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Semiannual Report to Congress
This year marks the 30th anniversary of the Office of Inspector General (OIG) for the Board of Governors of the Federal Reserve System (Board). Voluntarily established by former Federal Reserve Chairman Paul Volcker in July 1987, the OIG's responsibilities became statutorily established 1 year later as part of the Inspector General Act Amendments of 1988. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act also named our office the OIG for the Consumer Financial Protection Bureau (CFPB). The OIG has been expanding its presence and evolving ever since.
Beginning with just a handful of staff in the earliest days, the OIG now includes a headquarters location in Washington, DC, as well as four regional offices across the country. What has remained constant over the past 30 years is our commitment to providing independent oversight and promoting economy, efficiency, and effectiveness in the programs and operations of the agencies that we oversee.
During the current reporting period, we completed reviews of the Board in the areas of cybersecurity, management and operations, and financial management and internal controls. For the CFPB, we completed reviews in the areas of supervision and enforcement and information technology. In addition, we issued reports of the major management challenges facing both the Board and the CFPB. These reports help our agencies to identify areas that may hamper their ability to successfully accomplish their strategic objectives.
Our Office of Investigations has continued to investigate allegations of fraud, waste, and abuse related to the Board's and the CFPB's programs and operations and has had great success in bringing wrongdoers to justice. Over the past 6 months, we received 242 Hotline complaints, opened 16 new investigations, and closed 21 investigations. Our work resulted in 10 individuals referred for criminal prosecution; 6 indictments; over $8 million in criminal fines, restitution, and special assessments; $225 million in civil judgments; and a clear message to those involved in wrongdoing within or against the Board or the CFPB that they will be held accountable for their illegal activities.
In furtherance of our vision to be the trusted oversight organization of the Board and the CFPB, we have focused efforts on raising awareness about the OIG Hotline with our key partners in the fight against fraud, waste, and abuse. Our focus on outreach and the addition of Hotline links on agency intranets have resulted in nearly double the number of referrals as compared to previous years. We also continued to strengthen relationships with our law enforcement partners by hosting and attending conferences that drew attendees from dozens of federal, state, and local law enforcement agencies.
I am proud to be a part of the OIG's history and am confident that over the next 30 years, we will continue to rise to the challenge of carrying out our critical oversight role. I would like to express my appreciation to the OIG staff for their dedication, hard work, and unwavering commitment to our mission, vision, and values.
October 31, 2017
We continued to promote the integrity, economy, efficiency, and effectiveness of the programs and operations of the Board of Governors of the Federal Reserve System (Board) and the Consumer Financial Protection Bureau (CFPB). The following are highlights of our work during this semiannual reporting period.
The Board's Approach to Cybersecurity Supervision
The Board can enhance its approach to cybersecurity supervision as it implements its multiyear cybersecurity oversight program.
The CFPB's Examination Workpaper Documentation Practices
The CFPB can improve its approach to documenting examination results and protecting sensitive information so that only employees with a business need have access to materials with confidential supervisory information and personally identifiable information.
The CFPB's Examiner Commissioning Program
The CFPB can improve the design, implementation, and execution of its Examiner Commissioning Program and On-the-Job Training program to ensure that its examiners are fully prepared before pursuing commissioning and that the Examiner Commissioning Program is evaluated and updated as needed.
The Board's Martin Building Project
Although the Board's controls over contracted architectural and engineering services are designed effectively and communication channels help the project team, the Board can strengthen its internal controls and communication as the Martin Building project progresses.
The CFPB's Issuance of Civil Investigative Demands
Although the CFPB generally complied with the procedural elements of section 1052(c) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and with its own procedures when issuing the civil investigative demands in our sample, the agency can improve its guidance for crafting notifications of purpose associated with civil investigative demands.
Former Acting President of CFG Community Bank Indicted
A former acting President of CFG Community Bank was charged in an indictment with one or more counts of bank fraud, theft by a bank officer, conspiracy to defraud the United States, and tax evasion. Another subject was charged with conspiracy to defraud the United States and tax evasion. The indictment alleged that over $875,000 of the bank's loan proceeds was diverted to the former acting President's personal benefit or to the benefit of a friend.
Former President and Chief Executive Officer of Farmers Exchange Bank Pleaded Guilty to Bank Fraud, False Entries, and False Statements
The former President and Chief Executive Officer of Farmers Exchange Bank in Neshkoro, Wisconsin, pleaded guilty to three counts of bank fraud; one count of false entries, reports, and transactions; and one count of false statements. The defendant also signed a stipulation and settlement agreement, in which he agreed that the $338,000 seized from his bank accounts pursuant to a seizure warrant, which were monies derived from proceeds of traceable theft, embezzlement, or misapplication of funds by a bank holding company officer, would be paid to the other shareholders of FEB Bancshares, Inc.