The Government Accountability Office (GAO) has issued recommendations to the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) regarding bank regulatory examinations.
The GAO indicated there are five federal banking regulators who have risk management programs in place – the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, National Credit Union Administration (NCUA) and the Office of the Comptroller of the Currency (OCC).
The GAO noted its report examined how the federal banking regulators identified and assessed risks and challenges the COVID-19 pandemic posed to their supervisory missions, made changes to address the risks and challenges, and assessed lessons learned from their pandemic responses.
Additionally, the GAO determined that amid the pandemic, the federal banking regulators were not able to examine most banks and credit unions in person and revised examination practices that included rescheduling examinations, reviewing scanned copies of loan files and updating their programs to reflect pandemic-related changes in risk while reviewing pandemic lessons learned.
The scope of work involved GAO reviewing the five agencies’ policies and guidance, analyzing agencies’ reviews of their performance during the pandemic, and interviewing officials. The office also conducted small-group interviews with non-generalizable samples of between two and five groups of examiners from each agency.
The FDIC and the OCC have not completed all of the examination steps other regulators took during the pandemic.
The GAO has recommended that the Federal Reserve develop and document steps and timeframes to include pandemic-related risks to supervision in its enterprise risk management (ERM) framework and that the OCC review lessons learned from the pandemic to better prepare for future disruptions to examinations.