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DOCUMENT RESUME
00317 - (A0751138]
[Study on Federal Supervision of State and National Banks].
February 1, 1977. 21 pp. + enclosure (4 pp.).
Testimony before the Hcuse Committee on Banking, Currency and
Housing: Financial Institutions Supervision, Recalaticn and
Insurance Subcommittee; the House Committee on government
Operations: Commerce, Consumer atd Monetary Aftairs Subcommittee
; by Elmer B. Staats, Comptroller General.
Issue Area: Internal Auditing Systems (200); Personnel
management and Compensation (300).
Contact: Office of the Comptroller General.
Budget Function: General Government: Central Fiscal Operations
(803).
organization Concerned: Federal Deposit Insurance Corp.; Federal
Reserve System; Office of the Comptrolle- of the Currency.
Congressional Relevance: House Committee on Banking, Currency
and Housing: Financial Institutions Supervision, Regulation
and Insurance Subcommittee; House Committee cn Government
Operations: Commerce, Consumer and Monetary Affairs
Su icommittee.
Authority: National Banking Act. Edge Act. Financial
Institutions Supervisory Act of 1966. Federal Reserve Act of
1913. Banking Act of 1933.
Several Congressional committees requested tbc
evaluation of the effectiveness of the supervisory efforts of
the three Federal agencies involved in monitoring banking
operations, because of the increasing instability of banks. The
study objectives were to evaluate the agencies' efforts to
identify unsound conditions and violations of laws in banks, and
cause bank management to take corrective actions. Adverse
economic condition- contributed to some bank failures, but
generally embezzlement and poor management of loans were the
cause. Problems were not corrected because: (1) the regulatory
agencies were reluctant to use their legal authority to force
the banks to change, (2) the agencies did not consult with bank
boards, (3) examinations were set up on a time basis rather than
a problem solving basis, and (4) recommendations were not
generally made as to how to solve Problems. The agencies should
revise their examination pra,-tices and frequencies to better
identify problems. Examination reports and meetings with bank
boards should follow all exam.nations. More aggressive policies
should be developed for the use of formal actions against
problem banks. Better training and screening of potential
examiners should be irplemented. The three agencies, either
through their own initiative or legislation, should coordinate
their efforts sore closely. More stringent procedures for
handling charter applications should be devised. (SS)](ViewImageLocal?handle=hein.gao/gaobadxst0001&div=1&collection=&method=preview&ext=.png&size=3)