GAO

Priority Open Recommendations: Securities and Exchange Commission

What GAO Found In May 2021, GAO identified one priority recommendation for the Securities and Exchange Commission (SEC). Since then, SEC has implemented this recommendation, which relates to performance management for SEC employees. Specifically, it would help enhance the credibility of SEC's performance management system among its staff, including the ratings, recognition, or feedback that they receive as a result. We are also adding 3 new priority recommendations, which relate to SEC's oversight of the Financial Industry Regulatory Authority, Inc. We recommended that SEC develop and implement:  performance measures that reflect leading practices, including measuring progress in achieving SEC's mission policies and procedures for tracking identified deficiencies and associated corrective actions, and  procedures to identify the significance of SEC's inspection and examination findings. SEC's continued attention to these issues could lead to significant improvements in government operations. Why GAO Did This Study Priority open recommendations are the GAO recommendations that warrant priority attention from heads of key departments or agencies because their implementation could save large amounts of money; improve congressional and/or executive branch decision-making on major issues; eliminate mismanagement, fraud, and abuse; or ensure that programs comply with laws and funds are legally spent, among other benefits. Since 2015 GAO has sent letters to selected agencies to highlight the importance of implementing such recommendations. For more information, contact Dan Garcia-Diaz at (202) 512-8678 or garciadiazd@gao.gov.

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Priority Open Recommendations: Department of Agriculture

What GAO Found In July 2021, GAO identified 11 priority recommendations for the Department of Agriculture (USDA). Since then, USDA has implemented four of those recommendations by, among other things, revising policies and procedures to help improve its oversight of the funds it awards to nonfederal entities. In June 2022, GAO identified six additional priority recommendations for USDA, bringing the total number to 13. These recommendations involve the following areas: protecting the safety of the food supply. reducing improper payments. strengthening protections for wage workers. improving USDA's oversight of federal assistance and awards. improving information technology and cybersecurity. USDA's continued attention to these issues could lead to significant improvements in government operations. Why GAO Did This Study Priority open recommendations are the GAO recommendations that warrant priority attention from heads of key departments or agencies because their implementation could save large amounts of money; improve congressional and/or executive branch decision-making on major issues; eliminate mismanagement, fraud, and abuse; or ensure that programs comply with laws and funds are legally spent, among other benefits. Since 2015 GAO has sent letters to selected agencies to highlight the importance of implementing such recommendations. For more information, contact Mark Gaffigan at (202) 512-3841 or gaffiganm@gao.gov.

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COVID-19: Pandemic Lessons Highlight Need for Public Health Situational Awareness Network

