[House Report 115-589]
[From the U.S. Government Publishing Office]


115th Congress     }                                         {     Report
                          HOUSE OF REPRESENTATIVES
 2d Session        }                                         {    115-589

======================================================================



 
       FINANCIAL INSTITUTIONS EXAMINATION FAIRNESS AND REFORM ACT

                                _______
                                

 March 6, 2018.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4545]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4545) to amend the Federal Financial 
Institutions Examination Council Act of 1978 to improve the 
examination of depository institutions, and for other purposes, 
having considered the same, report favorably thereon without 
amendment and recommend that the bill do pass.

                          Purpose and Summary

    Introduced by Representative Tipton on December 4, 2017, 
the ``Financial Institutions Examination Fairness and Reform 
Act'' amends the Federal Financial Institutions Examination 
Council Act of 1978 to establish deadlines within which 
regulatory agencies must hold exit interviews and issue final 
examination reports to financial institutions. The bill would 
also provide supervised financial institutions the right to 
have material supervisory determinations reviewed by a newly 
created Independent Examination Review Director within the 
Federal Financial Institutions Examination Council (FFIEC).

                  Background and Need for Legislation

    Currently, federal law mandates a process to appeal 
regulatory determinations including examination results. In 
1994, to promote fairness and transparency in examinations, 
Congress directed the federal regulators of financial 
institutions to establish an ``independent intra-agency 
appellate process'' by which an institution could seek review 
of certain regulatory determinations, including (1) examination 
ratings, (2) adequacy of loan loss reserves, and (3) 
classifications of loans significant to the institution.\1\ 
Collectively, these determinations are known as ``material 
supervisory determinations.'' Each federal financial regulator 
has instituted its own unique process for appeals of material 
supervisory determinations.
---------------------------------------------------------------------------
    \1\12 U.S. Code 4806.
---------------------------------------------------------------------------
    The Committee has heard testimony that the intra-agency 
review to appeal material supervisory determinations provides 
financial institutions with limited opportunities to challenge, 
that the appeals process is not impartial, and that to either 
appeal or oppose examination findings incurs retaliation from 
regulators.
    In a letter of support for H.R. 4545 dated December 6, 
2017, the American Bankers Association wrote:

          H.R. 4545 establishes clear standards by giving 
        supervised financial institutions the right to have 
        material supervisory determinations reviewed by an 
        independent Examination Review Director to ensure the 
        consistency of all examinations. The legislation would 
        also ensure that financial institutions receive timely 
        examination reports that include full documentation of 
        the information the regulators used to make their 
        determinations; would create an expedited process for 
        banks to appeal examination decisions; and would impose 
        safeguards to ensure institutions do not improperly use 
        the review process.
          This legislation takes a major step toward a more 
        balanced and transparent approach regarding regulators' 
        decision-making during the examination process.
    On December 12, 2017, the Independent Community Bankers 
Association wrote in support of H.R. 4545, stating:

          H.R. 4545 would create an Office of Independent 
        Examination Review within the Federal Financial 
        Institutions Examination Council (FFIEC) and give 
        financial institutions a right to an expedited, 
        independent review of a material supervisory 
        determination before the Office's Director . . .
          . . . Taking the appeals process out of the examining 
        agencies is a positive step. While not completely 
        independent of the agencies the FFIEC is com posed of 
        each banking agency we expect that this level of 
        separation between the appeals process and the agencies 
        will provide a mea sure of distance and insulation.

                                Hearings

    The Committee on Financial Services held a hearing 
examining matters relating to H.R. 4545 on April 26, 2017, and 
April 28, 2017.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
December 13, 2017, and ordered H.R. 4545 to be reported 
favorably to the House without amendment by a recorded vote of 
50 yeas to 10 nays (FC-127), a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
first recorded vote (FC-126) was on an amendment offered by 
Representative Waters (CA). The amendment failed by a vote of 
26 ayes to 34 nays. The second recorded vote was on a motion by 
Chairman Hensarling to report the bill favorably to the House 
without amendment. The motion was agreed to by a recorded vote 
of 50 yeas to 10 nays (FC-127), a quorum being present.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 4545 
will reform the federal financial regulatory agency examination 
process to make it more efficient, responsive, and fair for 
financial institutions.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 12, 2018.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4545, the 
Financial Institutions Examination Fairness and Reform Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 4545--Financial Institutions Examination Fairness and Reform Act

    Summary: H.R. 4545 would establish the Office of 
Independent Examination Review within the Federal Financial 
Institutions Examination Council (FFIEC). The new office would 
investigate complaints from financial institutions about 
examinations, regularly review the quality of examinations, and 
adjudicate appeals of determinations made within examinations.
    CBO estimates that enacting H.R. 4545 would increase net 
direct spending by $82 million and reduce revenues by $41 
million over the 2018-2027 period. In total, CBO estimates, 
enacting H.R. 4545 would increase budget deficits by $123 
million over the 2018-2027 period. Implementing H.R. 4545 would 
not affect spending subject to appropriation.
    Because enacting the bill would affect direct spending and 
revenues, pay-as-you-go procedures apply.
    CBO estimates that enacting H.R. 4545 would not increase 
net direct spending or on-budget deficits by more than $2.5 
billion in any of the four consecutive 10-year periods 
beginning in 2028.
    H.R. 4545 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA). If financial 
regulators increase fees to offset some of the costs of 
implementing the bill, H.R. 4545 would increase the cost of an 
existing mandate on private entities required to pay those 
fees. Using information from the affected agencies, CBO 
estimates that the incremental cost of the mandate would fall 
well below the annual threshold for private-sector mandates 
established in UMRA ($156 million in 2017, adjusted annually 
for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 4545 is shown in the following table. 
The costs of the legislation fall within budget function 370 
(commerce and housing credit).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       By fiscal year, in millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2018   2019   2020   2021   2022   2023   2024   2025   2026   2027  2018-2022  2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              INCREASES IN DIRECT SPENDING
 
