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GAO-07-72R 1 (2006-11-30)

handle is hein.gao/gaocrptatzt0001 and id is 1 raw text is: Sai Accountability * Integrity * Reliability United States Government Accountability Office Washington, DC 20548 November 30, 2006 The Honorable William M. Thomas Chairman, Committee on Ways and Means House of Representatives Subject: Corporate Governance: NCUA's Controls and Related Procedures for Board Independence and Objectivity Are Similar to Other Financial Regulators, but Opportunities Exist to Enhance Its Governance Structure Dear Mr. Chairman: During recent congressional hearings and in public speeches, statements made by the National Credit Union Administration's (NCUA) Chairman and another board member raised congressional interest in the ability of NCUA to collect and objectively analyze data on credit union membership and executive compensation. More generally, these statements also raised issues about the agency's overall vigilance as a regulator and the independence and objectivity of NCUA's board and senior staff from the industry being regulated. As a result, you asked us to expand upon our current work looking at the tax-exempt status of credit unions to include a review of governance policies and procedures for NCUA's board of directors and senior staff and more specifically how the policies and procedures address independence and objectivity issues.' This correspondence (1) compares controls and related procedures applicable to NCUA that help ensure the independence and objectivity of its board members with those of other federal financial regulatory agencies and relevant recommended management practices identified in academic and industry literature and (2) describes NCUA's use of Schedule C staff compared with that of other federal financial regulatory agencies.2 To address our objectives, we reviewed statutory criteria for the selection of board members and commissioners at NCUA and six other federal financial regulatory agencies: the Commodity Futures Trading Commission (CFTC), Farm Credit Administration (FCA), Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Board (FHFB), the Board of Governors of the Federal Reserve System (Federal Reserve), and the Securities and Exchange Commission (SEC). We selected these six agencies for our comparison because they are all financial regulators with either a board 1See GAO, Credit Unions: Greater Transparency Needed on Who Credit Unions Serve and on Senior Executive Compensation Arrangements, GAO-07-29 (Washington, D.C.: Nov. 30, 2006). 2Schedule C appointees, frequently called political appointees, generally are noncompetitive and noncareer; that is, they are appointed without regard to the rules for competition that govern career appointees. Schedule C appointments are not subject to Senate confirmation. GAO-07-72R NCUA Board Independence and Objectivity

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