Bank supervision, blockchain technology and financial technology are all areas in need of special attention by the federal bank deposit insurance agency, as noted by earlier recommendation, according to a report made public Tuesday by the congressional watchdog.
However, the watchdog contended, the banking agency has not yet taken action on the recommendations; it is now urged to do so.
The Government Accountability Office (GAO) said in November that it recommended that the Federal Deposit Insurance Corp. (FDIC) establish bank supervision procedures—such as vetting meetings—to ensure that managers formally consult with the examination team and relevant stakeholders before making substantive changes to examination findings for certain institutions.
“We also recommended that FDIC consider periodic assignment rotations for certain case managers,” the GAO said. “By implementing these two recommendations, FDIC could better ensure that its escalation decisions are independent and evidence-based.”
On blockchain, the agency said, it found in 2023 that financial regulators lacked an “ongoing coordination mechanism for addressing blockchain risks in a timely manner.” The agency said that, for example, regulators identified financial stability risks posed by stablecoins in 2019 but did not identify the need for action to address these risks until November 2021.
“We recommended that FDIC and the other federal financial regulators jointly establish or adapt an existing formal coordination mechanism to identify and address risks posed by blockchain-related products and services,” GAO said. “Such a mechanism would help FDIC and the other regulators collectively identify risks and develop and implement a regulatory response in a timely manner.”
In 2019, GAO said, it told FDIC that it should communicate in writing to banks that engage in third-party relationships with financial technology (fintech) lenders “on the appropriate use of alternative data in the underwriting process, including issues to consider when selecting types of alternative data to use.” GAO said the agency should work with other agencies, and stakeholders, on the use of the data.
FDIC said in 2023 that it had, indeed, followed up on the recommendation (along with the Federal Reserve and the Office of the Comptroller of the Currency (OCC) by providing guidance. However, the GAO contends that wasn’t enough.
“The guidance does not include specific direction to banks that engage in third-party relationships with fintech lenders regarding the appropriate use of alternative data in the underwriting process,” GAO said. “Instead, the guidance broadly applies to all topics and third-party relationships. As a result, it does not address specific topics, such as use of alternative data, or specific types of third-party relationships, such as those with fintech companies.
“As of February 2025, FDIC has not taken additional actions to fully implement the recommendation,” GAO said.
The watchdog told FDIC that it needs to (along with other banking regulators) to finalize written communication providing banks with specific direction on the appropriate use of alternative data in underwriting when partnering with fintech lenders.
“Such communication would give fintech lenders greater certainty about their compliance with consumer protection laws and help banks manage the risks associated with these partnerships,” GAO wrote.
Priority Open Recommendations: Federal Deposit Insurance Corporation (GAO-25-108050)
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