Summary: GAO reached four primary conclusions about the Federal Housing Finance Board's (FHFB) regulatory oversight of the nation's third-largest government-sponsored enterprise--the Federal Home Loan Bank System. First, FHFB did not ensure that all parts of the annual examinations GAO reviewed met FHFB's internal standards for assessing safety and soundness. Second, weaknesses exist in FHFB's off-site monitoring and supervisory enforcement programs. Third, FHFB lacks policies and procedures, outside of its reviews of the special affordable housing and community investment programs, to determine whether or the extent to which Federal Home Loan Banks are supporting their public mission of housing finance. Fourth, FHFB's involvement in promoting System programs and projects that it later evaluates for mission compliance and for safety could complicate its primary duty as a safety and soundness regulator and may prompt questions about FHFB's objectivity. This testimony summarizes the September 1998 report, GAO/GGD-98-203.
