Material supervisory determinations by a federal financial institution regulator could be reviewed by a newly created federal office under legislation approved by the House Thursday.
The legislation, H.R. 4545 (the ‘‘Financial Institutions Examination Fairness and Reform Act’’) also sets deadlines for federal regulators to hold exit interviews and issue financial examination reports to the institutions under their supervision.
The House passed the bill (sponsored by Rep. Scott Tipton, R-Colo.) on a vote of 283-133.
The new office of Office of Independent Examination Review (OIER) would be led by a director appointed by the Federal Financial Institutions Examination Council (FFIEC), who would serve a five-year term (eligible to be re-appointed once for another five-year term).
The director, and office, the legislation notes, would be independent of any federal agency member of the FFIEC (i.e., the federal banking agencies, the National Credit Union Administration (NCUA) and Consumer Financial Protection Bureau (CFPB)). State financial regulators are also represented on the council.
The director may hire a staff; investigate complaints from financial institutions and others about examinations, examination practices, or examination reports; hold (at least) quarterly meetings; review exam procedures of the regulatory agencies to “ensure that the written examination policies of those agencies are being followed in practice and adhere to the standards for consistency established by the Council,” and; conduct “a continuing and regular review of examination quality assurance for all examination conducted by the regulatory agencies.
In setting deadlines for exit interviews and exam reports, the bill requires a federal financial institution regulatory agency to provide the final exam report no later than 60 days after the exit interview following the exam itself, or the “provision of additional information by the institution relating to the examination.”
The exit interview would be required no later than the nine-month period beginning with the examination itself (although the regulator could extend that by providing written notice to the institution and the new OIER established by the legislation).
If a financial institution desires, it may request an independent review by the OIER of a material supervisory determination contained in a final report of examination. To do that, the institution has to file for the review within 60 days of receiving the final report; identify the material supervisory determination at question (and why), and; request “any information relied upon by the agency in the final report that is not in the possession of the financial institution,” which “shall be delivered promptly.”
The House turned down an amendment by Rep. Maxine Waters (D-Calif., and ranking member of the Financial Services Committee) to narrow the applicability of the bill’s additional appeal process to apply only to small community banks and credit unions (those institutions with under $10 billion in assets).
The bill now heads to the Senate for consideration.