency: Department of Labor: Wage and Hour Division
Status: Open

Comments: WHD concurred with the recommendation. In August 2019, WHD indicated that it will add text to each webpage for any rulemaking that invites public comments which states that any personal information included in the comments (including duplicate) will be posted to Regulations.gov without change. However, the text provided by officials does not explain WHD's policy of posting duplicate comments as a group under a single document ID, and therefore does not clearly communicate the agency's posting practices to the public. As a result, at this time our recommendation to WHD remains open.

Recommendation: The Director of the Bureau of Consumer Financial Protection should, in coordination with the federal banking regulators and with input from relevant stakeholders, communicate in writing to fintech lenders on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use. (Recommendation 1)

Agency: Consumer Financial Protection Bureau
Status: Open

Comments: In December 2019, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (the agencies) issued an interagency statement on the use of alternative data in credit underwriting. The statement broadly highlights some potential benefits and risks of using alternative data and encourages firms to responsibly use alternative data, but does not provide firms or banks with specific direction on the appropriate use of alternative data, including issues to consider when selecting types of alternative data to use. We will continue to monitor the agencies' actions related to this recommendation.

Recommendation: The Chair of the Board of Governors of the Federal Reserve System should, in coordination with the other federal banking regulators and the Bureau of Consumer Financial Protection and with input from relevant stakeholders, communicate in writing to banks that engage in third-party relationships with fintech lenders on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use. (Recommendation 2)

Agency: Federal Reserve System
Status: Open
Priority recommendation

Comments: In December 2019, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (the agencies) issued an interagency statement on the use of alternative data in credit underwriting. The statement broadly highlights some potential benefits and risks of using alternative data and encourages firms to responsibly use alternative data, but does not provide firms or banks with specific direction on the appropriate use of alternative data, including issues to consider when selecting types of alternative data to use. We will continue to monitor the agencies' actions related to this recommendation.

Recommendation: The Chairman of the Federal Deposit Insurance Corporation should, in coordination with the other federal banking regulators and the Bureau of Consumer Financial Protection and with input from relevant stakeholders, communicate in writing to banks that engage in third-party relationships with fintech lenders on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use. (Recommendation 3)

Agency: Federal Deposit Insurance Corporation
Status: Open
Priority recommendation

Comments: In December 2019, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (the agencies) issued an interagency statement on the use of alternative data in credit underwriting. The statement broadly highlights some potential benefits and risks of using alternative data and encourages firms to responsibly use alternative data, but does not provide firms or banks with specific direction on the appropriate use of alternative data, including issues to consider when selecting types of alternative data to use. We will continue to monitor the agencies' actions related to this recommendation.

Recommendation: The Comptroller of the Currency should, in coordination with the other federal banking regulators and the Bureau of Consumer Financial Protection and with input from relevant stakeholders, communicate in writing to banks that engage in third-party relationships with fintech lenders on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use. (Recommendation 4)

Agency: Department of the Treasury: Office of the Comptroller of the Currency
Status: Open
Priority recommendation

Comments: In December 2019, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (the agencies) issued an interagency statement on the use of alternative data in credit underwriting. The statement broadly highlights some potential benefits and risks of using alternative data and encourages firms to responsibly use alternative data, but does not provide firms or banks with specific direction on the appropriate use of alternative data, including issues to consider when selecting types of alternative data to use. We will continue to monitor the agencies' actions related to this recommendation.

Recommendation: The Director of the Consumer Financial Protection Bureau should engage in collaborative discussions with other relevant financial regulators in a group that includes all relevant stakeholders and has defined agency roles and outcomes to address issues related to consumers' use of account aggregation services. (Recommendation 5)

