The FDIC should take further steps to strengthen its bank supervision, including rotating case manager assignments to ensure that decisions on whether to escalate potential problems are independent and evidence-based, the Government Accountability Office concluded in a new report.
The GAO also released a separate report recommending that the Department of Housing and Urban Development take steps to mitigate fraud in federal disaster recovery and improve manufactured housing financing.
FDIC recommendations
In 2024, the GAO released a series of recommendations for how the FDIC and Federal Reserve could improve their bank supervision programs following the failures of Silicon Valley Bank and other regional institutions. In its follow-up report, the GAO said the FDIC has implemented one recommendation but not three others. The report did not address the Fed recommendations.
The watchdog agency suggested the FDIC implement two recommendations “that warrant timely and focused attention.” First, the lack of periodic rotation of assignments for certain case managers “could compromise their independence and interfere with supervision outcomes.” The GAO recommended that the agency implement a rotation schedule.
Second, the FDIC and other banking agencies lack a mechanism to coordinate their efforts to address risks from blockchain technologies. They should develop a means to “collectively identify risks and develop and implement a regulatory response in a timely manner.”
HUD recommendations
The GAO outlined 10 recommendations for HUD that warranted more attention. The first set of recommendations included addressing fraud risks in HUD’s Community Development Block Grant Disaster Recovery. The watchdog also said that HUD should development an interagency plan to identify barriers to accessing disaster recovery assistance.
The second set of recommendations concerned improving financing for manufactured housing. The GAO said the agency should provide additional financing options for manufactured homes, including identifying options for greater securitization of manufactured home mortgages and personal property loans. It also recommended that HUD work with Ginnie Mae to identify additional financing methods.
