[House Report 115-657]
[From the U.S. Government Publishing Office]


115th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {       115-657

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



 
             SMALL BANK EXAM CYCLE IMPROVEMENT ACT OF 2018

                                _______
                                

 April 26, 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

                        [To accompany H.R. 5076]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 5076) to amend the Federal Deposit Insurance Act 
to extend the examination cycle for certain insured depository 
institutions, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.
    The amendment is as follows:
  Add at the end the following:

SEC. 3. GAO STUDY AND REPORT.

   Not later than 2 years after the date of enactment of this Act, the 
Comptroller General of the United States shall submit a report to the 
Congress on the effect of extending the examination cycle for 
qualifying institutions pursuant to section 2 of this Act on the 
ability of agencies to effectively supervise and protect the safety and 
soundness of qualifying institutions.

                          Purpose and Summary

    Introduced by Representative Claudia Tenney on February 20, 
2018, H.R. 5076, the ``Small Bank Exam Cycle Improvement Act of 
2018'' amends the Federal Deposit Insurance Act (FDIA) to 
increase the qualifying asset threshold for insured depository 
institutions eligible for 18-month on-site examination cycles 
from $1 million to $3 billion.

                  Background and Need for Legislation

    Section 10(d) of the FDIA generally provides that federal 
banking agencies must conduct a full-scope, on-site examination 
of each insured depository institution at least once during 
every 12-month period. As part of the examination process, 
federal financial regulators rate financial institutions on 
several criteria, including safety and soundness\1\ and their 
compliance with legal and regulatory requirements. Regulators 
also calculate capital ratios and classify financial 
institutions according to the adequacy of their capitalization. 
If an examination reveals that an institution is not complying 
with the law or that it is undercapitalized, the regulator will 
assign the institution unsatisfactory ratings or 
classifications in the institution's examination report. The 
institution is then subject to penalties that are authorized or 
required by law, including restrictions on asset growth, 
expansion, and other activities.
---------------------------------------------------------------------------
    \1\These safety and soundness ratings are known as CAMELS ratings. 
CAMELS stand for capital adequacy, asset quality, management quality, 
earnings, liquidity, and sensitivity to market risk.
---------------------------------------------------------------------------
    Community financial institutions argue that their 
compliance costs have gone up as they attempt to keep up with 
new regulations and more intrusive examinations. New 
regulations and higher compliance costs have forced small banks 
and credit unions to cut back on the services they offer to 
their customers. As a result, local banks are increasingly 
unable to provide consumers with the products and services that 
they need and want. The higher threshold cost of compliance 
programs has also accelerated the pace of industry 
consolidation as efficiency concerns drive financial 
institutions to merge. The Federal Reserve Bank of San 
Francisco, for example, describes its process for examinations, 
``During an on-site bank exam, supervisors gather private 
information, such as details on problem loans, with which to 
evaluate a bank's financial condition and to monitor its 
compliance with laws and regulatory policies. A key product of 
such an exam is a supervisory rating of the bank's overall 
condition, commonly referred to as a CAMELS rating.''
    This rating system is used by the three federal banking 
supervisors (the Federal Reserve, the FDIC, and the OCC) and 
other financial supervisory agencies to provide a convenient 
summary of bank conditions at the time of an exam. The acronym 
``CAMEL'' refers to the five components of a bank's condition 
that are assessed: Capital adequacy, Asset quality, Management, 
Earnings, and Liquidity. A sixth component, a bank's 
Sensitivity to market risk, was added in 1997; hence the 
acronym was changed to CAMELS. Ratings are assigned for each 
component in addition to the overall rating of a bank's 
financial condition. The ratings are assigned on a scale from 1 
to 5. Banks with ratings of 1 or 2 are considered to present 
few, if any, supervisory concerns, while banks with ratings of 
3, 4, or 5 present moderate to extreme degrees of supervisory 
concern.
    However, paragraph (4) of Section 10(d) of the FDIA 
provides that certain insured depository institutions may be 
examined every 18 months. To qualify for this longer 
examination cycle:
           The institution must be found, at its most 
        recent examination, to be well managed and must earn a 
        1 (outstanding) or 2 (good) rating under the Uniform 
        Financial Institutions Rating System, commonly referred 
        to as CAMELS;
           The institution must have total assets of 
        less than $500 million;
           The institution must not be currently 
        subject to a formal enforcement proceeding; and
           The institution must not have undergone a 
        change in control during the previous 12-month period.
    Congress raised the threshold for CAMELS 1-rated 
institutions from $250 million to $500 million in 2006\2\, and 
granted agencies discretion to increase the threshold for 2-
rated institutions in 2007.\3\ In a 2007 rulemaking raising the 
2-rated threshold to $500 million, the federal banking agencies 
estimated that a total of 6,670 insured depository institutions 
qualified for the 18-month exam cycle.\4\
---------------------------------------------------------------------------
    \2\Pub. L. 109-351.
    \3\Pub. L. 109-473.
    \4\72 Fed. Reg. 11798 (Apr. 10, 2007).
---------------------------------------------------------------------------
    In the 114th Congress, H.R. 22, the FAST Act (P.L. 114-94) 
included Rep. Tipton's legislation, H.R. 1553, the Small Bank 
Exam Cycle Reform Act of 2015, which President Obama signed 
into law on December 4, 2015. H.R. 1553 increased from $500 
million to $1 billion, the total asset threshold below which an 
agency may apply an 18-month (rather than a 12-month) on-site 
examination cycle for an institution with ``outstanding'' 
composite ratings, and to raise, from not more than $100 
million to not more than $200 million, the total asset 
threshold below which an agency may apply an 18-month 
examination cycle to an institution with an ``outstanding'' or 
``good'' composite rating.
    In December 2016, the federal banking agencies issued final 
rules to implement H.R. 1553 and extend the on-site exam cycle 
for banks with up to $1 billion in assets from 12 months to 18 
months.\5\
---------------------------------------------------------------------------
    \5\https://www.federalreserve.gov/newsevents/pressreleases/files/
bcreg20161212a1.pdf
---------------------------------------------------------------------------
    H.R. 5076 would raise the asset eligibility threshold for 
smaller, well-rated financial institutions--those which pose 
little risk--to qualify for extended exam cycles from $1 
billion to $3 billion. As amended by an amendment offered by 
the Ranking Member, H.R. 5076 also requires the Government 
Accountability Office to report on the effect of extending the 
examination cycle.