Agency: Consumer Financial Protection Bureau
Status: Open

Comments: In a May 2018 letter, the Acting Director of the Bureau stated that the Bureau has previously issued principles that include reasonable and practical means for consumers to dispute and resolve instances of unauthorized payments conducted in connection with or as a result of authorized or unauthorized data sharing access. The letter notes that the Bureau is committed to monitoring developments in data aggregation markets and will continue to assess how the Bureau's consumer protection principles may be best realized, including engaging in discussions with other relevant federal and state financial regulators. In October 2018, Bureau staff advised us that they made a presentation on existing consumer protections that would appear to be applicable to consumers using data aggregators at the June 28, 2018 meeting of the Fintech Interagency Discussion Group, which includes OCC, the Federal Reserve, the Federal Deposit Insurance Corporation, and the National Credit Union Administration. They noted they are monitoring private sector efforts related to resolving data aggregation issues and that additional discussions among the regulators about these issues will be held in the future. We will recontact the agency in the future to obtain information on additional actions it has taken. In January 2020, GAO met with CFPB to discuss the recommendation and potential outcomes that could close the recommendation. CFPB officials stated that they will be hosting a public forum on data aggregation in February 2020. They noted that results from the public forum could include action related to the data aggregation recommendation.

Recommendation: The Chair of the Board of Governors of the Federal Reserve System should engage in collaborative discussions with other relevant financial regulators in a group that includes all relevant stakeholders and has defined agency roles and outcomes to address issues related to consumers' use of account aggregation services. (Recommendation 6)

Agency: Federal Reserve System: Board of Governors
Status: Open
Priority recommendation

Comments: In a May 2018 letter, the Chair of the Federal Reserve Board noted that the Federal Reserve recognizes the importance of working together to determine how best to encourage socially beneficial innovation in the marketplace, while ensuring that consumers' interests are protected. The letter noted that the Federal Reserve staff have been meeting with other regulators and industry participants. The Chair states that the Federal Reserve will continue to facilitate and engage in collaborative discussions with other relevant financial regulators in these and other settings to help market participants address the important issues surrounding reimbursement for consumers who use financial account aggregators and experience unauthorized transactions. In October 2018, Federal Reserve staff advised us that issues related to data aggregation were discussed at a June 28, 2018 meeting of the Fintech Interagency Discussion Group, which includes OCC, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Consumer Financial Protection Bureau. They noted that they are monitoring private sector efforts related to resolving data aggregation issues and expect to hold additional discussions among the regulators about these issues in the future. In March 2019, the agency noted that it continues to collaborate on this issue. As of February 2020, the agency had no further updates on this recommendation. We plan to follow up with Federal Reserve staff to obtain updates on these efforts in the future.

Recommendation: The Chairman of the Federal Deposit Insurance Corporation should engage in collaborative discussions with other relevant financial regulators in a group that includes all relevant stakeholders and has defined agency roles and outcomes to address issues related to consumers' use of account aggregation services. (Recommendation 7)

Agency: Federal Deposit Insurance Corporation
Status: Open
Priority recommendation

Comments: In November 2018, FDIC staff confirmed that they have engaged in collaborative discussions with other relevant financial regulators regarding issues related to consumers' use of account aggregation services and associated liability issues. We followed up in April 2019 and they confirmed that their collaboration had yet to produce outcomes that would satisfy the recommendation.

Recommendation: The Chairman of the National Credit Union Administration should engage in collaborative discussions with other relevant financial regulators in a group that includes all relevant stakeholders and has defined agency roles and outcomes to address issues related to consumers' use of account aggregation services. (Recommendation 8)

Agency: National Credit Union Administration
Status: Open

Comments: In July 2018, NCUA staff indicated that staff from their agency had recently participated in a discussion forum with other federal regulators and other stakeholders on fintech, and, in particular, account aggregation challenges. They stated that they intend to continue to engage other regulators and related industry stakeholders on fintech topics and emerging technology that can have an impact on credit unions and their consumers. In October 2018, NCUA staff advised us that they have been discussing issues related to data aggregation at meetings of the Fintech Interagency Discussion Group, which includes OCC, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Bureau of Consumer Financial Protection. In November 2019, NCUA staff said that the agency continues to participate in meetings through the Fintech Interagency Discussion Group and had taken part in a Data Symposium held by the San Francisco Federal Reserve. We plan to follow up with NCUA staff to obtain updates on these efforts and resulting outcomes in the future.

Recommendation: The Comptroller of the Currency should engage in collaborative discussions with other relevant financial regulators in a group that includes all relevant stakeholders and has defined agency roles and outcomes to address issues related to consumers' use of account aggregation services. (Recommendation 9)

Agency: Department of the Treasury: Office of the Comptroller of the Currency
Status: Open

Comments: In a May 2018 letter, OCC noted that its staff have met with the other banking regulators and with market participants about account aggregation issues in the past. In October 2018, OCC staff advised us that issues related to data aggregation were discussed at a June 28, 2018 meeting of the Fintech Interagency Discussion Group, which includes OCC, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Bureau of Consumer Financial Protection. We followed up in January 2020 and they confirmed that their collaboration had yet to produce outcomes that would satisfy the recommendation. We plan to follow up with OCC staff to obtain updates on these efforts in the future.

