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Board Report:  September 30, 2011

Audit of the Board's Implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act

  • REPORT SUMMARY

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The Dodd-Frank Act was enacted in response to the financial crisis and charged the Board with significant responsibilities, including the development of complex rulemakings, many in conjunction with other federal financial regulatory agencies. We conducted this audit to assess (1) the efficiency and effectiveness of the Board's processes for identifying, tracking, and overall managing its responsibilities under the act and (2) the Board's progress in implementing key requirements of the act.  

Overall, we found that the Board has implemented processes and taken significant steps to meet its Dodd-Frank Act responsibilities. The Board has drawn on expertise and resources from across the Federal Reserve System and has over 300 staff members working on its implementation projects. The Board has established an organizational structure with a senior staff position to coordinate its efforts and developed and implemented the use of project reporting and tracking tools to facilitate management and oversight. Building on these efforts, the Board has completed studies and rulemakings, issued reports, and reorganized and created offices to meet its Dodd-Frank Act obligations, and Board project teams are continuing work on Dodd-Frank Act requirements, many of which require interagency involvement.

Notwithstanding this progress, we identified that the Board faces a number of ongoing management challenges in implementing its substantial Dodd-Frank Act requirements efficiently and effectively, including (1) managing the overall workload volume and complexity; (2) collaborating and coordinating actions with other financial regulatory agencies that share responsibilities for a number of rules, studies, and other Dodd-Frank Act provisions; (3) obtaining and analyzing voluminous public comments on rulemakings; (4) meeting statutory deadlines; and (5) establishing an organizational structure and recruiting and integrating new staff. In addition to these challenges, we identified opportunities to improve the use of the Board's project reporting and tracking tool, and we made a recommendation designed to enhance project monitoring and reporting. 

We noted that some of these challenges have had adverse impacts on project completion early in the Board's implementation process. Of the 13 projects having statutory deadlines that fell within the period of our fieldwork, 6 missed their deadlines. Two of these 6 projects stem from a single proposed rulemaking that generated over 11,000 comments. The other four projects were delayed due to interagency operational challenges, including one project that the Board approved about one week prior to its deadline. While these projects represent a small percentage of the Board's overall Dodd-Frank Act implementation responsibilities through 2013, they are reflective of the challenges that the Board faces in its ongoing implementation efforts. As the bulk of the Board's Dodd- Frank Act work lies ahead, leveraging lessons learned from challenges experienced during its early implementation activities can help guide the Board in efficiently and effectively carrying out Dodd-Frank Act requirements going forward.

In their comments on our draft report, the Board's General Counsel and the Special Advisor to the Board for Regulatory Reform Implementation summarized the management structure and processes employed to meet the ongoing challenges of implementing the Dodd-Frank Act. In addition, they indicated that the report's recommendation would be addressed by reviewing existing policies related to the project reporting and tracking tool and by clarifying guidance. Prior to issuing our final report, we were notified that this guidance had been clarified and approved and that appropriate staff had been instructed to incorporate it in their activities.