                                Hearings

    The Committee on Financial Services' Subcommittee on 
Financial Institutions and Consumer Credit held a hearing 
examining matters relating to H.R. 5076 on April 6, 2017.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
March 21, 2018, and ordered H.R. 5076 to be reported favorably 
by a recorded vote of 60 yeas to 0 nays (Record vote no. FC-
168), a quorum being present. Before the motion to report was 
offered, the Committee adopted an amendment by Ms. Waters by 
voice vote.

                            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 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House as amended. The motion 
was agreed to by a recorded vote of 60 yeas to 0 nays (Record 
vote no. FC-168), 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. 5076 
will reduce regulatory burden on well managed smaller 
depository institutions by permitting a greater number of such 
institutions to be examined by federal financial regulators 
once every 18 months instead of once every 12 months.

   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, April 5, 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. 5076, the Small 
Bank Exam Cycle Improvement Act of 2018.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sarah Puro.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 5076--Small Bank Exam Cycle Improvement Act of 2018

    H.R. 5076 would amend the Federal Deposit Insurance Act to 
increase the maximum size of certain financial institutions 
that are eligible to have on-site bank examinations once every 
18 months instead of once every 12 months.
    Current information about bank assets indicates that 600 to 
700 institutions could qualify for the change in frequency of 
examinations under H.R. 5076. Using information from the 
federal banking regulators, CBO expects that bank examiners who 
now conduct examinations on-site would instead generally 
examine the affected banks remotely, as would be permitted by 
the bill. In addition, CBO expects that enacting H.R. 5076 
would not affect future costs to resolve failed financial 
institutions because federal regulators would continue to 
exercise oversight of the institutions and could impose more 
frequent examinations of any institution for which they deemed 
more oversight to be necessary. As a result, CBO estimates that 
the net budgetary effects of enacting H.R. 5076 would be 
insignificant.
    Enacting H.R. 5076 could affect direct spending by federal 
agencies that regulate financial institutions; therefore, pay-
as-you-go procedures apply. However, CBO estimates that the net 
effect on direct spending would be insignificant for each year. 
Enacting the bill would not affect revenues.
    CBO estimates that enacting H.R. 5076 would not 
significantly increase net direct spending or on-budget 
deficits in any of the four consecutive 10-year periods 
beginning in 2028.
    H.R. 5076 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Sarah Puro. The 
estimate was 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 
rulemakings: The Committee estimates that the bill requires no 
directed rulemakings within the meaning of such section.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 5076 as the ``Small Bank Exam Cycle 
Improvement Act of 2018.''

