A recent review of how federal regulators handled COVID-caused disruptions to bank examinations has led the Government Accountability Office to make two recommendations for how those same regulators could better prepare for future disruptions.
In a report last week, the GAO noted that regulators couldn’t examine most banks and credit unions in person during the pandemic, so they implemented workarounds such as rescheduling exams and reviewing scanned copies of loan files. Of the five regulatory agencies reviewed that have risk management programs, three had updated their programs to reflect pandemic-related changes in risk and also reviewed pandemic lessons learned. The other two had done one or the other, but not both.
GAO singled out the two regulators that had not taken both steps. The agency recommended that the Federal Reserve develop and document specific action steps and time frames for completing the components of its enterprise risk management framework related to identifying and assessing risks to its supervisory mission. The Fed has neither agreed nor disagreed with the recommendation, GAO said. The agency also recommended the Office of the Comptroller of the Currency review potential lessons learned related to how it managed adjustments to supervisory activities during the COVID-19 pandemic. OCC said a review would be completed by March 2023.