Report Identifies Top Management and Performance Challenges Facing Federal Financial Regulators

The Council of Inspectors General on Financial Oversight (CIGfO) issued a September 2018 report on top management and performance challenges facing financial regulators.

Cybersecurity was the most frequently identified cross-cutting challenge among CIGFO members. This included risks to the security of information technology (IT) systems and information at financial institutions, those institutions’ third-party service providers, and financial regulatory organizations. For example, the National Credit Union Administration (NCUA) Inspector General noted that "cyber threats continue to pose significant dangers to the stability and soundness of the credit union industry; and credit unions and other small financial institutions are increasingly the target of cyberattacks."

The report also stated that financial-sector regulatory organizations have supervisory responsibilities to identify and mitigate potential systemic problems in the financial sector. With respect to credit unions, The report noted that the NCUA faces several challenges that threaten the safety and soundness of the credit union system and the National Credit Union Share Insurance Fund, including growing disparity in the performance of large and small credit unions specific to loan, net worth, and membership growth; increasing competition in the financial services industry; and continuing consolidation among depository institutions.

Managing human capital is another key challenge facing federal regulators. Federal financial regulators noted that a large percentage of their workforce can retire in the next couple of years. The Office of Personnel Management estimated that 34.3 percent of all Federal employees will be eligible to retire by fiscal year 2020. This pending rollover in the work force will require the “knowledge transfer” from the more experienced personnel to the newer staff to ensure that the federal agencies are able to fulfill their mission critical functions.

Other challenges identified in the report involved the sharing of threat information among government agencies and throughout the entire financial sector and governing risk management and internal control processes to fulfill the agencies' missions and provide stewardship of public resources.

CIGFO members include the Inspectors General of the Department of the Treasury, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission, the Department of Housing and Urban Development, the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection, the Federal Housing Finance Agency, the National Credit Union Administration, the Securities and Exchange Commission, and the Special Inspector General for the Troubled Asset Relief Program.

Read the report.