Section 2. Examination cycle

    This section amends the Federal Deposit Insurance Act to 
increase the asset threshold at which certain institutions 
qualify for an 18-month examination cycle.

         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 italics, 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 DEPOSIT INSURANCE ACT

           *       *       *       *       *       *       *


  Sec. 10. (a) The Board of Directors shall administer the 
affairs of the Corporation fairly and impartially and without 
discrimination. The Board of Directors of the Corporation shall 
determine and prescribe the manner in which its obligations 
shall be incurred and its expenses allowed and paid. The 
Corporation shall be entitled to the free use of the United 
States mails in the same manner as the executive departments of 
the Government. The Corporation with the consent of any Federal 
Reserve bank or of any board, commission, independent 
establishment, or executive department of the Government, 
including any field service thereof, may avail itself of the 
use of information, services, and facilities thereof in 
carrying out the provisions of this Act.
  (b) Examinations.--
          (1) Appointment of examiners and claims agents.--The 
        Board of Directors shall appoint examiners and claims 
        agents.
          (2) Regular examinations.--Any examiner appointed 
        under paragraph (1) shall have power, on behalf of the 
        Corporation, to examine--
                  (A) any insured State nonmember bank or 
                insured State branch of any foreign bank;
                  (B) any depository institution which files an 
                application with the Corporation to become an 
                insured depository institution; and
                  (C) any insured depository institution in 
                default,
        whenever the Board of Directors determines an 
        examination of any such depository institution is 
        necessary.
          (3) Special examination of any insured depository 
        institution.--
                  (A) In general.--In addition to the 
                examinations authorized under paragraph (2), 
                any examiner appointed under paragraph (1) 
                shall have power, on behalf of the Corporation, 
                to make any special examination of any insured 
                depository institution or nonbank financial 
                company supervised by the Board of Governors or 
                a bank holding company described in section 
                165(a) of the Financial Stability Act of 2010, 
                whenever the Board of Directors determines that 
                a special examination of any such depository 
                institution is necessary to determine the 
                condition of such depository institution for 
                insurance purposes, or of such nonbank 
                financial company supervised by the Board of 
                Governors or bank holding company described in 
                section 165(a) of the Financial Stability Act 
                of 2010, for the purpose of implementing its 
                authority to provide for orderly liquidation of 
                any such company under title II of that Act, 
                provided that such authority may not be used 
                with respect to any such company that is in a 
                generally sound condition.
                  (B) Limitation.--Before conducting a special 
                examination of a nonbank financial company 
                supervised by the Board of Governors or a bank 
                holding company described in section 165(a) of 
                the Financial Stability Act of 2010, the 
                Corporation shall review any available and 
                acceptable resolution plan that the company has 
                submitted in accordance with section 165(d) of 
                that Act, consistent with the nonbinding effect 
                of such plan, and available reports of 
                examination, and shall coordinate to the 
                maximum extent practicable with the Board of 
                Governors, in order to minimize duplicative or 
                conflicting examinations.
          (4) Examination of affiliates.--
                  (A) In general.--In making any examination 
                under paragraph (2) or (3), any examiner 
                appointed under paragraph (1) shall have power, 
                on behalf of the Corporation, to make such 
                examinations of the affairs of any affiliate of 
                any depository institution as may be necessary 
                to disclose fully--
                          (i) the relationship between such 
                        depository institution and any such 
                        affiliate; and
                          (ii) the effect of such relationship 
                        on the depository institution.
                  (B) Commitment by foreign banks to allow 
                examinations of affiliates.--No branch or 
                depository institution subsidiary of a foreign 
                bank may become an insured depository 
                institution unless such foreign bank submits a 
                written binding commitment to the Board of 
                Directors to permit any examination of any 
                affiliate of such branch or depository 
                institution subsidiary pursuant to subparagraph 
                (A) to the extent determined by the Board of 
                Directors to be necessary to carry out the 
                purposes of this Act.
          (5) Examination of insured state branches.--The Board 