Office of Independent Examination Review:
    Estimated Budget Authority..............................      0      6      9      9      9      9      9      9      9     10        34         79
    Estimated Outlays.......................................      0      5      8      9      9      9      9      9      9     10        33         78
Other Administrative Costs:
    Estimated Budget Authority..............................      0      *      *      *      1      1      1      1      1      1         2          5
    Estimated Outlays                                             0      *      *      *      1      1      1      1      1      1         2          4
    Total:
        Estimated Budget:
        Authority...........................................      0      7      9      9      9      9     10     10     10     10        36         84
        Estimated Outlays...................................      0      6      9      9      9      9     10     10     10     10        35         82
 
                                                                  DECREASES IN REVENUES
 
Federal Reserve.............................................      0     -3     -4     -4     -5     -5     -5     -5     -5     -5       -17        -41
 
                                        NET INCREASE IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES
 
Effect on the Deficit.......................................      0      9     13     14     14     14     14     15     15     15        50        123
--------------------------------------------------------------------------------------------------------------------------------------------------------
Components may not sum to totals because of rounding; * = between zero and $500,000.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
4545 will be enacted near the end of fiscal year 2018. 
Estimated spending is based on historical patterns for similar 
regulatory activities.

Background

    The FFIEC was established to promote uniformity in 
supervision of financial institutions. Generally, the majority 
of its operating costs are borne by four financial regulatory 
agencies: the Office of the Comptroller of the Currency (OCC), 
the Federal Deposit Insurance Corporation (FDIC), the National 
Credit Union Administration (NCUA), and the Federal Reserve 
System. Some costs currently are covered by the Consumer 
Financial Protection Bureau (CFPB) and the Department of 
Housing and Urban Development. Of the regulators, the OCC, the 
FDIC, and the NCUA collect fees to offset operating costs. 
Because of lags between the time costs are incurred by some of 
the financial regulators and when additional fees would be 
imposed, not all additional costs resulting from the bill would 
be recovered within the next 10 years. Costs borne by the CFPB 
are recorded in the budget as direct spending because the 
agency has permanent authority to spend amounts transferred 
from the Federal Reserve. Finally, costs incurred by the 
Federal Reserve would reduce remittances to the Treasury (which 
are recorded as revenues).
    Currently, the FFIEC is supported by 16 people who are 
employed by the regulatory agencies but assigned to the 
council.

Office of Independent Examination Review

    CBO expects that establishing the new office would require 
a significant increase in the council's staff. Using 
information from the FFIEC, CBO estimates that an additional 60 
staff positions would be needed to meet the bill's requirements 
to investigate and resolve appeals and to review examination 
procedures. Under H.R. 4545, the costs of the office would be 
covered by the OCC, the NCUA, the FDIC, the CFPB, and the 
Federal Reserve. CBO expects that it would take several years 
to reach the new staffing level and that the costs would be 
spread evenly among the five regulatory agencies.
    Based on the average cost for each employee of $225,000, 
CBO estimates that establishing the office would cost $192 
million over the 2018-2027 period to supply the FFIEC with 
additional people and to cover other operating expenses. That 
amount reflects some savings to the regulators because a 
portion of the complaints they receive under current law would 
instead be handled by FFIEC. CBO estimates that 80 percent of 
the net cost, or $154 million, would be spread equally among 
the FDIC, the OCC, the NCUA and the CFPB--increasing gross 
direct spending by that amount.
    Three of those regulators collect fees to offset operating 
costs. CBO estimates that over the 10-year period, additional 
fees collected from financial institutions would total about 
$76 million. On net, CBO estimates, enacting H.R. 4545 would 
increase direct spending by $78 million over the 2018-2027 
period.
    The remaining 20 percent of the costs would be charged to 
the Federal Reserve (see ``The Federal Reserve'' below).

Other administrative costs

    H.R. 4545 also would establish deadlines for the federal 
banking regulators to complete examination reports. Using 
information from those agencies, CBO estimates that they would 
need to hire additional staff to meet the deadlines established 
in the bill, at an estimated net cost of about $4 million over 
the 2018-2027 period. That cost accounts for anticipated 
increases in fee collections during the period.

The Federal Reserve

    Because the Federal Reserve remits its profits to the 
Treasury, increasing the costs of operating the Federal Reserve 
reduces federal revenues. CBO estimates that the portion of the 
costs to establish the Office of Independent Examination Review 
that would be allocated to the Federal Reserve, combined with 
additional administrative costs to meet deadlines established 
under the bill, would average about $4 million per year over 
the 2018-2027 period. CBO estimates that revenues would decline 
by $42 million over the next 10 years under H.R. 4545.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

       CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4545, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON DECEMBER 13, 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       By fiscal year, in millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2018   2019   2020   2021   2022   2023   2024   2025   2026   2027  2018-2022  2018-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact..............................      0      9     13     14     14     14     14     15     15     15        50        123
Memorandum:
    Changes in Outlays......................................      0      6      9      9      9      9     10     10     10     10        33         82
    Changes in Revenues.....................................      0     -3     -4     -4     -5     -5     -5     -5     -5     -5       -17        -41
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term direct spending and deficits: CBO 
estimates that enacting H.R. 4545 would not increase net direct 
spending or on-budget deficits by more than $2.5 billion in any 
of the four consecutive 10-year periods beginning in 2028.
    Mandates: H.R. 4545 contains no intergovernmental mandates 
as defined in UMRA.
    If financial regulators increased fees to offset some of 
the costs of implementing the new activities of the FFIEC, the 
bill would increase the cost of an existing mandate on private 
entities required to pay those fees. Using information from the 
affected agencies, CBO estimates that the incremental cost of 
the mandate would amount to no more than $25 million over the 
2018-2022 period and would fall well below the annual threshold 
for private-sector mandates established in UMRA ($156 million 
in 2017, adjusted annually for inflation).
    Estimate prepared by: Federal costs: Stephen Rabent and 
Sarah Puro, Revenues: Nathaniel Frentz, Mandates: Rachel 
Austin.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995.
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, (115th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 4545 as the ``Financial 
Institutions Examination Fairness and Reform Act.''

Section 2. Amendment to definition of financial institution

    This section amends the definition of ``financial 
institution'' in the Federal Financial Institutions Examination 
Council Act of 1978 to include, for the purposes of sections 
1012, 1013, and 1014, a nondepository covered person subject to 
supervision by the Bureau of Consumer Financial Protection.

