Mounting workload prompts IGs to seek help

Federal financial agency watchdogs are so inundated by mandatory reviews of the nation's failed banks that they have been forced to abandon inquiries into money laundering, offshore banking operations and the house of cards that caused the financial crisis, the Treasury Department's inspector general told lawmakers Tuesday.

The inspectors general who oversee the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. used a hearing by the House Financial Services Oversight Subcommittee to ask Congress to loosen the requirements that trigger "material loss reviews" -- mandatory analyses of failed banks -- that have swamped their staffs.

Under current law, the IGs must conduct a full review of any failure by a financial institution in their jurisdiction that costs the Deposit Insurance Fund more than $25 million.

That $25 million threshold has forced the three agencies to launch at least 48 such reviews since January 2007, the IGs said. FDIC Inspector General Jon Rymer estimated that each review requires about 2,000 hours of staff work.

In a letter to House Financial Services Committee Chairman Barney Frank, D-Mass., Rymer and his colleagues have recommended that Congress raise the threshold to between $300 million and $500 million.

Even a bump up to a $200 million trigger would substantially lighten their workloads, they told lawmakers.

In response to their pleas, Rep. Steve Driehaus, D-Ohio, is expected to introduce legislation soon to change the threshold, an aide to the lawmaker said after the hearing. The bill will likely include a threshold in the range of $200 million to $250 million, the aide said.

Without some tweaking of the threshold, the IGs warned at the hearing, their offices could go from being swamped to sinking deep under water.

The workload has caused the Treasury Department to nix or defer audits within its terrorist financing and anti-money-laundering units, said Treasury IG Eric Thorson.

His office would like to examine the role of the Office of Thrift Supervision's relationship with insurance giant American International Group, but it simply does not have the resources, Thorson said.

Rymer agreed, saying that if banks continue to fail at expected rates, FDIC will not have enough staff to complete all the mandatory bank failure reviews they are required to conduct. "Depending on the level of this growth, my office may not be able to keep up," he said.

Meanwhile, another government watchdog appealed Tuesday for public help in tracking economic stimulus spending and rooting out fraud and waste in the $787 billion recovery program.

Earl Devaney, chairman of the Recovery Accountability and Transparency Board, told the House Science Committee he was considering creating a citizens' hotline with which the public would be able to share with the board "potentially critical information" on suspected spending abuses.

"Citizen participation, I hope, will be my force multiplier," he told reporters later.

He also pledged to shield whistleblowers who gave the board tips about waste and abuse. "I have been pretty aggressive about protecting federal whistle-blowers ...," said Devaney, former Interior Department IG. "I do not intend to abandon that practice now."

Terry Kivlan contributed to this report.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.


When you download a report, your information may be shared with the underwriters of that document.