September 28, 2021

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Priority Open Recommendations: Board of Governors of the Federal Reserve System

11 min read
<div>What GAO Found In April 2020, GAO identified eight priority recommendations for the Federal Reserve. Since then, the Federal Reserve has implemented five of those recommendations. As of April 2021, the remaining open three priority recommendations for the Federal Reserve involve the following areas: Collaborating with other financial regulators to communicate with banks that have third-party relationships with fintech lenders about using alternative data in underwriting. Communicating uncertainties surrounding stress testing, including capital ratio estimates. Communicating uncertainties surrounding stress testing, including tolerance levels for key risks, and the degree of uncertainty in projected estimates. The Federal Reserve's continued attention to these issues could improve its ability to more effectively oversee risks to consumers and the safety and soundness of the U.S. banking system. Why GAO Did This Study Priority open recommendations are GAO recommendations that warrant priority attention from heads of key departments or agencies because their implementation could save large amounts of money; improve congressional or executive branch decision-making on major issues; eliminate mismanagement, fraud, and abuse; or ensure that programs comply with laws and funds are legally spent, among other benefits. Since 2015 GAO has sent letters to selected agencies to highlight the importance of implementing such recommendations. For more information, contact Daniel Garcia-Diaz at (202) 512-8678 or garciadiazd@gao.gov.</div>

What GAO Found

In April 2020, GAO identified eight priority recommendations for the Federal Reserve. Since then, the Federal Reserve has implemented five of those recommendations.

As of April 2021, the remaining open three priority recommendations for the Federal Reserve involve the following areas:

  • Collaborating with other financial regulators to communicate with banks that have third-party relationships with fintech lenders about using alternative data in underwriting.
  • Communicating uncertainties surrounding stress testing, including capital ratio estimates.
  • Communicating uncertainties surrounding stress testing, including tolerance levels for key risks, and the degree of uncertainty in projected estimates.

The Federal Reserve’s continued attention to these issues could improve its ability to more effectively oversee risks to consumers and the safety and soundness of the U.S. banking system.

Why GAO Did This Study

Priority open recommendations are GAO recommendations that warrant priority attention from heads of key departments or agencies because their implementation could save large amounts of money; improve congressional or executive branch decision-making on major issues; eliminate mismanagement, fraud, and abuse; or ensure that programs comply with laws and funds are legally spent, among other benefits. Since 2015 GAO has sent letters to selected agencies to highlight the importance of implementing such recommendations.

For more information, contact Daniel Garcia-Diaz at (202) 512-8678 or garciadiazd@gao.gov.

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