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GAO-23-106418 1 (2023-08-01)

handle is hein.gao/gaopaj0001 and id is 1 raw text is: U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Comptroller General Washington, DC 20548 of the United States August 1, 2023 The Honorable Jerome H. Powell Chair Board of Governors of the Federal Reserve System 20th St. & Constitution Ave., NW Washington, D.C. 20551 Priority Open Recommendations: Board of Governors of the Federal Reserve System Dear Chair Powell: The purpose of this letter is to provide an update on the overall status of the Board of Governors of the Federal Reserve System's implementation of GAO's recommendations and to call your continued personal attention to open recommendations that should be given high priority.1 In November 2022, we reported that on a government-wide basis, 77 percent of our recommendations made 4 years ago were implemented.2 The Federal Reserve's implementation rate for these recommendations was 84 percent. As of July 2023, the Federal Reserve had 13 open recommendations. Fully implementing these open recommendations could significantly improve the Federal Reserve's efforts to more effectively oversee risks to consumers and the safety and soundness of the U.S. banking system. In our June 2022 letter, we noted that three of the open recommendations were priority recommendations. Since that time, the Federal Reserve has not implemented any of them. We ask for your attention to these three priority recommendations, which are related to financial technology (fintech) and stress testing. We are also adding one new priority recommendation related to oversight of blockchain technology. This brings the total number of priority recommendations to four. (See enclosure for the list of recommendations.) The four priority recommendations fall into the following three areas: Blockchain technology. Recent volatility, bankruptcies, and instances of fraud in the crypto asset markets illustrate the harm consumers and investors may face without adequate protections. We recommended that the Federal Reserve and other financial regulators jointly establish or adapt an existing formal coordination mechanism to identify and address blockchain-related risks. If implemented, the Federal Reserve and the financial regulators would 1Priority recommendations are those that we believe warrant priority attention from heads of key departments or agencies. They are highlighted because, upon implementation, they may significantly improve government operations-for example, by realizing large dollar savings; eliminating mismanagement, fraud, and abuse; or making progress toward addressing a high-risk or duplication issue. 2GAO, Performance and Accountability Report: Fiscal Year 2022, GAO-23-900398 (Washington, D.C.: Nov. 15, 2022). GAO-23-106418 Federal Reserve Priority Recommendations Page 1

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