Recommendation: The Chairman of the National Credit Union Administration should formally evaluate the feasibility and benefit of establishing an office of innovation or clear contact point, including at least a website with a dedicated email address. (Recommendation 11)

Agency: National Credit Union Administration
Status: Open

Comments: NCUA officials told us that in August 2018 the agency established a working group to formally evaluate the feasibility of establishing a dedicated work unit to oversee and lead fintech and innovation efforts, including creating a website and monitoring a dedicated e-mail account. NCUA officials indicated that as of November 2019 the working group was deliberating key considerations related to establishing a dedicated work unit. We plan to follow up with NCUA staff to obtain updates on these efforts in the future.

Recommendation: The Chair of the Board of Governors of the Federal Reserve System should formally evaluate the feasibility and benefits to their regulatory capacities of adopting certain knowledge-building initiatives related to financial innovation. (Recommendation 12)

Agency: Federal Reserve System: Board of Governors
Status: Open

Comments: In a May 2018 letter, the Chair of the Federal Reserve Board noted that the Federal Reserve recognizes the importance of formally increasing its knowledge base related to financial innovation. The letter noted that the Federal Reserve has recently organized two nationwide teams of experts tasked with monitoring fintech and related emerging technology trends as they relate to its supervisory and payment system mandates, respectively. These new teams include representation from all of the Federal Reserve System's Reserve Banks and have leadership from Board staff. These teams' critical objectives include ensuring that fintech-related information is shared across the Federal Reserve System and is used to inform relevant supervisory, policy, and outreach strategies. As of February 2020, the agency had no updates on this recommendation. We plan to follow up with Federal Reserve staff to obtain updates on these efforts in the future.

Recommendation: The Chairman of the Commodity Futures Trading Commission should formally evaluate the feasibility and benefits to their regulatory capacities of adopting certain knowledge-building initiatives related to financial innovation. (Recommendation 13)

Agency: Commodity Futures Trading Commission
Status: Open

Comments: We followed up in January 2020 and CFTC described its efforts to address this recommendation, which were encouraging. We are awaiting documentation of these efforts and when we confirm the agency's actions, we will provide updated information.

Recommendation: The Chairman of the National Credit Union Administration should formally evaluate the feasibility and benefits to their regulatory capacities of adopting certain knowledge-building initiatives related to financial innovation. (Recommendation 15)

Agency: National Credit Union Administration
Status: Open

Comments: NCUA officials told us that, as of November 2019, the internal working group that the agency established in August 2018 was evaluating the feasibility and benefits of adopting certain knowledge-building initiatives related to financial innovation. Specifically, the working group was assessing initiatives such as stakeholder outreach, research and collaboration opportunities, grants and other technical assistance, and existing supervisory tools. We plan to follow up with NCUA staff to obtain updates on these efforts in the future.

Recommendation: Congress should consider whether additional changes to the financial regulatory structure are needed to reduce or better manage fragmentation and overlap in the oversight of financial institutions and activities to improve (1) the efficiency and effectiveness of oversight; (2) the consistency of consumer and investor protections; and (3) the consistency of financial oversight for similar institutions, products, risks, and services. For example, Congress could consider consolidating the number of federal agencies involved in overseeing the safety and soundness of depository institutions, combining the entities involved in overseeing the securities and derivatives markets, transferring the remaining prudential regulators' consumer protection authorities over large depository institutions to the Consumer Financial Protection Bureau, and the optimal role for the federal government in insurance regulation, among other considerations.