        of Directors shall--
                  (A) coordinate examinations of insured State 
                branches of foreign banks with examinations 
                conducted by the Board of Governors of the 
                Federal Reserve System under section 7(c)(1) of 
                the International Banking Act of 1978; and
                  (B) to the extent possible, participate in 
                any simultaneous examination of the United 
                States operations of a foreign bank requested 
                by the Board under such section.
          (6) Power and duty of examiners.--Each examiner 
        appointed under paragraph (1) shall--
                  (A) have power to make a thorough examination 
                of any insured depository institution or 
                affiliate under paragraph (2), (3), (4), or 
                (5); and
                  (B) shall make a full and detailed report of 
                condition of any insured depository institution 
                or affiliate examined to the Corporation.
          (7) Power of claim agents.--Each claim agent 
        appointed under paragraph (1) shall have power to 
        investigate and examine all claims for insured 
        deposits.
  (c) In connection with examinations of insured depository 
institutions and any State nonmember bank, savings association, 
or other institution making application to become insured 
depository institutions, and affiliates thereof, or with other 
types of investigations to determine compliance with applicable 
law and regulations, the appropriate Federal banking agency, or 
its designated representatives, are authorized to administer 
oaths and affirmations, and to examine and and to take and 
preserve testimony under oath as to any matter in respect to 
the affairs or ownership of any such bank or institution or 
affiliate thereof, and to exercise such other powers as are set 
forth in section 8(n) of this Act.
  (d) Annual On-Site Examinations of All Insured Depository 
Institutions Required.--
          (1) In general.--The appropriate Federal banking 
        agency shall, not less than once during each 12-month 
        period, conduct a full-scope, on-site examination of 
        each insured depository institution.
          (2) Examinations by corporation.--Paragraph (1) shall 
        not apply during any 12-month period in which the 
        Corporation has conducted a full-scope, on-site 
        examination of the insured depository institution.
          (3) State examinations acceptable.--The examinations 
        required by paragraph (1) may be conducted in alternate 
        12-month periods, as appropriate, if the appropriate 
        Federal banking agency determines that an examination 
        of the insured depository institution conducted by the 
        State during the intervening 12-month period carries 
        out the purpose of this subsection.
          (4)  18-month rule for certain small institutions.--
        Paragraphs (1), (2), and (3) shall apply with ``18-
        month'' substituted for ``12-month'' if--
                  (A) the insured depository institution has 
                total assets of less than [$1,000,000,000] 
                $3,000,000,000;
                  (B) the institution is well capitalized, as 
                defined in section 38;
                  (C) when the institution was most recently 
                examined, it was found to be well managed, and 
                its composite condition--
                          (i) was found to be outstanding; or
                          (ii) was found to be outstanding or 
                        good, in the case of an insured 
                        depository institution that has total 
                        assets of not more than $200,000,000;
                  (D) the insured institution is not currently 
                subject to a formal enforcement proceeding or 
                order by the Corporation or the appropriate 
                Federal banking agency; and
                  (E) no person acquired control of the 
                institution during the 12-month period in which 
                a full-scope, on-site examination would be 
                required but for this paragraph.
          (5) Certain government-controlled institutions 
        exempted.--Paragraph (1) does not apply to--
                  (A) any institution for which the Corporation 
                is conservator; or
                  (B) any bridge depository institution, none 
                of the voting securities of which are owned by 
                a person or agency other than the Corporation.
          (6) Coordinated examinations.--To minimize the 
        disruptive effects of examinations on the operations of 
        insured depository institutions--
                  (A) each appropriate Federal banking agency 
                shall, to the extent practicable and consistent 
                with principles of safety and soundness and the 
                public interest--
                          (i) coordinate examinations to be 
                        conducted by that agency at an insured 
                        depository institution and its 
                        affiliates;
                          (ii) coordinate with the other 
                        appropriate Federal banking agencies in 
                        the conduct of such examinations;
                          (iii) work to coordinate with the 
                        appropriate State bank supervisor--
                                  (I) the conduct of all 
                                examinations made pursuant to 
                                this subsection; and
