Page 1 GAO-25-108047
Comptroller General
of the United States
May 9, 2025
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 call your personal attention to three areas based on GAO’s past
work and five priority recommendations, which are enclosed.
1
Additionally, there are 11 other
GAO open recommendations that we will continue to work with your staff to address.
We are highlighting the following areas that warrant your timely and focused attention.
Specifically:
Bank supervision. The 2023 bank failures raised questions about whether the banking
regulators took sufficient action to ensure that financial institutions promptly addressed
supervisory concerns, such as weak liquidity and risk management practices. In 2024, we found
that the Board of Governors of the Federal Reserve System had not finalized a rule that would
promote earlier remediation of issues at certain financial institutions. Implementing this
recommendation would help lessen the risk of insolvency among certain financial institutions
and protect financial stability.
Financial services regulations. Leading practices for rulemaking call for assessing the
potential and actual effects of proposed and final rules, such as costs and benefits. However, in
July 2024, we found that the Federal Reserve’s policies and procedures for conducting
regulatory analysis had not been updated since 1994 and did not fully align with leading
practices, including for documenting the analysis performed. Policies that align its regulatory
analysis with leading practices could help the Federal Reserve ensure its rules justify regulatory
action and represent the most cost-beneficial option, as we recommended.
In addition, we found the Federal Reserve lacked implemented policies and procedures for
systematically performing retrospective reviews of its rules. We recommended that the Federal
Reserve adopt such policies and procedures. Doing so could help the Federal Reserve evaluate
whether rules are achieving their intended effects and avoiding unintended economic
consequences.
1
GAO considers a recommendation to be a priority if, when implemented, it 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.