Agency: Congress
Status: Open

Comments: At least two bills have been introduced in the 115th Congress that would change the financial regulatory structure, to some degree, to address fragmented and overlapping regulatory authorities among agencies, as GAO suggested in February 2016. The Financial CHOICE Act of 2017 (H.R. 10) was introduced on April 26, 2017, passed the House in June 2017 and the Senate held hearings in July 2017. Among other things, the Financial CHOICE Act of 2017 calls for the federal financial regulatory agencies to implement policies and procedures to minimize the duplication of effort with respect to enforcement actions. For example, it eliminates the authority of the Consumer Financial Protection Bureau to supervise and examine financial institutions and also eliminates the regulatory and enforcement authority of the agency with respect to unfair, deceptive, and abusive acts and practices by depository institutions. Such actions could help reduce fragmentation and overlap in the financial regulatory structure. In addition, the Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155) was introduced on November 16, 2017 and passed in the Senate in March 2018. The bill, to some extent, may help address fragmentation, overlap, and duplication in the financial regulatory structure. For example, the bill helps to address fragmentation in insurance oversight by finding that the federal agencies and office involved in insurance regulation should achieve consensus with state insurance regulators when they participate in negotiations on insurance issues before any international forum of financial regulators or supervisors, and create an advisory committee to discuss and report on insurance policy issues including international issues. GAO will continue to monitor the reform efforts to determine the extent to which they could help to address fragmentation and overlap between the federal financial regulatory agencies and reduce opportunities for inefficiencies in the regulatory process and inconsistencies in how regulators conduct oversight activities over similar types of institutions, products, and risks.

Recommendation: Congress should consider whether legislative changes are necessary to align FSOC's authorities with its mission to respond to systemic risks. Congress could do so by making changes to FSOC's mission, its authorities, or both, or to the missions and authorities of one or more of the FSOC member agencies to support a stronger link between the responsibility and capacity to respond to systemic risks. In doing so, Congress could solicit information from FSOC on the effective scope of its collective designation authorities, including any gaps.

Agency: Congress
Status: Open

Comments: While some legislative action has been taken that may alter FSOC's authorities, it is not clear that the legislation would address GAO's February 2016 suggestion. The Financial CHOICE Act of 2017 (H.R. 10) was introduced on April 26, 2017, passed the House in June 2017, and the Senate held hearings in July 2017. The bill would change FSOC's authorities by repealing its authorities to designate non-bank financial institutions and financial market utilities (i.e., payment, clearing, and settlement systems) as "systemically important." In addition, the Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155) was introduced on November 16, 2017 and passed in the Senate in March 2018. The bill may alter some of FSOC's authorities. However, it is unclear if these acts would alter FSOC's mission to better align it with its authorities to respond to systemic risk or addresses a gap in systemic risk mitigation mechanisms. Without legislative changes that would align FSOC's authorities with its mission, FSOC may lack the tools it needs to comprehensively address systemic risks that may emerge and a gap will continue to exist in the mechanisms for mitigating systemic risks. GAO will continue to monitor the reform efforts to determine the extent to which they help to align FSOC's authorities with its mission to respond to systemic risks.

Recommendation: To avoid serious disruptions to the Treasury market and to help inform the fiscal policy debate in a timely way, Congress should consider alternative approaches that better link decisions about the debt limit with decisions about spending and revenue at the time those decisions are made such as those described in this report.

Agency: Congress
Status: Open

Comments: The Bipartisan Budget Act of 2019 temporarily suspended the debt limit through July 31, 2021. This will allow the Treasury to continue to borrow to meet the funding needs of the federal government. However, the Act did not explicitly link decisions about the debt limit to legislation that is expected to increase borrowing needs or debate over specific tax or spending proposals and their effect on debt. As of June 2020, we confirmed that no further legislative action has been taken since our last update. We will continue to monitor legislation enacting future debt limit increases to see if it addresses our matter for congressional consideration.

Recommendation: However, if Congress chooses to continue to temporarily suspend the debt limit, it should consider providing Treasury with more flexibility in the level of Treasury's operating cash so that it is based not on the level that it was just prior to a suspension period, but on the federal government's immediate borrowing needs. This would minimize some of the disruptions to Treasury's normal cash management and debt issuance.

Agency: Congress
Status: Open

Comments: The Bipartisan Budget Act of 2019 temporarily suspended the debt limit through July 31, 2021, but did not provide Treasury with more flexibility in the level of Treasury's operating cash at the end of the suspension period. As result, absent future action, Treasury is expected to reduce its cash balance to approximately the level it was at on the date the suspension was enacted as it has following previous debt limit suspensions, regardless of cyclical or other cash management needs. We will continue to monitor legislation enacting future debt limit increases to see if it addresses our matter for congressional consideration. As of June 2020, no relevant legislation has been enacted.

