US Agency Issues Paper on Lending; GAO Issues Recommendations for FED
The U.S. Government Accountability Office (GAO) published a report that outlines three priority open recommendations for the Board of Governors of the Federal Reserve System (FED), as of May 2022. These recommendations are related to financial technology and stress testing of banking institutions. Additionally, the Federal Reserve Bank of Cleveland published a working paper on credit availability for minority business owners in an evolving credit environment.
GAO report on recommendations for FED. In its report, GAO highlighted that FED has not implemented the three priority recommendations identified in May 2021. GAO is now requesting FED its continued attention to the three recommendations:
- FED should collaborate with other financial regulators to communicate with banks that have third-party relationships with financial technology lenders about using alternative data in underwriting.
- FED should design and implement a process to communicate information about the range and sources of uncertainty surrounding the post-stress capital ratio estimates to the Board during Comprehensive Capital Analysis and Review deliberations.
- FED should design and implement a process for the Board and senior staff to articulate tolerance levels for key risks identified through sensitivity testing and for the degree of uncertainty in the projected capital ratios
Working paper on credit availability for minority business owners. The paper highlights that substantial credit disparities exist despite the growth of fintech lenders, which prior research shows have expanded the set of small businesses receiving credit. Also, there is evidence that the geographic focus areas of the Community Reinvestment Act do not appear to be disadvantaged but introducing information on the specific race and ethnicity of business owner continues to reveal differences in credit access. Fintech lenders are a valuable substitute in market segments that have limited access to credit, but their lending patterns do not shift lending to minority-owned businesses in a meaningful way. It has been also mentioned in the paper that the Paycheck Protection Program loans represented an unprecedented support for small businesses, support that was not dependent on the creditworthiness of businesses, but minority-owned businesses are estimated to have received a smaller fraction of the funds they applied for from the program. The combination of these results suggests that the credit needs of minority-owned small businesses might require more specialized interventions in national or local lending markets.
Related Links
- US GAO Notification on Recommendations for FED
- US GAO Report on Recommendations for FED (PDF)
- Cleveland FED Notification on Working Paper on Credit Availability
- Cleveland FED Working Paper on Credit Availability (PDF)
Keywords: Americas, US, Banking, Fintech, Stress Testing, Regtech, Lending, Credit Risk, SME Lending, FED, Cleveland FED, US GAO
Featured Experts

Laurent Birade
Advises U.S. and Canadian financial institutions on risk and finance integration, CCAR/DFAST stress testing, IFRS9 and CECL credit loss reserving, and credit risk practices.

James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.

Cristian deRitis
Leading economist; recognized authority and commentator on personal finance and credit, U.S. housing, economic trends and policy implications; innovator in econometric and credit modeling techniques.
Previous Article
SRB Updates MREL Policy and Publishes Other UpdatesRelated Articles
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks
At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.
ISSB Standards Shine Spotlight on Comparability of ESG Disclosures
The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures
EBA Issues Several Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.
BCBS Proposes to Revise Core Principles for Banking Supervision
The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.
US Proposes Final Basel Rules, Transition Period to Start in July 2025
The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.
FSB Report Outlines Next Steps for Climate Risk Roadmap
The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.
EBA Plans on Ad-hoc ESG Data Collection and Climate Scenario Exercise
The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.