OIG Calls for Strengthening FDIC Conflict of Interest Training

WASHINGTON — A report by the Federal Deposit Insurance Corp.’s Office of Inspector General found that the banking regulator could improve its policies to better prevent conflicts of interest between its employees and the companies with which it contracts.

The OIG report released this month notes that while the FDIC has policies for identifying and responding to conflicts of interest in the agency acquisition process, the internal guidance — contained in the FDIC’s Manual of Acquisition Procedures and Guidance — does not require employees involved in the acquisition process to explicitly identify potential or actual conflicts of interest, but rather relies on employees to identify and avoid such conflicts themselves.

“APGM requires sound planning for all procurement activities… however, identification and description of conflict of interest risks are not specifically required,” the report notes. “In the absence of additional internal controls throughout the procurement lifecycle, Program Office-level staff and contracting officers may not be prepared to identify, analyze, respond to, and monitor potential or actual conflicts of interest.”

The Office of Inspector General also found that the FDIC Ethics Unit did not establish specific requirements for ethics training beyond initial new employee and annual sessions, but provided additional, tailored ethics training upon request by FDIC program offices.

OIG initiates ethics review of FDIC acquisitions beyond 2022 information report Three agency employees were found to have investments in FDIC-contracted companies that were directly affected by the work they supervised. In February 2023, the OIG received a request from Congress to investigate conflicts of interest at the FDIC, and the watchdog assessed the effectiveness of existing regulations and policies between February and August 2024.

The report noted that as a result of media reports of alleged conflicts, two program offices requested and received specialized training to address acquisition-related risks. While the inspector noted that such actions reflected the agency’s commitment to internal controls over such conflicts, they also stated that the need for additional training may justify “additional staff training related to conflicts of interest in acquisitions…which may reduce the likelihood of ethics violations.”

The Office of Inspector General has directed the FDIC Chief Operating Officer to identify and document acquisition team members from appropriate departments and develop procedures to require these team members to complete a conflict of interest certification prior to engaging in an acquisition and to submit conflict of interest certifications annually throughout the life of the acquisition.

The report further recommends that the agency’s Chief Administrative Officer update the Acquisition Procedures and Guidance Manual. While the manual currently requires “prudent planning” by employees, the OIG suggests that the official provide more detail, as well as written descriptions of any potential or actual conflicts of interest. The OIG also recommends specialized annual training on acquisition-related conflicts of interest.

The FDIC said it agrees with all eight recommendations and plans to complete all corrective actions by August 31, 2025.

“The FDIC agrees that it is important that government decisions, including those related to acquisitions, be free from personal financial bias,” said Vice President and Chief Operating Officer Daniel Bendler. “The FDIC agrees with all of the recommendations and has proposed corrective actions.”