FDIC revises guidelines on appeals of material supervisory findings; new office planned for review of appeals

Revised guidelines for banks’ appeals of material supervisory determinations by the federal bank deposit insurer were approved by the agency’s board Monday on a vote of 3-1, with Board Member Martin Gruenberg (a former chairman) dissenting.

The FDIC Board, in a Financial Institution Letter (FIL), said the revised guidelines are intended to enhance the independence of appeals decisions and to clarify the procedures and timeframes that apply to appeals when the FDIC is taking a formal enforcement action. They generally replace the existing Supervision Appeals Review Committee (SARC) with an independent, stand-alone office within the FDIC, known as the Office of Supervisory Appeals.

“The revised guidelines will take effect when the Office is fully operational,” the agency said. The FDIC said it will publish a notice when this occurs; until then, the current guidelines will remain in effect.

The FDIC said the under the changes, the new Office of Supervisory Appeals will be independent of the divisions that have authority to issue material supervisory determinations, while still operating within the FDIC. Appeals submitted to the office will be decided by a panel of reviewing officials. It added that in order to promote the independence of the office, the FDIC will recruit externally. Reviewing officials will have bank supervisory or examination experience and serve on term appointments.

It said the revised guidelines also:

  • Change the standard of review for appeals to the division director so that the division director makes an independent supervisory determination without deferring to the judgments of either party;
  • Require that communications between the Office of Supervisory Appeals and either supervisory staff or the appealing institution, including materials submitted to the office for review, also be shared with the other party to the appeal;
  • Allow an institution to request expedited review in its appeal to the new appeals office; and
  • Modify the procedures and timeframes for when determinations underlying formal enforcement-related actions may be appealed.

Voting in favor of the revised guidelines were FDIC Chairman Jelena McWilliams, Acting Comptroller of the Currency Blake Paulson (who assumed that post Jan. 14, following the departure of Brian Brooks), and then-director of the Consumer Financial Protection Bureau (CFPB) Kathleen Kraninger (who resigned her post this Wednesday).

FDIC FIL-04-2021