What GAO Found Since 2006, multiple federal laws have mandated that the Department of Health and Human Services (HHS) take steps to improve the nation's situational awareness of threats related to public health emergencies, such as the COVID-19 pandemic. Specifically, HHS was required to establish a near real-time electronic nationwide public health situational awareness capability through an interoperable network of systems. This network was to be used to facilitate early detection of and rapid response to potentially catastrophic infectious disease outbreaks. More than 15 years after the law initially mandated it, the federal government does not yet have this needed situational awareness network capability. If this network had been available, it could have been used to provide vital information to better manage a timely COVID-19 response. The Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 reiterated the need for HHS to improve situational awareness capabilities. The following summarizes key requirements in the act and the extent to which HHS has implemented them as of March 2022. Summary of statutory requirements related to the improvement of situational awareness for public health emergencies and the extent to which HHS has implemented them as of March 2022 Summary of requirements Implementation status Adopt technical and reporting standards. ● Provide grants to establish integrated systems. ◑ Develop a plan for sharing and securing information. ○ Establish a near real-time electronic nationwide public health situational awareness and biosurveillance capability. ○ Facilitate coordination among relevant agencies. ○ Conduct a public meeting with experts in public health by December 21, 2019. ○ Utilize applicable interoperability standards and define minimal data elements. ○ Develop a strategy and implementation plan by December 24, 2020. ○ Conduct a review of the data and information transmitted by the network by June 24, 2021 and every 6 years thereafter. ○ Develop a budget plan by June 24, 2021, and on an annual basis thereafter. ○ Legend: ● Requirement is fully implemented; ◑ Requirement is partially implemented; ○ Requirement is not implemented Source: GAO analysis of The Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 and other related laws, and Department of Health and Human Services (HHS) data. I GAO-22-104600 The lack of significant progress in implementing the requirements in the act is due, in part, to the department failing to prioritize the requirements of the act and not establishing an appropriate management and governance structure. Such a structure would include a lead operational division with defined roles and responsibilities for implementation of statutory requirements, and an organization to provide oversight of these efforts. During GAO's review, HHS began drafting a work plan intended to address the requirements of the 2019 act. However, HHS has not provided a time frame for completing the work plan. In January 2022, GAO designated HHS leadership and coordination of a range of public health emergencies as high risk. For more than a decade, GAO has reported on HHS's execution of its lead role in preparing for, and responding to, public health emergencies and have found persistent deficiencies in its ability to perform this role. Similarly, HHS has not provided the leadership necessary to carry out its required responsibilities in the 2019 act. Public health entities experienced a variety of challenges and identified lessons learned from the COVID-19 pandemic that could better inform HHS in developing and implementing the public health situational awareness and biosurveillance network. Specifically, state survey respondents identified a number of information-sharing challenges that they experienced in the management of public health information. The following summarizes the top four challenges state survey respondents most often rated as challenging. State Reported Challenges in Managing Public Health Information during COVID-19 Additional challenges—limitations on data collected, increased reporting requirements, and impediments to health-related data sharing and collaboration—were identified by public health organizations at the national, state, and local levels. Thirty states identified lessons that HHS could use in planning for the network. The three lessons that states identified most often were improve public health reporting by, for example, standardizing and sharing data among federal entities and states to improve surveillance needs; collaborate early with stakeholders by, for example, involving state and local stakeholders throughout the entirety of emergency reponse activities; and establish a public health infrastructure to enable data sharing by, for example, implementing the network required by the 2019 act. After having over two years of experience in responding to COVID-19, HHS had not taken steps, as of March 2022, to identify, document, and share all of the challenges and lessons learned from the pandemic. These challenges and lessons could be incorporated into the planning and implementation of the public health situational awareness and biosurveillance network. Until HHS takes steps to identify, document, share, and incorporate lessons learned from the COVID-19 pandemic, opportunities to improve the response to future and ongoing public health emergencies by learning from past challenges will likely be missed. Why GAO Did This Study The COVID-19 pandemic has drawn attention to the urgent need for public health officials to access real-time information about emerging threats to enable them to make timely, responsive decisions. For over a decade, federal law has mandated that HHS improve the nation's situational awareness of these threats. The most recent mandate, enacted in 2019, included a provision for GAO to report on HHS's efforts to implement these improvements. The CARES Act also included a provision for GAO to conduct monitoring and oversight of the federal response to the pandemic. This report examines (1) the extent to which HHS has made progress toward implementing the requirements in the 2019 act; and (2) the challenges and lessons learned from COVID-19 that HHS could incorporate in planning for a situational awareness and biosurveillance network. GAO reviewed HHS documentation, such as grants provided to states, technical and reporting standards, and adoption plans. It also analyzed documentation and compared it to requirements in the act. In addition, GAO surveyed public health officials from 50 U.S. states, the District of Columbia, and five U.S. territories. Thirty-nine states, the District of Columbia and three U.S. territories (hereinafter collectively referred to as states) responded to the survey, for a response rate of 77 percent. GAO assessed these responses to identify COVID-19 challenges and lessons learned. Further, GAO interviewed representatives from eight public health organizations representing state and local levels, such as the National Governors Association and National Association of County and City Health Officials, as well as HHS officials.

