A U.S. Treasury Department office allegedly manipulated information that it turned over to congressional auditors and provided misleading answers during interviews.

That’s according to a scathing statement Thursday from the Government Accountability Office, the watchdog agency that reports to Congress. In its 11-page statement, the GAO blasted the Office of Financial Research, which was established by the Dodd-Frank Act to improve the quality of financial data that is available to regulators and to conduct research related to financial stability.

The GAO’s statement provides new grist for congressional Republicans who have long been hostile to the research office. Rep. Ann Wagner, R-Mo., raised the question Thursday of whether the embattled Treasury office should be shut down.

“From studies that impugn the workplace culture, to low morale, multiple ongoing investigations, and today’s harsh criticism of OFR by the Government Accountability Office, it appears to both outsiders and insiders that this organization is completely dysfunctional,” Wagner said.

OFR Director Richard Berner
"There are some delays that we acknowledge, but that we made every effort to work with them and get them everything that they need," said Office of Financial Research Director Richard Berner. Bloomberg News

The GAO said that it launched its review of the research office in January 2015, but was stymied by agency officials who dragged their feet.

“Many meetings took months to schedule, some were canceled with short notice, and responses to requests for documentation and other information were delayed,” Lawrence Evans, a managing director at the accountability office, said in the statement.

In June 2016, GAO was contacted by a whistleblower who alleged misconduct inside of OFR in connection with the congressional watchdog’s audit. GAO said that it later learned that the Treasury inspector general office was conducting an investigation of similar allegations from whistleblowers. At that point, GAO decided to shut down its review.

Appearing before a House panel on Thursday, the research office's director, Richard Berner, did not dispute the GAO’s findings, but disagreed it was purposeful.

“I am not saying that they are fabricating their report,” Berner said. “I am saying there are some delays that we acknowledge, but that we made every effort to work with them and get them everything that they need.”

Berner was making his final appearance before Congress, after announcing plans last month to step down on Dec. 31. He was hired in 2011 to set up the financial research office and later became its Senate-confirmed director. Today the office has 207 employees.

Berner, a former chief economist at Morgan Stanley, used Thursday’s hearing to offer a defense of the things the Office of Financial Research has accomplished.

The office’s 2017 annual report to Congress found that risks to financial stability are moderate. It identified three key threats to the U.S. financial system: vulnerability to cybersecurity incidents, obstacles to resolving large failing financial institutions, and structural changes in markets.

“The findings of the GAO really overlook a lot of the things we have been doing in the Office of Financial Research,” Berner said.

A spokesman for the Treasury inspector general’s office said Thursday that its investigation is ongoing.

Kevin Wack

Kevin Wack

Kevin Wack is a California-based reporter for American Banker who covers the U.S. consumer finance industry.