                                  (II) the number, types, and 
                                frequency of reports required 
                                to be submitted to such 
                                agencies and supervisors by 
                                insured depository 
                                institutions, and the type and 
                                amount of information required 
                                to be included in such reports; 
                                and
                          (iv) use copies of reports of 
                        examinations of insured depository 
                        institutions made by any other Federal 
                        banking agency or appropriate State 
                        bank supervisor to eliminate 
                        duplicative requests for information; 
                        and
                  (B) not later than 2 years after the date of 
                enactment of the Riegle Community Development 
                and Regulatory Improvement Act of 1994, the 
                Federal banking agencies shall jointly 
                establish and implement a system for 
                determining which one of the Federal banking 
                agencies or State bank supervisors shall be the 
                lead agency responsible for managing a unified 
                examination of each insured depository 
                institution and its affiliates, as required by 
                this subsection.
          (7) Separate examinations permitted.--Notwithstanding 
        paragraph (6), each appropriate Federal banking agency 
        may conduct a separate examination in an emergency or 
        under other exigent circumstances, or when the agency 
        believes that a violation of law may have occurred.
          (8) Report.--At the time the system provided for in 
        paragraph (6) is established, the Federal banking 
        agencies shall submit a joint report describing the 
        system to the Committee on Banking, Housing, and Urban 
        Affairs of the Senate and the Committee on Banking, 
        Finance and Urban Affairs of the House of 
        Representatives. Thereafter, the Federal banking 
        agencies shall annually submit a joint report to the 
        Committee on Banking, Housing, and Urban Affairs of the 
        Senate and the Committee on Banking, Finance and Urban 
        Affairs of the House of Representatives regarding the 
        progress of the agencies in implementing the system and 
        indicating areas in which enhancements to the system, 
        including legislature improvements, would be 
        appropriate.
          (9) Standards for determining adequacy of state 
        examinations.--The Federal Financial Institutions 
        Examination Council shall issue guidelines establishing 
        standards to be used at the discretion of the 
        appropriate Federal banking agency for purposes of 
        making a determination under paragraph (3).
          (10) Agencies authorized to increase maximum asset 
        amount of institutions for certain purposes.--At any 
        time after the end of the 2-year period beginning on 
        the date of enactment of the Riegle Community 
        Development and Regulatory Improvement Act of 1994, the 
        appropriate Federal banking agency, in the agency's 
        discretion, may increase the maximum amount limitation 
        contained in paragraph (4)(C)(ii), by regulation, from 
        $200,000,000 to an amount not to exceed 
        [$1,000,000,000] $3,000,000,000 for purposes of such 
        paragraph, if the agency determines that the greater 
        amount would be consistent with the principles of 
        safety and soundness for insured depository 
        institutions.
  (e) Examination Fees.--
          (1) Regular and special examinations of depository 
        institutions.--The cost of conducting any regular 
        examination or special examination of any depository 
        institution under subsection (b)(2), (b)(3), or (d) or 
        of any entity described in section 3(q)(2) may be 
        assessed by the Corporation against the institution or 
        entity to meet the expenses of the Corporation in 
        carrying out such examinations.
          (2) Examination of affiliates.--The cost of 
        conducting any examination of any affiliate of any 
        insured depository institution under subsection (b)(4) 
        may be assessed by the Corporation against each 
        affiliate which is examined to meet the Corporation's 
        expenses in carrying out such examination.
          (3) Assessment against depository institution in case 
        of affiliate's refusal to pay.--
                  (A) In general.--Subject to subparagraph (B), 
                if any affiliate of any insured depository 
                institution--
                          (i) refuses to pay any assessment 
                        under paragraph (2); or
                          (ii) fails to pay any such assessment 
                        before the end of the 60-day period 
                        beginning on the date the affiliate 
                        receives notice of the assessment,
                the Corporation may assess such cost against, 
                and collect such cost from, the depository 
                institution.
                  (B) Affiliate of more than 1 depository 
                institution.--If any affiliate referred to in 
                subparagraph (A) is an affiliate of more than 1 
                insured depository institution, the assessment 
                under subparagraph (A) may be assessed against 
                the depository institutions in such proportions 