Section 3. Timeliness of examination reports

    This section amends the Federal Financial Institutions 
Examination Council Act of 1978 to require a federal financial 
institutions regulatory agency to make a final examination 
report to a financial institution within 60 days after the 
later of: (1) the exit interview for an examination of the 
institution, or (2) the provision of additional information by 
the institution relating to the examination.

Section 4. Independent Examination Review Director

    This section establishes in the Federal Financial 
Institutions Examination Council (FFIEC) the Office of 
Independent Examination Review, headed by a Director appointed 
by the FFIEC, but independent from any member agency of the 
FFIEC.

Section 5. Right to independent review of material supervisory 
        determinations

    This section entitles a financial institution to appeal a 
material supervisory determination contained in a final report 
of examination; requires the Director to determine the merits 
of the appeal and grants a financial institution the right to 
petition for judicial review of the Director's decision.
    This section allows for a limited review by the FFIEC if 
there is substantial evidence that the Director's decision 
would pose an imminent threat to the safety and soundness of 
the financial institution.
    This section also prohibits a federal financial 
institutions regulatory agency from retaliating against a 
financial institution or delaying or denying any agency action 
that would benefit a financial institution.

Section 6. Additional amendments

    This section requires the Consumer Financial Protection 
Bureau to establish an independent intra-agency appellate 
process in connection with the regulatory appeals process, and 
establishes safeguards to protect an insured depository 
institution or insured credit union from retaliation by any 
federal banking agency for exercising its rights.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

     FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL ACT OF 1978



           *       *       *       *       *       *       *
TITLE X--FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

           *       *       *       *       *       *       *


                              definitions

  Sec. 1003. As used in this title--
          [(1) the term ``Federal financial institutions 
        regulatory agencies'' means the Office of the 
        Comptroller of the Currency, the Board of Governors of 
        the Federal Reserve System, the Federal Deposit 
        Insurance Corporation, the Office of Thrift 
        Supervision, and the National Credit Union 
        Administration;]
          (1) the term ``Federal financial institutions 
        regulatory agencies''--
                  (A) means the Office of the Comptroller of 
                the Currency, the Board of Governors of the 
                Federal Reserve System, the Federal Deposit 
                Insurance Corporation, and the National Credit 
                Union Administration; and
                  (B) for purposes of sections 1012, 1013, and 
                1014, includes the Bureau of Consumer Financial 
                Protection;
          (2) the term ``Council'' means the Financial 
        Institutions Examination Council; and
          [(3) the term ``financial institution'' means a 
        commercial bank, a savings bank, a trust company, a 
        savings association, a building and loan association, a 
        homestead association, a cooperative bank, or a credit 
        union;]
          (3) the term ``financial institution''--
                  (A) means a commercial bank, a savings bank, 
                a trust company, a savings association, a 
                building and loan association, a homestead 
                association, a cooperative bank, or a credit 
                union; and
                  (B) for purposes of sections 1012, 1013, and 
                1014, includes a nondepository covered person 
                subject to supervision by the Bureau of 
                Consumer Financial Protection under section 
                1024 of the Consumer Financial Protection Act 
                of 2010 (12 U.S.C. 5514).

           *       *       *       *       *       *       *


                        expenses of the council

  Sec. 1005. [One-fifth] One-fourth of the costs and expenses 
of the Council, including the salaries of its employees, shall 
be paid by each of the Federal financial institutions 
regulatory agencies. Annual assessments for such share shall be 
levied by the Council based upon its projected budget for the 
year, and additional assessments may be made during the year if 
necessary.

           *       *       *       *       *       *       *


SEC. 1012. TIMELINESS OF EXAMINATION REPORTS.

  (a) In General.--
          (1) Final examination report.--A Federal financial 
        institutions regulatory agency shall provide a final 
        examination report to a financial institution not later 
        than 60 days after the later of--
                  (A) the exit interview for an examination of 
                the institution; or
                  (B) the provision of additional information 
                by the institution relating to the examination.
          (2) Exit interview.--If a financial institution is 
        not subject to a resident examiner program, the exit 
        interview shall occur not later than the end of the 9-
        month period beginning on the commencement of the 
        examination, except that such period may be extended by 
        the Federal financial institutions regulatory agency by 
        providing written notice to the institution and the 
        Independent Examination Review Director describing with 
        particularity the reasons that a longer period is 
        needed to complete the examination.
  (b) Examination Materials.--Upon the request of a financial 
institution, the Federal financial institutions regulatory 
agency shall include with the final report an appendix listing 
all examination or other factual information relied upon by the 
agency in support of a material supervisory determination.

SEC. 1013. OFFICE OF INDEPENDENT EXAMINATION REVIEW.

  (a) Establishment.--There is established in the Council an 
Office of Independent Examination Review (the ``Office'').
  (b) Head of Office.--There is established the position of the 
Independent Examination Review Director (the ``Director''), as 
the head of the Office. The Director shall be appointed by the 
Council and shall be independent from any member agency of the 
Council.
  (c) Term.--The Director shall serve for a term of 5 years, 
and may be appointed to serve a subsequent 5-year term.
  (d) Staffing.--The Director is authorized to hire staff to 
support the activities of the Office.
  (e) Duties.--The Director shall--
          (1) receive and, at the Director's discretion, 
        investigate complaints from financial institutions, 
        their representatives, or another entity acting on 
        behalf of such institutions, concerning examinations, 
        examination practices, or examination reports;
          (2) hold meetings, at least once every three months 
        and in locations designed to encourage participation 
        from all sections of the United States, with financial 
        institutions, their representatives, or another entity 
        acting on behalf of such institutions, to discuss 
        examination procedures, examination practices, or 
        examination policies;
          (3) in accordance with subsection (f), review 
        examination procedures of the Federal financial 
        institutions 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;
          (4) conduct a continuing and regular review of 
        examination quality assurance for all examination types 
        conducted by the Federal financial institutions 
        regulatory agencies;
          (5) adjudicate any supervisory appeal initiated under 
        section 1014; and
          (6) report annually to the Committee on Financial 
        Services of the House of Representatives, the Committee 
        on Banking, Housing, and Urban Affairs of the Senate, 
        and the Council, on the reviews carried out pursuant to 
        paragraphs (3) and (4), including compliance with the 
        requirements set forth in section 1012 regarding 
        timeliness of examination reports, and the Council's 
        recommendations for improvements in examination 
        procedures, practices, and policies.
  (f) Standard for Reviewing Examination Procedures.--In 
conducting reviews pursuant to subsection (e)(4), the Director 
shall prioritize factors relating to the safety and soundness 
of the financial system of the United States.
  (g) Removal.--If the Director is removed from office, the 
Council shall communicate in writing the reasons for any such 
removal to the Committee on Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate not later than 30 days before the 
removal.
  (h) Confidentiality.--The Director shall keep confidential 
all meetings with, discussions with, and information provided 
by financial institutions.

