Summary: In response to a congressional request, GAO reviewed certain areas of the operations of the National Consumer Cooperative Bank. The Bank has recently undergone a major reorganization, converted from a mixed-ownership Government corporation to a quasi-private institution, and experienced high personnel turnover. In addition, the Bank has recently established a nonprofit corporation to administer financial and technical assistance to new, emerging, or low-income cooperatives, and it has unified its lending process, restructured regional operations, and is implementing new contracting procedures.
GAO believes that some of the recent actions should improve Bank operations, but the action of reducing the number of regional offices and staff may limit the Bank's ability to develop cooperatives nationwide. Even before this action, the Bank failed to develop the cooperative community it needed to meet its long-term financial obligations. GAO found that the Bank has decreased its emphasis on technical assistance to nonborrowing cooperatives, training, and outreach. However, the newly established Consumer Cooperative Development Corporation could restore these activities if it is able to secure sufficient funding. GAO found that questionable practices were involved in the election of nine members of the board of directors in 1982. Therefore, GAO believes that the Bank needs to reevaluate the 1982 election process and the ramifications of the board's decisions to decide what action, if any, it should take. GAO also found that Bank officials have not consistently followed established contracting policies and procedures. However, a newly adopted procurement manual, if properly implemented, could correct many of the identified contracting weaknesses. GAO found that the Bank management has taken actions to increase the flow of information with member cooperatives and the public. Finally, a review of Bank personnel policies showed that the Bank has consistently applied these policies despite allegations made by separated employees that they were treated unfairly.