Recommendation: To enhance the effectiveness of its preparations for conducting a retrospective review of its QM regulations, HUD should develop a plan that identifies the metrics, baselines, and analytical methods to be used. Furthermore, to account for and help mitigate the limitations of existing data and the uncertain availability of enhanced datasets, HUD should include in its plan alternate metrics, baselines, and analytical methods that could be used data were to remain unavailable.

Agency: Department of Housing and Urban Development
Status: Open

Comments: In February 2017, HUD noted that it does not currently collect data on the annual percentage rate (APR) for each loan that would allow for a perfect comparison to the average prime offer rate. According to HUD, its Office of Housing has on its long-term list of systems priorities to collect specific information from the Uniform Closing Data that could be used to conduct such a comparison. However, HUD stated that it has not received adequate funding to meet these systems enhancements. According to HUD, it is considering the feasibility and potential utility of alternative data sources or the use of a proxy in an appropriate methodology. For instance, whether it may be possible to approximate the APR based upon the note rate and information on closing costs that is collected in the current data system, or alternatively, whether the APR could be obtained or approximated through matching Home Mortgage Disclosure Act data for FHA loans. In a September 2020 email, HUD officials stated that HUD has certain unique considerations for review of its own QM rule as compared to the other federal agencies covered in the GAO report. HUD officials explained that HUD's QM rule implemented certain changes intended to conform with the Consumer Financial Protection Bureau's (CFPB) rule and constituted only a small subset of FHA's overall requirements related to underwriting and loan characteristics. According to HUD officials, HUD's QM rule was intended to make conforming changes to FHA's requirements, as statutorily required, in order to bring them into greater alignment with the new CFPB-promulgated QM rule requirements. They stated that HUD assesses FHA loan performance on an ongoing basis through a variety of mechanisms including the annual audit requirement and monitoring of the overall market and mortgage portfolio. According to the HUD officials, these mechanisms are used to assess the need for adjustments in underwriting criteria and mortgage insurance premiums as well as to assess the health and risks to safety and soundness of the MMIF Fund. HUD officials said that given these considerations, there is no specific stand-alone full evaluation of the HUD QM rule planned at this time.

Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to strengthen procedures in place to guide Reserve Banks' efforts to manage emergency program access for higher-risk borrowers by providing more specific guidance on how Reserve Bank staff should exercise discretion and document decisions to restrict or deny program access for depository institutions and primary dealers that would otherwise be eligible for emergency assistance.

Agency: Federal Reserve System: Board of Governors
Status: Open

Comments: We most recently sought information from the Board of Governors of the Federal Reserve System in July 2018 regarding the status of the recommendation but did not receive any new information. Therefore, the recommendation remains open.

Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to document a plan for estimating and tracking losses that could occur under more adverse economic conditions within and across all emergency lending activities and for using this information to inform policy decisions, such as decisions to limit risk exposures through program design or restrictions applied to eligible borrowing institutions.

Agency: Federal Reserve System: Board of Governors
Status: Open

Comments: We most recently sought information from the Board of Governors of the Federal Reserve System in July 2018 regarding the status of the recommendation but did not receive any new information. Therefore, the recommendation remains open.

Recommendation: While creating control systems at the same time that the emergency programs were being designed and implemented posed unique challenges, the recent crisis provided invaluable experience that the Federal Reserve System can apply in the future should the use of these authorities again become warranted. Going forward, to further strengthen policies for selecting vendors, ensuring the transparency and consistency of decision making involving the implementation of any future emergency programs, and managing risks related to these programs, the Chairman of the Federal Reserve Board should direct Federal Reserve Board and Reserve Bank staff to document the Federal Reserve Board's guidance to Reserve Banks on types of emergency program decisions and risk events that require approval by or consultation with the Board of Governors, the Federal Open Market Committee, or other designated groups or officials at the Federal Reserve Board.

Agency: Federal Reserve System: Board of Governors
Status: Open

Comments: We most recently sought information from the Board of Governors of the Federal Reserve System in July 2018 regarding the status of the recommendation but did not receive any new information. Therefore, the recommendation remains open.