SEC. 1014. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SUPERVISORY 
                    DETERMINATIONS.

  (a) In General.--A financial institution shall have the right 
to obtain an independent review of a material supervisory 
determination contained in a final report of examination.
  (b) Notice.--
          (1) Timing.--A financial institution seeking review 
        of a material supervisory determination under this 
        section shall file a written notice with the 
        Independent Examination Review Director (the 
        ``Director'') within 60 days after receiving the final 
        report of examination that is the subject of such 
        review.
          (2) Identification of determination.--The written 
        notice shall identify the material supervisory 
        determination that is the subject of the independent 
        examination review, and a statement of the reasons why 
        the institution believes that the determination is 
        incorrect or should otherwise be modified.
          (3) Information to be provided to institution.--Any 
        information relied upon by the agency in the final 
        report that is not in the possession of the financial 
        institution may be requested by the financial 
        institution and shall be delivered promptly by the 
        agency to the financial institution.
  (c) Right to Hearing.--
          (1) In general.--The Director shall determine the 
        merits of the appeal on the record or, at the financial 
        institution's election, shall refer the appeal to an 
        Administrative Law Judge to conduct a confidential 
        hearing pursuant to the procedures set forth under 
        sections 556 and 557 of title 5, United States Code, 
        which hearing shall take place not later than 60 days 
        after the petition for review was received by the 
        Director, and to issue a proposed decision to the 
        Director based upon the record established at such 
        hearing.
          (2) Standard of review.--In rendering a determination 
        or recommendation under this subsection, neither the 
        Administrative Law Judge nor the Director shall defer 
        to the opinions of the examiner or agency, but shall 
        conduct a de novo review to independently determine the 
        appropriateness of the agency's decision based upon the 
        relevant statutes, regulations, and other appropriate 
        guidance, as well as evidence adduced at any hearing.
  (d) Final Decision.--A decision by the Director on an 
independent review under this section shall--
          (1) be made not later than 60 days after the record 
        has been closed; and
          (2) subject to subsection (e), be deemed a final 
        agency action and shall bind the agency whose 
        supervisory determination was the subject of the review 
        and the financial institution requesting the review.
  (e) Limited Review by FFIEC.--
          (1) In general.--If the agency whose supervisory 
        determination was the subject of the review believes 
        that the Director's decision under subsection (d) would 
        pose an imminent threat to the safety and soundness of 
        the financial institution, such agency may file a 
        written notice seeking review of the Director's 
        decision with the Council within 10 days of receiving 
        the Director's decision.
          (2) Standard of review.--In making a determination 
        under this subsection, the Council shall conduct a 
        review to determine whether there is substantial 
        evidence that the Director's decision would pose an 
        imminent threat to the safety and soundness of the 
        financial institution.
          (3) Final determination.--A determination by the 
        Council shall--
                  (A) be made not later than 30 days after the 
                filing of the notice pursuant to paragraph (1); 
                and
                  (B) be deemed a final agency action and shall 
                bind the agency whose supervisory determination 
                was the subject of the review and the financial 
                institution requesting the review.
  (f) Right to Judicial Review.--A financial institution shall 
have the right to petition for review of final agency action 
under this section by filing a Petition for Review within 60 
days of the Director's decision or the Council's decision in 
the United States Court of Appeals for the District of Columbia 
Circuit or the Circuit in which the financial institution is 
located.
  (g) Report.--The Director shall report annually to the 
Committee on Financial Services of the House of Representatives 
and the Committee on Banking, Housing, and Urban Affairs of the 
Senate on actions taken under this section, including the types 
of issues that the Director has reviewed and the results of 
those reviews. In no case shall such a report contain 
information about individual financial institutions or any 
confidential or privileged information shared by financial 
institutions.
  (h) Retaliation Prohibited.--A Federal financial institutions 
regulatory agency may not--
          (1) retaliate against a financial institution, 
        including service providers, or any institution-
        affiliated party (as defined under section 3 of the 
        Federal Deposit Insurance Act), for exercising 
        appellate rights under this section; or
          (2) delay or deny any agency action that would 
        benefit a financial institution or any institution-
        affiliated party on the basis that an appeal under this 
        section is pending under this section.
  (i) Rule of Construction.--Nothing in this section may be 
construed--
          (1) to affect the right of a Federal financial 
        institutions regulatory agency to take enforcement or 
        other supervisory actions related to a material 
        supervisory determination under review under this 
        section; or
          (2) to prohibit the review under this section of a 
        material supervisory determination with respect to 
        which there is an ongoing enforcement or other 
        supervisory action.
                              ----------                              


  RIEGLE COMMUNITY DEVELOPMENT AND REGULATORY IMPROVEMENT ACT OF 1994



           *       *       *       *       *       *       *
TITLE III--PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT

           *       *       *       *       *       *       *


SEC. 309. REGULATORY APPEALS PROCESS, OMBUDSMAN, AND ALTERNATIVE 
                    DISPUTE RESOLUTION.