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COVID-19: Agencies Increased Use of Some Regulatory Flexibilities and Are Taking Steps to Assess Them

What GAO Found Twenty-three of 24 major agencies GAO surveyed reported implementing regulatory flexibilities in response to COVID-19. Regulatory flexibilities can include actions that modify regulatory standards, as well as activities that modify their applicability (e.g., through waivers or exemptions) or enforcement. A majority of agencies reported increased use of multiple types of flexibilities in response to COVID-19 compared to before the pandemic (see figure). Agencies' Change in Use of Regulatory Flexibilities in Response to the COVID-19 Pandemic Officials from each of the five agencies GAO interviewed—the Departments of Energy, Homeland Security, and Transportation, as well as the Environmental Protection Agency and the Small Business Administration—reported designing and implementing flexibilities based on internal expertise developed from prior events. For example, officials reported that their experiences managing Ebola, constrained funding situations, and natural disasters—such as Hurricanes Sandy and Maria—helped them develop responses to COVID-19. Officials from these agencies stated that they generally did not rely on specific plans, policies, or other tools given the unique challenges posed by COVID-19. Fifteen of the 24 agencies GAO surveyed reported having already completed an assessment of at least one regulatory flexibility to understand successes or challenges with using them. Ten agencies reported having used at least one such assessment to inform their decision-making, such as whether to modify an existing flexibility or use a new flexibility. Officials from several of the selected agencies reported that their agencies had not conducted assessments of at least one of the flexibilities discussed with GAO. Among reasons why assessments were not conducted, officials said that some flexibilities were intended to be temporary, and that their focus remained on responding to and recovering from the ongoing pandemic. Why GAO Did This Study Federal regulations can generate substantial benefits to society, but benefits can diminish if regulations are not adapted to meet emerging public needs. Federal agencies have implemented regulatory flexibilities to address the COVID-19 pandemic's substantial effect. Regulatory flexibilities are actions taken, at least in part, to temporarily reduce regulatory burdens or constraints imposed on regulated entities. The CARES Act includes a provision for GAO to report on its COVID-19 pandemic oversight efforts. GAO was also asked to look at regulatory flexibilities available to agencies in responding to COVID-19. For this report, GAO examines (1) agencies' implementation of regulatory flexibilities in response to the pandemic; (2) the plans, policies, and other tools selected agencies used to identify and design regulatory flexibilities; and (3) efforts these selected agencies took to assess the impacts of regulatory flexibilities. To do so, in October 2021, GAO surveyed 24 major federal agencies—those identified in the Chief Financial Officers Act of 1990, as amended—regarding their use of COVID-19 regulatory flexibilities. GAO also interviewed officials at five agencies in part because those agencies reported using more types of flexibilities in response to COVID-19 compared to before the pandemic. GAO interviewed officials about how they identified, designed, and assessed their flexibilities. GAO also reviewed GAO's work related to major agencies' COVID-19 flexibilities, and summarized examples of these flexibilities, as appropriate. For more information, contact Yvonne D. Jones at (202) 512-6806 or JonesY@gao.gov.

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Interagency Council on Homelessness: Written Policies for Implementing Statutory Requirements Are Needed