                as the Corporation determines to be 
                appropriate.
          (4) Civil money penalty for affiliate's refusal to 
        cooperate.--
                  (A) Penalty imposed.--If any affiliate of any 
                insured depository institution--
                          (i) refuses to permit an examiner 
                        appointed by the Board of Directors 
                        under subsection (b)(1) to conduct an 
                        examination; or
                          (ii) refuses to provide any 
                        information required to be disclosed in 
                        the course of any examination,
                the depository institution shall forfeit and 
                pay a penalty of not more than $5,000 for each 
                day that any such refusal continues.
                  (B) Assessment and collection.--Any penalty 
                imposed under subparagraph (A) shall be 
                assessed and collected by the Corporation in 
                the manner provided in section 8(i)(2).
          (5) Deposits of examination assessment.--Amounts 
        received by the Corporation under this subsection 
        (other than paragraph (4)) may be deposited in the 
        manner provided in section 13.
  (f) Preservation of Agency Records.--
          (1) In general.--A Federal banking agency may cause 
        any and all records, papers, or documents kept by the 
        agency or in the possession or custody of the agency to 
        be--
                  (A) photographed or microphotographed or 
                otherwise reproduced upon film; or
                  (B) preserved in any electronic medium or 
                format which is capable of--
                          (i) being read or scanned by 
                        computer; and
                          (ii) being reproduced from such 
                        electronic medium or format by printing 
                        any other form of reproduction of 
                        electronically stored data.
          (2) Treatment as original records.--Any photographs, 
        microphotographs, or photographic film or copies 
        thereof described in paragraph (1)(A) or reproduction 
        of electronically stored data described in paragraph 
        (1)(B) shall be deemed to be an original record for all 
        purposes, including introduction in evidence in all 
        State and Federal courts or administrative agencies, 
        and shall be admissible to prove any act, transaction, 
        occurrence, or event therein recorded.
          (3) Authority of the federal banking agencies.--Any 
        photographs, microphotographs, or photographic film or 
        copies thereof described in paragraph (1)(A) or 
        reproduction of electronically stored data described in 
        paragraph (1)(B) shall be preserved in such manner as 
        the Federal banking agency shall prescribe, and the 
        original records, papers, or documents may be destroyed 
        or otherwise disposed of as the Federal banking agency 
        may direct.
  (g) Authority To Prescribe Regulations and Definitions.--
Except to the extent that authority under this Act is conferred 
on any of the Federal banking agencies other than the 
Corporation, the Corporation may--
          (1) prescribe regulations to carry out this Act; and
          (2) by regulation define terms as necessary to carry 
        out this Act.
  (h) Coordination of Examination Authority.--
          (1) State bank supervisors of home and host states.--
                  (A) Home state of bank.--The appropriate 
                State bank supervisor of the home State of an 
                insured State bank has authority to examine and 
                supervise the bank.
                  (B) Host state branches.--The State bank 
                supervisor of the home State of an insured 
                State bank and any State bank supervisor of an 
                appropriate host State shall exercise its 
                respective authority to supervise and examine 
                the branches of the bank in a host State in 
                accordance with the terms of any applicable 
                cooperative agreement between the home State 
                bank supervisor and the State bank supervisor 
                of the relevant host State.
                  (C) Supervisory fees.--Except as expressly 
                provided in a cooperative agreement between the 
                State bank supervisors of the home State and 
                any host State of an insured State bank, only 
                the State bank supervisor of the home State of 
                an insured State bank may levy or charge State 
                supervisory fees on the bank.
          (2) Host state examination.--
                  (A) In general.--With respect to a branch 
                operated in a host State by an out-of-State 
                insured State bank that resulted from an 
                interstate merger transaction approved under 
                section 44, or that was established in such 
                State pursuant to section 5155(g) of the 
                Revised Statutes of the United States, the 
                third undesignated paragraph of section 9 of 
                the Federal Reserve Act or section 18(d)(4) of 
                this Act, the appropriate State bank supervisor 
                of such host State may--
                          (i) with written notice to the State 
                        bank supervisor of the bank's home 
                        State and subject to the terms of any 
                        applicable cooperative agreement with 