  (a) In General.--Not later than 180 days after the date of 
enactment of this Act, each appropriate Federal banking agency, 
the Bureau of Consumer Financial Protection, and the National 
Credit Union Administration Board shall establish an 
independent intra-agency appellate process. The process shall 
be available to review material supervisory determinations made 
at insured depository institutions or at insured credit unions 
that the agency supervises.
  (b) Review Process.--In establishing the independent 
appellate process under subsection (a), each agency shall 
ensure that--
          (1) any appeal of a material supervisory 
        determination by an insured depository institution or 
        insured credit union is heard and decided 
        expeditiously; and
          (2) appropriate safeguards exist for protecting [the 
        appellant from retaliation by agency examiners] the 
        insured depository institution or insured credit union 
        from retaliation by the agencies referred to in 
        subsection (a) .
For purposes of this subsection and subsection (e), retaliation 
includes delaying consideration of, or withholding approval of, 
any request, notice, or application that otherwise would have 
been approved, but for the exercise of the institution's or 
credit union's rights under this section.
  (c) Comment Period.--Not later than 90 days after the date of 
enactment of this Act, each appropriate Federal banking agency 
and the National Credit Union Administration Board shall 
provide public notice and opportunity for comment on proposed 
guidelines for the establishment of an appellate process under 
this section.
  (d) Agency Ombudsman.--
          (1) Establishment required.--Not later than 180 days 
        after the date of enactment of this Act, each Federal 
        banking agency and the National Credit Union 
        Administration Board shall appoint an ombudsman.
          (2) Duties of ombudsman.--The ombudsman appointed in 
        accordance with paragraph (1) for any agency shall--
                  (A) act as a liaison between the agency and 
                any affected person with respect to any problem 
                such party may have in dealing with the agency 
                resulting from the regulatory activities of the 
                agency; and
                  (B) assure that safeguards exist to encourage 
                complainants to come forward and preserve 
                confidentiality.
  (e) Alternative Dispute Resolution Pilot Program.--
          (1) In general.--Not later than 18 months after the 
        date of enactment of this Act, each Federal banking 
        agency and the National Credit Union Administration 
        Board shall develop and implement a pilot program for 
        using alternative means of dispute resolution of issues 
        in controversy (hereafter in this section referred to 
        as the ``alternative dispute resolution program'') that 
        is consistent with the requirements of subchapter IV of 
        chapter 5 of title 5, United States Code, if the 
        parties to the dispute, including the agency, agree to 
        such proceeding.
          (2) Standards.--An alternative dispute resolution 
        pilot program developed under paragraph (1) shall--
                  (A) be fair to all interested parties to a 
                dispute;
                  (B) resolve disputes expeditiously; [and]
                  (C) be less costly than traditional means of 
                dispute resolution, including litigation[.]; 
                and
                  (D) ensure that appropriate safeguards exist 
                for protecting the insured depository 
                institution or insured credit union from 
                retaliation by any agency referred to in 
                subsection (a) for exercising its rights under 
                this subsection.
          (3) Independent evaluation.--Not later than 18 months 
        after the date on which a pilot program is implemented 
        under paragraph (1), the Administrative Conference of 
        the United States shall submit to the Congress a report 
        containing--
                  (A) an evaluation of that pilot program;
                  (B) the extent to which the pilot programs 
                meet the standards established under paragraph 
                (2);
                  (C) the extent to which parties to disputes 
                were offered alternative means of dispute 
                resolution and the frequency with which the 
                parties, including the agencies, accepted or 
                declined to use such means; and
                  (D) any recommendations of the Conference to 
                improve the alternative dispute resolution 
                procedures of the Federal banking agencies and 
                the National Credit Union Administration Board.
          (4) Implementation of program.--At any time after 
        completion of the evaluation under paragraph (3)(A), 
        any Federal banking agency and the National Credit 
        Union Administration Board may implement an alternative 
        dispute resolution program throughout the agency, 
        taking into account the results of that evaluation.
          (5) Coordination with existing agency adr programs.--
                  (A) Evaluation required.--If any Federal 
                banking agency or the National Credit Union 
                Administration maintains an alternative dispute 
                resolution program as of the date of enactment 
                of this Act under any other provision of law, 
                the Administrative Conference of the United 
                States shall include such program in the 
                evaluation conducted under paragraph (3)(A).
                  (B) Multiple adr programs.--No provision of 
                this section shall be construed as precluding 
                any Federal banking agency or the National 
                Credit Union Administration Board from 
                establishing more than 1 alternative means of 
                dispute resolution.
  (f) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Material supervisory determinations.--The term 
        ``material supervisory determinations''--
                  (A) includes determinations relating to--
                          (i) examination ratings;
                          (ii) the adequacy of loan loss 
                        reserve provisions; [and]
                          (iii) loan classifications on loans 
                        that are significant to an institution; 
                        [and]
                          (iv) any issue specifically listed in 
                        an exam report as a matter requiring 
                        attention by the institution's 
                        management or board of directors; and
                          (v) any suspension or removal of an 
                        institution's status as eligible for 
                        expedited processing of applications, 
                        requests, notices, or filings on the 
                        grounds of a supervisory or compliance 
                        concern, regardless of whether that 
                        concern has been cited as a basis for 
                        another material supervisory 
                        determination or matter requiring 
                        attention in an examination report, 
                        provided that the conduct at issue did 
                        not involve violation of any criminal 
                        law; and
                  (B) does not include a determination by a 
                Federal banking agency or the National Credit 
                Union Administration Board to appoint a 
                conservator or receiver for an insured 
                depository institution or a liquidating agent 
                for an insured credit union, as the case may 
                be, or a decision to take action pursuant to 
                section 38 of the Federal Deposit Insurance Act 
                or section 212 of the Federal Credit Union Act, 
                as appropriate.
          (2) Independent appellate process.--The term 
        ``independent appellate process'' means a review by an 
        agency official who does not directly or indirectly 
        report to the agency official who made the material 
        supervisory determination under review.
          (3) Alternative means of dispute resolution.--The 
        term ``alternative means of dispute resolution'' has 
        the meaning given to such term in section 571 of title 
        5, United States Code.
          (4) Issues in controversy.--The term ``issues in 
        controversy'' means--
                  (A) any final agency decision involving any 
                claim against an insured depository institution 
                or insured credit union for which the agency 
                has been appointed conservator or receiver or 
                for which a liquidating agent has been 
                appointed, as the case may be;
                  (B) any final action taken by an agency in 
                the agency's capacity as conservator or 
                receiver for an insured depository institution 
                or by the liquidating agent appointed for an 
                insured credit union; and
                  (C) any other issue for which the appropriate 
                Federal banking agency or the National Credit 
                Union Administration Board determines that 
                alternative means of dispute resolution would 
                be appropriate.
  (g) Effect on Other Authority.--Nothing in this section shall 
affect the authority of an appropriate Federal banking agency 
or the National Credit Union Administration Board to take 
enforcement or supervisory action.