What GAO Found The United States Interagency Council on Homelessness (USICH), which includes 19 federal agencies and its own full-time staff, coordinates the federal response to homelessness. In 2017–2021, activities USICH performed corresponded to duties and functions set forth in its governing statute. For example, as part of its duty to provide technical assistance to nonfederal entities, USICH provided written guidance and regional knowledge-sharing workshops. As part of its duty to recommend improvements in programs, USICH worked with the Departments of Veterans Affairs and Housing and Urban Development to increase voucher use for supportive housing (housing combined with other services, such as healthcare and job training and placement). Homeless Encampment in Downtown Los Angeles, California However, USICH did not have documented policies that specified how it would meet the statutory requirements GAO reviewed and did not consistently perform some obligations, such as annually updating its strategic plan. To monitor how the agency meets some statutory requirements, USICH staff use a spreadsheet (action plan) that briefly describes planned or completed activities. But USICH did not always update the plan or specify the steps staff should take to meet requirements. The plan also did not address some requirements, such as a reporting requirement in an annual appropriations act. Staff also could not clearly describe if or how USICH met certain requirements in prior years. For example, USICH consulted with the Office of Management and Budget and congressional appropriations staff on meeting certain reporting obligations, but could not describe related decisions (prior staff had not documented them). Federal internal control standards note the importance of documenting responsibilities through written policies. USICH staff told GAO they relied on informal processes used by their predecessors, but said written documentation would be beneficial, especially when facing staff turnover. By developing and documenting policies and procedures for meeting statutory requirements, USICH could help ensure it consistently performs statutory obligations and furthers its mission to prevent and end homelessness. Doing so also could help USICH communicate timely information to other stakeholders, including Congress and federal, state, and local partners. Why GAO Did This Study The mission of USICH is to coordinate the federal response to homelessness and partner with the private sector and state and local governments to prevent and end homelessness. Under its governing statute, the McKinney-Vento Homeless Assistance Act, USICH must perform certain duties and functions, such as annually updating its national strategic plan to end homelessness, providing technical assistance to state and local governments and nonprofit organizations, and recommending improvements to programs that assist homeless individuals. House Report No. 116-452 includes a provision for GAO to review USICH's policies and procedures to ensure compliance with certain statutory requirements. This report addresses policies and procedures USICH used in fiscal years 2017–2021 to perform duties and functions under its governing statute and comply with certain appropriations requirements. GAO reviewed relevant statutes and agency documents (such as action plans, performance reports, and a charter) and interviewed senior USICH staff and agency representatives.

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Fiscal Year 2023 Budget Request: U.S. Government Accountability Office

GAO Results For over a century, GAO has been committed to providing nonpartisan, professional and objective program and technical expertise to support Congress in overseeing the executive branch; evaluating government programs, operations and spending priorities; and assessing information from outside parties. Since 2002, GAO’s work has resulted in about $1.26 trillion in financial benefits. Our work has helped change laws, improve public safety and other services, and promote better management throughout the government. Our average return on investment for the past five years is $158 to $1. We have also identified on average over 1,300 program and operational benefits that produced a more effective and efficient government each year during the same time period. GAO FY 2023 Request and Priorities GAO requests $810.3 million for FY 2023, an increase of $91.1 million (12.7 percent) over the enacted FY 2022 level. GAO also requests the use of $61.0 million in offsets and supplemental appropriations. With this budget request, we are planning to achieve and maintain 3,500 full-time equivalents (FTEs) in FY 2023. The request for $810.3 in appropriated funds includes $25 million in no-year funds to help meet the congressional directives and requests for oversight of federal infrastructure spending included in the Infrastructure Investment and Jobs Act. Overall, the resources extended to GAO in the FY 2023 budget request will enable GAO to continue to increase our capabilities to review the opportunities and challenges associated with rapidly evolving science and technology issues; complex and growing cyber security developments, increasingly complex national security issues and the re-emergence of long-term, strategic competition; and rising health care costs. The FY 2023 budget request also prioritizes GAO’s multi-year effort to ensure we have the 21st century tools and technologies needed to support our workforce and achieve our mission, including enhanced cloud data management and storage solutions, and IT security upgrades to combat the ever-growing cybersecurity threats toward U.S. assets. Lastly, this request continues support for long deferred infrastructure maintenance needs as our workforce returns to the workplace. GAO FY 2021 Key Results GAO documented $66.2 billion in financial benefits and over 1,200 in program and operational benefits in FY 2021. GAO issued 578 reports and more than 500 legal decisions, and made 1,602 recommendations to improve government operations. GAO also testified at least once before 45 separate committees or subcommittees on a range of issues. The Congress continues to use GAO’s work to inform its legislative decisions. For example, recently enacted legislation, such as the National Defense Authorization Act for FY 2022, Consolidated Appropriations Act for FY 2021, and Infrastructure Investment and Jobs Act included more than 50 directives for agencies to implement our recommendations or take actions based on recommendations or findings. Most recently, the Consolidated Appropriations Act for FY 2022 included over 25 directives that would spur agency action on GAO’s recommendations. For more information, contact Bill Anderson at (202) 512-2908 or andersonwl@gao.gov.

