Banking: Federal Agencies' Compliance with Section 302 of the Riegle Community Development and Regulatory Improvement Act

What GAO Found

Section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 (Riegle Act) requires federal banking agencies to consider administrative burdens and benefits when determining the effective date and administrative compliance requirements for certain new rules.  The federal banking agencies are the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System (Federal Reserve), and the Office of the Comptroller of the Currency (OCC). The rules covered by section 302 of the Riegle Act include those that would impose additional reporting, disclosure, or other requirements on insured depository institutions.

Section 302 also requires that these rules take effect on the first day of a calendar quarter beginning on or after the date on which the federal banking agencies publish the final rules, with some exceptions. Specifically, the agencies may set a different effective date if (1) they have good cause (as explained in the final rule), (2) the Federal Reserve has issued the rule to implement monetary policy, or (3) a law requires that the rule take effect on another date. According to the act’s legislative history, section 302’s purpose is to have new rules take effect on only 4 days each year. By having only a few effective dates for new rules, insured depository institutions should be able to better inform themselves about the new rules and should have the time to put in place any needed training, software, and other operational modifications.

In summary, of the 248 final rules issued by the federal banking agencies between January 2009 and August 2015, we found 68 were subject to the Riegle Act, and all but one had effective or other dates that complied or were consistent with the act. For the one rule, the agency did not cite the Riegle Act’s good cause exemption in the final rule’s preamble to justify not setting the rule’s effective date on the first day of a following quarter. In addition, we found that OCC and FDIC have rulemaking policies that discuss the Riegle Act, but the Federal Reserve did not. Although the Riegle Act does not require agencies to have rulemaking policies, such policies can serve as internal controls to help agencies comply with applicable laws.

A report attached to the Consolidated and Further Continuing Appropriations Act, 2015 includes a provision for GAO to report on federal banking agencies’ compliance with section 302 of the Riegle Act.

We identified final rules published by FDIC, the Federal Reserve, and OCC in the Federal Register between January 2009 and August 2015 and determined which of them included section 302 analysis. The federal banking agencies reviewed the accuracy and completeness of our rule lists and, in some cases, provided us with supplemental information and analyses. We also reviewed the agencies’ analyses associated with the effective dates of the rules and determined how, if at all, the federal banking agencies met each of the requirements of section 302. We reviewed available FDIC, Federal Reserve, and OCC policies and procedures that the agencies had put in place to ensure that rulemakings comply with section 302 of the Riegle Act. We also reviewed GAO, inspector general, and other studies about section 302. We interviewed FDIC, Federal Reserve, and OCC officials about their controls and compliance with section 302. We also interviewed officials from two industry associations about their views on agency compliance with section 302 and benefits of section 302 to insured depository institutions.

For more information, contact Lawrance L. Evans, Jr. at (202) 512-8678 or evansl@gao.gov.