           *       *       *       *       *       *       *

                              ----------                              


                        FEDERAL CREDIT UNION ACT



           *       *       *       *       *       *       *
TITLE II--SHARE INSURANCE

           *       *       *       *       *       *       *


              requirements governing insured credit unions

  Sec. 205. (a) Insurance Logo.--
          (1) Insured credit unions.--
                  (A) In general.--Each insured credit union 
                shall display at each place of business 
                maintained by that credit union a sign or signs 
                relating to the insurance of the share accounts 
                of the institution, in accordance with 
                regulations to be prescribed by the Board.
                  (B) Statement to be included.--Each sign 
                required under subparagraph (A) shall include a 
                statement that insured share accounts are 
                backed by the full faith and credit of the 
                United States Government.
          (2) Regulations.--The Board shall prescribe 
        regulations to carry out this subsection, including 
        regulations governing the substance of signs required 
        by paragraph (1) and the manner of display or use of 
        such signs.
          (3) Penalties.--For each day that an insured credit 
        union continues to violate this subsection or any 
        regulation issued under this subsection, it shall be 
        subject to a penalty of not more than $100, which the 
        Board may recover for its use.
  (b)(1) Except as provided in paragraph (2), no insured credit 
union shall, without the prior approval of the Board--
          (A) merge or consolidate with any noninsured credit 
        union or institution;
          (B) assume liability to pay any member accounts in, 
        or similar liabilities of, any noninsured credit union 
        or institution;
          (C) transfer assets to any noninsured credit union or 
        institution in consideration of the assumption of 
        liabilities for any portion of the member accounts in 
        such insured credit union; or
          (D) convert into a noninsured credit union or 
        institution.
          (2) Conversion of insured credit unions to mutual 
        savings banks.--
                  (A) In general.--Notwithstanding paragraph 
                (1), an insured credit union may convert to a 
                mutual savings bank or savings association (if 
                the savings association is in mutual form), as 
                those terms are defined in section 3 of the 
                Federal Deposit Insurance Act, without the 
                prior approval of the Board, subject to the 
                requirements and procedures set forth in the 
                laws and regulations governing mutual savings 
                banks and savings associations.
                  (B) Conversion proposal.--A proposal for a 
                conversion described in subparagraph (A) shall 
                first be approved, and a date set for a vote 
                thereon by the members (either at a meeting to 
                be held on that date or by written ballot to be 
                filed on or before that date), by a majority of 
                the directors of the insured credit union. 
                Approval of the proposal for conversion shall 
                be by the affirmative vote of a majority of the 
                members of the insured credit union who vote on 
                the proposal.
                  (C) Notice of proposal to members.--An 
                insured credit union that proposes to convert 
                to a mutual savings bank or savings association 
                under subparagraph (A) shall submit notice to 
                each of its members who is eligible to vote on 
                the matter of its intent to convert--
                          (i) 90 days before the date of the 
                        member vote on the conversion;
                          (ii) 60 days before the date of the 
                        member vote on the conversion; and
                          (iii) 30 days before the date of the 
                        member vote on the conversion.
                  (D) Notice of proposal to board.--The Board 
                may require an insured credit union that 
                proposes to convert to a mutual savings bank or 
                savings association under subparagraph (A) to 
                submit a notice to the Board of its intent to 
                convert during the 90-day period preceding the 
                date of the completion of the conversion.
                  (E) Inapplicability of act upon conversion.--
                Upon completion of a conversion described in 
                subparagraph (A), the credit union shall no 
                longer be subject to any of the provisions of 
                this Act.
                  (F) Limit on compensation of officials.--
                          (i) In general.--No director or 
                        senior management official of an 
                        insured credit union may receive any 
                        economic benefit in connection with a 
                        conversion of the credit union as 
                        described in subparagraph (A), other 
                        than--
                                  (I) director fees; and
                                  (II) compensation and other 
                                benefits paid to directors or 
                                senior management officials of 
                                the converted institution in 
                                the ordinary course of 
                                business.
                          (ii) Senior management official.--For 
                        purposes of this subparagraph, the term 
                        ``senior management official'' means a 
                        chief executive officer, an assistant 
                        chief executive officer, a chief 
                        financial officer, and any other senior 
                        executive officer (as defined by the 
                        appropriate Federal banking agency 
                        pursuant to section 32 (f) of the 
                        Federal Deposit Insurance Act).
                  (G) Consistent rules.--
                          (i) In general.--Not later than 6 
                        months after the date of enactment of 
                        the Credit Union Membership Access Act, 
                        the Administration shall promulgate 
                        final rules applicable to charter 
                        conversions described in this paragraph 
                        that are consistent with rules 
                        promulgated by other financial 
                        regulators, including the Office of the 
                        Comptroller of the Currency. The rules 
                        required by this clause shall provide 
                        that charter conversion by an insured 
                        credit union shall be subject to 
                        regulation that is no more or less 
                        restrictive than that applicable to 
                        charter conversions by other financial 
                        institutions.
                          (ii) Oversight of member vote.--The 
                        member vote concerning charter 
                        conversion under this paragraph shall 
                        be administered by the Administration, 
                        and shall be verified by the Federal or 
                        State regulatory agency that would have 
                        jurisdiction over the institution after 
                        the conversion. If either the 
                        Administration or that regulatory 
                        agency disapproves of the methods by 