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Alternatives to Detention: ICE Needs to Better Assess Program Performance and Improve Contract Oversight

What GAO Found U.S. Immigration and Customs Enforcement (ICE) uses the Alternatives to Detention (ATD) program as one way to monitor individuals it releases into the community. GAO's analysis of ICE contractor data found that the number of individuals enrolled in the ATD program more than doubled from approximately 53,000 in 2015 to 111,000 in 2020. See figure. During this period, ICE unenrolled most participants before their immigration proceedings concluded. ICE placed about half of unenrolled participants on monitoring outside of the ATD program and about a quarter absconded (i.e. fled their address and could not be located). Number of Participants Enrolled and Unenrolled in the Alternatives to Detention Program, 2015-2020 ICE collects data on the ATD program, such as whether participants attend their scheduled court hearings. ICE also developed a performance goal for fiscal year 2022, but ICE does not assess program performance for all core program activities and outcomes, such as referrals for community services. Establishing such goals would position ICE to assess the extent to which the program is achieving intended results and identify any needed improvements. In addition, ICE has not completely presented information on participants who abscond from the ATD program. For example, ICE does not include all relevant participants when calculating absconsion rates. By doing so, ICE could more completely demonstrate program performance related to absconsions and help ensure policymakers have the context needed to appropriately use the information. ICE conducts some oversight of the contractor that helps implement the ATD program nationwide. For example, ICE conducts weekly audits intended to ensure that ATD participants receive the assigned level of supervision and services. However, ICE does not fully assess the contractor against the standards for performance established in the contract, nor follow-up and document whether the contractor resolves issues it identifies. Taking steps to improve contract oversight would help ICE ensure that the contractor is achieving outcomes as identified in the contract and provide reasonable assurance that the contractor is correcting identified issues. Why GAO Did This Study ICE has wide discretion to detain or release individuals of foreign nationality awaiting resolution of their immigration court proceedings, except for individuals subject to mandatory detention. The ATD program, which ICE administers through a $2.2 billion contract, uses electronic monitoring and case management to help ensure that individuals enrolled comply with release conditions, such as appearing at immigration court hearings. The explanatory statement accompanying the Consolidated Appropriations Act, 2020 includes a provision for GAO to review the ATD program. This report examines, among other objectives, (1) what data show about participation in the ATD program, (2) the extent to which ICE has assessed ATD performance, and (3) how ICE manages and oversees the ATD contractor. GAO analyzed ICE contractor data from November 2014 through 2020; and reviewed ATD policies, performance reports, and contract documents. GAO also interviewed ICE and contractor officials from headquarters and the field.

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NASA: Assessments of Major Projects

