US GAO Urges FDIC to Rotate Case Manager Examiners

In a recent letter sent to the US Federal Deposit Insurance Corporation (FDIC) Chair Travis Hill, the Government Accountability Office (GAO) urges the regulator to consider rotating case manager examiners to prevent regulatory capture, as reported by American Banker.

“In 2024, we found that FDIC did not require periodic rotation of assignments for certain case managers, which could compromise their independence and interfere with supervision outcomes,” the letter reads. “By implementing rotation requirements, as we recommended, FDIC could mitigate threats to independence and better ensure that escalation decisions are independent and evidence-based.”

The letter refers to a 2024 GAO study which found that, while the FDIC does require rotation for examiners in charge, it has no such requirement for case managers overseeing large institutions. By contrast, it explained, the Office of the Comptroller of the Currency and the Federal Reserve rotate comparable case managers every 5 years. The GAO warned in that report that prolonged case manager assignments “risk developing close relationships with institution management, which can threaten their independence and interfere with supervision outcomes,” and detailed instances of managers overriding examiner assessments without consultation.