                        which the member vote was taken or 
                        procedures applicable to the member 
                        vote, the member vote shall be taken 
                        again, as directed by the 
                        Administration or the agency.
  (3) Except with the prior written approval of the Board, no 
insured credit union shall merge or consolidate with any other 
insured credit union or, either directly or indirectly, acquire 
the assets of, or assume liability to pay any member accounts 
in, any other insured credit union.
  (c) In granting or withholding approval or consent under 
subsection (b) of this section, the Board shall consider--
          (1) the history, financial condition, and management 
        policies of the credit union;
          (2) the adequacy of the credit union's reserves;
          (3) the economic advisability of the transaction;
          (4) the general character and fitness of the credit 
        union's management;
          (5) the convenience and needs of the members to be 
        served by the credit union; and
          (6) whether the credit union is a cooperative 
        association organized for the purpose of promoting 
        thrift among its members and creating a source of 
        credit for provident or productive purposes.
  (d) Prohibition.--
          (1) In general.--Except with prior written consent of 
        the Board--
                  (A) any person who has been convicted of any 
                criminal offense involving dishonesty or a 
                breach of trust, or has agreed to enter into a 
                pretrial diversion or similar program in 
                connection with a prosecution for such offense, 
                may not--
                          (i) become, or continue as, an 
                        institution-affiliated party with 
                        respect to any insured credit union; or
                          (ii) otherwise participate, directly 
                        or indirectly, in the conduct of the 
                        affairs of any insured credit union; 
                        and
                  (B) any insured credit union may not permit 
                any person referred to in subparagraph (A) to 
                engage in any conduct or continue any 
                relationship prohibited under such 
                subparagraph.
          (2) Minimum 10-year prohibition period for certain 
        offenses.--
                  (A) In general.--If the offense referred to 
                in paragraph (1)(A) in connection with any 
                person referred to in such paragraph is--
                          (i) an offense under--
                                  (I) section 215, 656, 657, 
                                1005, 1006, 1007, 1008, 1014, 
                                1032, 1344, 1517, 1956, or 1957 
                                of title 18, United States 
                                Code; or
                                  (II) section 1341 or 1343 of 
                                such title which affects any 
                                financial institution (as 
                                defined in section 20 of such 
                                title); or
                          (ii) the offense of conspiring to 
                        commit any such offense,
                the Board may not consent to any exception to 
                the application of paragraph (1) to such person 
                during the 10-year period beginning on the date 
                the conviction or the agreement of the person 
                becomes final.
                  (B) Exception by order of sentencing court.--
                          (i) In general.--On motion of the 
                        Board, the court in which the 
                        conviction or the agreement of a person 
                        referred to in subparagraph (A) has 
                        been entered may grant an exception to 
                        the application of paragraph (1) to 
                        such person if granting the exception 
                        is in the interest of justice.
                          (ii) Period for filing.--A motion may 
                        be filed under clause (i) at any time 
                        during the 10-year period described in 
                        subparagraph (A) with regard to the 
                        person on whose behalf such motion is 
                        made.
          (3) Penalty.--Whoever knowingly violates paragraph 
        (1) or (2) shall be fined not more than $1,000,000 for 
        each day such prohibition is violated or imprisoned for 
        not more than 5 years, or both.
  (e)(1) The Board shall promulgate rules establishing minimum 
standards with which each insured credit union must comply with 
respect to the installation, maintenance, and operation of 
security devices and procedures, reasonable in cost, to 
discourage robberies, burglaries, and larcenies and to assist 
in the identification and apprehension of persons who commit 
such acts.
  (2) The rules shall establish the time limits within which 
insured credit unions shall comply with the standards and shall 
require the submission of periodic reports with respect to the 
installation, maintenance, and operation of security devices 
and procedures.
  (3) An insured credit union which violates a rule promulgated 
pursuant to this subsection shall be subject to a civil penalty 
which shall not exceed $100 for each day of the violation.
  (f)(1) Every insured credit union is authorized to maintain, 
and make loans with respect to, share draft accounts in 
accordance with rules and regulations prescribed by the Board. 
Except as provided in paragraph (2), an insured credit union 
may pay dividends on share draft accounts and may permit the 
owners of such share draft accounts to make withdrawals by 
negotiable or transferable instruments or other orders for the 
purpose of making transfers to third parties.
  (2) Paragraph (1) shall apply only with respect to share 
draft accounts in which the entire beneficial interest is held 
by one or more individuals or members or by an organization 
which is operated primarily for religious, philanthropic, 
charitable, educational, or other similar purposes and which is 
not operated for profit, and with respect to deposits of public 
funds by an officer, employee, or agent of the United States, 
any State, county, municipality, or political subdivision 
thereof, the District of Columbia, the Commonwealth of Puerto 
Rico, American Samoa, Guam, any territory or possession of the 
United States, or any political subdivision thereof.
  (g)(1) If the applicable rate prescribed in this subsection 
exceeds the rate an insured credit union would be permitted to 
charge in the absence of this subsection, such credit union 
may, notwithstanding any State constitution or statute which is 
hereby preempted for the purposes of this subsection, take, 
receive, reserve, and charge on any loan, interest at a rate of 
not more than 1 per centum in excess of the discount rate on 
ninety-day commercial paper in effect at the Federal Reserve 
bank in the Federal Reserve district where such insured credit 
union is located or at the rate allowed by the laws of the 
State, territory, or district where such credit union is 
located, whichever may be greater.
  (2) If the rate prescribed in paragraph (1) exceeds the rate 
such credit union would be permitted to charge in the absence 
of this subsection, and such State fixed rate is thereby 
preempted by the rate described in paragraph (1), the taking, 
receiving, reserving, or charging a greater rate than is 
allowed by paragraph (1), when knowingly done, shall be deemed 
a forfeiture of the entire interest which the loan carries with 
it, or which has been agreed to be paid thereon. If such 
greater rate of interest has been paid, the person who paid it 
may recover, in a civil action commenced in a court of 
appropriate jurisdiction not later than two years after the 
date of such payment, an amount equal to twice the amount of 