What GAO Found Continuing a recent trend, NASA's portfolio of major projects experienced significant cost and schedule overruns and more projects were added (see figure). Of the 21 major projects in the development phase of NASA's acquisition process (which includes building and launching the system), 15 were responsible for cumulative cost overruns of about $12 billion and cumulative schedule delays of 28 years. But just three projects—the James Webb Space Telescope, Space Launch System, and Orion—are responsible for more than three-quarters of the cost growth and almost half of the delays. Cumulative Cost and Schedule Overruns for NASA's Major Projects in Development In the past year, the majority of NASA's projects in development increased their cost estimates, schedule estimates, or both. Technical issues and new scope were the primary causes of overruns. However, COVID-19 exacerbated these challenges with government and contractor facility shutdowns and remote work. Current overruns and the risk of future COVID-19 issues could have a cascading effect on NASA's ability to manage its portfolio. NASA designates cost reserves to help projects address risks. However, when projects exhaust these reserves and need additional funding, it can limit the agency's ability to fund existing missions or start new ones. For example, NASA officials said some new projects are preparing for later launch dates due in part to funding limitations caused by other projects' cost overruns. NASA is taking steps to improve its portfolio management, but it is too soon to determine the results of these efforts. Why GAO Did This Study NASA plans to invest at least $80 billion in its major projects to continue exploring Earth, the moon, and the solar system. Major projects are those with costs of over $250 million. An explanatory statement included a provision for GAO to prepare status reports on NASA's major projects. This is GAO's 14th annual assessment. This report describes the cost and schedule performance of NASA's major projects and GAO's assessment of these projects' technology development and design stability. The report also includes individual assessments of the major projects. GAO collected and analyzed data; reviewed project status reports; and interviewed NASA officials. GAO reviewed projects in the formulation phase (which takes a project through its preliminary design), and those in the subsequent development phase.

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Cyber Insurance: Action Needed to Assess Potential Federal Response to Catastrophic Attacks

What GAO Found U.S. critical infrastructure (such as utilities, financial services, and pipelines) faces increasing cybersecurity risks. Understanding these risks and associated vulnerabilities, threats, and impacts is essential to protecting critical infrastructure. Cybersecurity Vulnerabilities, Threats, and Impacts Vulnerabilities. Critical infrastructure has become more vulnerable to cyberattacks for reasons that include greater use of interconnected electronic systems. Threats. Threat actors—such as nation-states, criminal groups, and terrorists—have become increasingly capable of carrying out cyberattacks on critical infrastructure. Impacts. Federal and industry data indicate that cyberattacks—including those affecting critical infrastructure—generally have increased in frequency and cost. Source: Prior GAO reports and GAO analysis of agency and industry documentation. The effects of cyber incidents can spill over from the initial target to economically linked firms—magnifying damage to the economy. For example, in May 2021 the Colonial Pipeline Company learned that it was the victim of a cyberattack that led to short-lived gasoline shortages. Cyber insurance and the Terrorism Risk Insurance Program (TRIP)—the government backstop for losses from terrorism—are both limited in their ability to cover potentially catastrophic losses from systemic cyberattacks. Cyber insurance can offset costs from some of the most common cyber risks, such as data breaches and ransomware. However, private insurers have been taking steps to limit their potential losses from systemic cyber events. For example, insurers are excluding coverage for losses from cyber warfare and infrastructure outages. TRIP covers losses from cyberattacks if they are considered terrorism, among other requirements. However, cyberattacks may not meet the program's criteria to be certified as terrorism, even if they resulted in catastrophic losses. For example, attacks must be violent or coercive in nature to be certified. The Department of the Treasury's Federal Insurance Office (FIO) and the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency (CISA) both have taken steps to understand the financial implications of growing cybersecurity risks. However, they have not assessed the extent to which risks to critical infrastructure from catastrophic cyber incidents and potential financial exposures warrant a federal insurance response. CISA is the primary risk advisor on critical infrastructure and FIO the federal monitor of the insurance sector. Accordingly, they are well-positioned to jointly perform such an assessment. Doing so and reporting the results to Congress can inform deliberations on whether a federal insurance response is warranted. If such a response were deemed necessary, GAO's framework for providing federal assistance to private market participants (GAO-10-719) could help inform its design. The framework notes the need to define the problem, mitigate moral hazard (that the existence of a federal backstop could result in entities taking greater risks), and protect taxpayer interests. Consistent with these elements, any federal insurance response should include clear criteria for coverage, specific cybersecurity requirements, and a dedicated funding mechanism with concessions from all market participants. Why GAO Did This Study Cyber threats to critical infrastructure represent a significant economic challenge. Although cyber incident costs are paid in part by the private cyber insurance market, growing cyber threats have created uncertainty in this evolving market. The Further Consolidated Appropriations Act, 2020, includes a provision for GAO to study cyber risks to U.S. critical infrastructure and available insurance for these risks. This report examines the extent to which (1) cyber risks for critical infrastructure exist; (2) private insurance covers catastrophic cyber losses and TRIP provides a backstop for such losses; and (3) cognizant federal agencies have assessed a potential federal response for cyberattacks. GAO reviewed cyber insurance coverage literature and reports on cyber risk and the insurance market. GAO interviewed CISA and FIO officials and industry stakeholders (e.g., critical infrastructure owners, insurers, and brokers) that were selected based on factors such as expertise and market share.

