International Banking

GAO identified the extent to which the U.S. bank regulatory agencies' regulations, policies, and procedures are consistent with the Basle Committee's principles. The Committee, which consists of the United States and 11 other countries, agrees on principles designed to ensure adequate supervision of international banking.

GAO found that the banking supervision principles that federal bank regulatory agencies use are consistent with the Basle Committee's principles in many respects. Although the Committee is concerned with the decreasing capital positions of banks, consolidated bank supervision and country and foreign exchange risk, U.S. banking laws and regulations adequately address those issues. The main difference between the U.S. banking agencies' policies and procedures and the Committee's principles is the limited attention that the federal and state agencies give to identifying how adequately foreign countries' home banks supervise their applications for U.S. offices. Although adequate banking supervision could be critical to the safety and soundness of the banks' U.S. offices, some state banking agencies frequently fail to contact foreign supervisors when considering the applications. Less familiarity with the Committee's activities and with foreign bank supervision could account for the limited attention that state agencies give to foreign bank supervision. In addition, most state agencies fail to ask the Federal Reserve, which has representation on the Committee, to supply them with the information it gathers on the foreign banks when they consider U.S. office applications.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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