interest paid from the credit union taking or receiving such 
interest.
  (h) Notwithstanding any other provision of law, the Board may 
authorize a merger or consolidation of an insured credit union 
which is insolvent or is in danger of insolvency with any other 
insured credit union or may authorize an insured credit union 
to purchase any of the assets of, or assume any of the 
liabilities of, any other insured credit union which is 
insolvent or in danger of insolvency if the Board is satisfied 
that--
          (1) an emergency requiring expeditious action exists 
        with respect to such other insured credit union;
          (2) other alternatives are not reasonably available; 
        and
          (3) the public interest would best be served by 
        approval of such merger, consolidation, purchase, or 
        assumption.
  (i)(1) Notwithstanding any other provision of this Act or of 
State law, the Board may authorize an institution whose 
deposits or accounts are insured by the Federal Deposit 
Insurance Corporation to purchase any of the assets of or 
assume any of the liabilities of an insured credit union which 
is insolvent or in danger of insolvency, except that prior to 
exercising this authority the Board must attempt to effect the 
merger or consolidation of an insured credit union which is 
insolvent or in danger of insolvency with another insured 
credit union, as provided in subsection (h).
  (2) For purposes of the authority contained in paragraph (1), 
insured accounts of the credit union may upon consummation of 
the purchase and assumption be converted to insured deposits or 
other comparable accounts in the acquiring institution, and the 
Board and the National Credit Union Share Insurance Fund shall 
be absolved of any liability to the credit union's members with 
respect to those accounts.
  (j) Privileges Not Affected by Disclosure to Banking Agency 
or Supervisor.--
          (1) In general.--The submission by any person of any 
        information to the Bureau of Consumer Financial 
        Protection, the Administration, any State credit union 
        supervisor, or foreign banking authority for any 
        purpose in the course of any supervisory or regulatory 
        process of such Board, supervisor, or authority shall 
        not be construed as waiving, destroying, or otherwise 
        affecting any privilege such person may claim with 
        respect to such information under Federal or State law 
        as to any person or entity other than such Board, 
        supervisor, or authority.
          (2) Rule of construction.--No provision of paragraph 
        (1) may be construed as implying or establishing that--
                  (A) any person waives any privilege 
                applicable to information that is submitted or 
                transferred under any circumstance to which 
                paragraph (1) does not apply; or
                  (B) any person would waive any privilege 
                applicable to any information by submitting the 
                information to the Bureau of Consumer Financial 
                Protection, the Administration, any State 
                credit union supervisor, or foreign banking 
                authority, but for this subsection.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    H.R. 4545 would enable any bank, regardless of size, to 
appeal and postpone material supervisory determinations by the 
bank's regulator, which include adverse determinations such as 
a downgrade of a bank's rating for capital, asset quality, 
management, earnings, liquidity, and sensitivity to market 
risks (CAMELS); significant deficiencies in the institution's 
Bank Secrecy Act/Anti-Money Laundering (BSA/AML) program; 
findings related to violations of various regulations; or a 
downgrade of a bank's Community Reinvestment Act (CRA) rating. 
The bill would create a new Office of Independent Examination 
Review within the Federal Financial Institutions Examination 
Council (``FFIEC'') and allow depository institutions that 
receive such a determination to be able to appeal the 
determination to the review office. This bill would make it 
more likely that megabanks would be able to escape or delay 
accountability for egregious violations of federal laws 
protecting consumers and the economy.
    Although proponents of this bill contend that it will 
provide regulatory relief to community banks and small lenders, 
the bill is not tailored for that goal. Rather, H.R. 4545 would 
allow any bank, as well as any nonbank under the Consumer 
Financial Protection Bureau's (``Consumer Bureau'') supervisory 
authority, to appeal negative supervisory determinations made 
in the examination process. While targeted improvements to the 
exam process could be considered for the smallest banks, 
allowing megabanks, as this bill would do, to challenge any 
negative supervisory action taken against them is completely 
inappropriate, particularly given the light-touch oversight 
these large banks have been given. Even when receiving large 
enforcement penalties, with fines sometimes reaching billions 
of dollars, megabanks often view these fines as just a cost of 
doing business. Time and again, megabanks are fined for the 
same or similar offense without major consequence. Relatedly, 
in November 2017, the Government Accountability Office 
(``GAO'') released a report that found the Federal Reserve 
needs to strengthen internal controls to more effectively 
mitigate the risks of regulatory capture and threats to 
supervisory independence across their large bank supervisory 
program.\1\ Congress should not advance a measure that 
exacerbates this issue. We believe it would be inappropriate to 
enable megabanks to circumvent longstanding, deliberative 
regulatory due processes by asking an independent office to 
repeal adverse supervisory determinations issued by the 
prudential regulators tasked with overseeing these entities.
---------------------------------------------------------------------------
    \1\See Press Release, ``Waters: GAO Report is More Evidence That 
Regulators Need to Get Tougher on Megabanks,'' (Dec. 6, 2017), 
available at: https://democrats-financialservices.house.gov/news/
documentsingle.aspx?DocumentID=401001.
---------------------------------------------------------------------------
    Furthermore, the independent review office created by this 
legislation is not responsible for the safety and soundness of 
the banking system as the prudential regulators are. For 
example, the Federal Deposit Insurance Corporation (``FDIC'') 
is charged with protecting the financial state of the Deposit 
Insurance Fund (``DIF''), but the review office's decision in 
support of a bank's appeal may result in a bank taking more 
risk, which could have a material impact on the soundness of 
the DIF.
    What's more, the nonpartisan Congressional Budget Office 
(``CBO'') estimated that the bill would increase budget 
deficits by $123 million over a ten-year window.
    Many of the concerns identified here would be largely 
mitigated if H.R. 4545 was limited to small, community 
depository institutions. Democrats unanimously supported an 
amendment to limit the bill to community financial institutions 
with less that $10 billion in assets;\2\ however, Committee 
Republicans rejected this approach, allowing megabanks like 
Wells Fargo to benefit from the bill.
---------------------------------------------------------------------------
    \2\https://financialservices.house.gov/uploadedfiles/crpt-115-
hr4545-w000187-amdt-001.pdf.
---------------------------------------------------------------------------
    For these reasons, we strongly oppose H.R. 4545.

                                   Maxine Waters.
                                   Daniel Kildee.
                                   Keith Ellison.
                                   Al Green.
                                   Nydia M. Velazquez.
                                   Stephen F. Lynch.
                                   Vicente Gonzalez.
                                   Joyce Beatty.
                                   Emanuel Cleaver.
                                   Wm. Lacy Clay.