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Fair Lending: Opportunities Exist to Enhance OCC's Oversight of Banks' Lending Practices

What GAO Found The Office of the Comptroller of the Currency's (OCC) activities to oversee banks' compliance with fair lending laws include the following: assessments of banks' risk of violating fair lending laws in every examination cycle for all of OCC's supervised banks that engage in retail lending (OCC supervised over 1,000 such banks in 2020); annual fair lending examinations of some banks, chosen based on risk assessments and statistical analysis of lending data (63 in 2020); supervisory action to correct deficient bank practices or address uncorrected deficiencies or violations of fair lending laws; and referral of certain fair lending matters to the Department of Justice (DOJ). In 2021, OCC began considering enforcement action in every referred matter. Before 2021, OCC generally did not consider taking enforcement action if DOJ pursued one, or OCC waited to consider enforcement action until DOJ returned the matter to OCC when DOJ did not pursue one itself. GAO's review of 10 examinations of potential discrimination in loan underwriting or pricing found that OCC examiners generally followed policies and procedures consistently. However, in reviewing five examinations of potential redlining, GAO found that examiner guidance did not account for new statistical methods used to analyze redlining, and examiners followed some procedures inconsistently. Examiners for three examinations did not find the banks' responses disputing the statistical findings satisfactory and concluded that the banks potentially engaged in redlining. Examiners for two examinations considered the banks' responses. They also conducted additional analyses to support or contradict interpreting identified disparities to be the result of intentional discrimination. They concluded the banks did not engage in redlining. The guidance lacks specificity in some procedures in light of new statistical analyses. Since examiners' conclusions are the basis for supervisory action, updated and clearer guidance could help ensure the consistency of redlining examinations and enforcement of fair lending laws. OCC has made major changes to its annual process for screening retail lending activities at midsize and community banks, which significantly decreased the number of annual fair lending examinations since 2018. These changes likely contributed to a decrease in informal supervisory actions in 2018–2020. OCC staff said they make periodic process changes to conduct more targeted examinations and better manage resources. For example, the revised screening process is intended to identify lending activities with elevated fair lending risk, and examiners are to select all of these activities for examination, as resources allow—a change from the previous practice of selecting generally one activity per bank. However, OCC has not assessed the impact of conducting fewer examinations on its ability to detect deficient practices at smaller banks. Staff said they plan to centralize some information to facilitate such an assessment, but OCC has not established time frames for implementing this plan. Going forward, centralized data linking the screening, selection, and examination outcomes would allow OCC to better evaluate the trade-offs between efficient resource allocation and the effectiveness of its fair lending examinations. Why GAO Did This Study The Fair Housing Act and the Equal Credit Opportunity Act prohibit discrimination in access to most forms of credit transactions based on race, national origin, and other characteristics. GAO was asked to review OCC's oversight of fair lending laws. This report examines (1) how OCC identifies and addresses any deficient fair lending practices at supervised banks and refers potential violations to DOJ, (2) the extent to which OCC examiners followed policies and procedures in selected fair lending examinations, and (3) how changes to examination selection processes have affected oversight. GAO reviewed OCC data and documents related to its fair lending oversight activities, such as policies and procedures, and files from a nongeneralizable sample of 15 fair lending examinations. GAO also interviewed staff from OCC, DOJ, other agencies, and advocacy groups.

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