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GAO-23-106417 1 (2023-08-01)

handle is hein.gao/gaopak0001 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 Martin J. Gruenberg Chairman Federal Deposit Insurance Corporation 550 17th St., N.W. Washington, D.C. 20429 Priority Open Recommendations: Federal Deposit Insurance Corporation Dear Chairman Gruenberg: The purpose of this letter is to provide an update on the overall status of the Federal Deposit Insurance Corporation's (FDIC) implementation of our recommendations and to call your continued personal attention to areas where open recommendations should be given high priority.1 In November 2022, we reported that, government-wide, 77 percent of our recommendations made 4 years ago were implemented.2 FDIC's implementation rate for these recommendations was 97 percent. As of June 2023, FDIC had 12 open recommendations. Fully implementing these open recommendations could significantly improve FDIC's efforts to more effectively oversee risks to consumers and the safety and soundness of the U.S. banking system. Since our June 2022 letter, FDIC has not implemented our one priority recommendation. We ask that you direct your attention to this open priority recommendation, which is related to financial technology (fintech). We are also adding one new priority recommendation related to the oversight of blockchain technology. This brings the total number of priority recommendations to two. (See enclosure for the list of recommendations.) The two priority recommendations fall into the following two areas: Financial technology. Fintech lenders may analyze large amounts of alternative data on borrower characteristics, such as information from bank accounts, when determining borrowers' creditworthiness. We recommended that the FDIC, other federal banking regulators, and the Consumer Financial Protection Bureau communicate the appropriate use of alternative data in the underwriting process with banks that engage in third-party relationships with fintech lenders. Implementing our priority recommendation in this area could better position federally regulated banks to manage the risks associated with partnering with fintech lenders that use these data. 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-23-106417 FDIC Priority Recommendations Page 1

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