Capital Briefs: GAO Criticizes Fed Reports on Foreign Banks

Federal Reserve Board reports on foreign banking operations in the United States are hampered by "inconsistent, incomplete, or outdated information," according to a General Accounting Office report released Monday.

These Fed reports-which include reviews of home country financial systems and accounting practices as well as rankings of financial backing provided to foreign operations by their home banks-were begun in March 1995 to bolster supervision of foreign bank operations.

Examiners from the Fed and other agencies who share the information said the reports have improved communication among supervisors and bank management domestically and abroad, according to the GAO report.

However, only 43% of the required reports on 281 foreign bank organizations have been completed, the report said. And GAO found that though examiners said some of the information in the documents was helpful, they were making "limited use" of them because they held "some skepticism" about the usefulness, timeliness, and reliability of the data.

The Fed noted in response that the reports are still fairly new, but it acknowledged that corrective measures were already under way.

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