                        the State bank supervisor of such home 
                        State, examine such branch for the 
                        purpose of determining compliance with 
                        host State laws that are applicable 
                        pursuant to section 24(j), including 
                        those that govern community 
                        reinvestment, fair lending, and 
                        consumer protection; and
                          (ii) if expressly permitted under and 
                        subject to the terms of a cooperative 
                        agreement with the State bank 
                        supervisor of the bank's home State or 
                        if such out-of-State insured State bank 
                        has been determined to be in a troubled 
                        condition by either the State bank 
                        supervisor of the bank's home State or 
                        the bank's appropriate Federal banking 
                        agency, participate in the examination 
                        of the bank by the State bank 
                        supervisor of the bank's home State to 
                        ascertain that the activities of the 
                        branch in such host State are not 
                        conducted in an unsafe or unsound 
                        manner.
                  (B) Notice of determination.--
                          (i) In general.--The State bank 
                        supervisor of the home State of an 
                        insured State bank shall notify the 
                        State bank supervisor of each host 
                        State of the bank if there has been a 
                        final determination that the bank is in 
                        a troubled condition.
                          (ii) Timing of notice.--The State 
                        bank supervisor of the home State of an 
                        insured State bank shall provide notice 
                        under clause (i) as soon as is 
                        reasonably possible, but in all cases 
                        not later than 15 business days after 
                        the date on which the State bank 
                        supervisor has made such final 
                        determination or has received written 
                        notification of such final 
                        determination.
          (3) Host state enforcement.--If the State bank 
        supervisor of a host State determines that a branch of 
        an out-of-State insured State bank is violating any law 
        of the host State that is applicable to such branch 
        pursuant to section 24(j), including a law that governs 
        community reinvestment, fair lending, or consumer 
        protection, the State bank supervisor of the host State 
        or, to the extent authorized by the law of the host 
        State, a host State law enforcement officer may, with 
        written notice to the State bank supervisor of the 
        bank's home State and subject to the terms of any 
        applicable cooperative agreement with the State bank 
        supervisor of the bank's home State, undertake such 
        enforcement actions and proceedings as would be 
        permitted under the law of the host State as if the 
        branch were a bank chartered by that host State.
          (4) Cooperative agreement.--
                  (A) In general.--The State bank supervisors 
                from 2 or more States may enter into 
                cooperative agreements to facilitate State 
                regulatory supervision of State banks, 
                including cooperative agreements relating to 
                the coordination of examinations and joint 
                participation in examinations.
                  (B) Definition.--For purposes of this 
                subsection, the term ``cooperative agreement'' 
                means a written agreement that is signed by the 
                home State bank supervisor and the host State 
                bank supervisor to facilitate State regulatory 
                supervision of State banks, and includes 
                nationwide or multi-State cooperative 
                agreements and cooperative agreements solely 
                between the home State and host State.
                  (C) Rule of construction.--Except for State 
                bank supervisors, no provision of this 
                subsection relating to such cooperative 
                agreements shall be construed as limiting in 
                any way the authority of home State and host 
                State law enforcement officers, regulatory 
                supervisors, or other officials that have not 
                signed such cooperative agreements to enforce 
                host State laws that are applicable to a branch 
                of an out-of-State insured State bank located 
                in the host State pursuant to section 24(j).
          (5) Federal regulatory authority.--No provision of 
        this subsection shall be construed as limiting in any 
        way the authority of any Federal banking agency.
          (6) State taxation authority not affected.--No 
        provision of this subsection shall be construed as 
        affecting the authority of any State or political 
        subdivision of any State to adopt, apply, or administer 
        any tax or method of taxation to any bank, bank holding 
        company, or foreign bank, or any affiliate of any bank, 
        bank holding company, or foreign bank, to the extent 
        that such tax or tax method is otherwise permissible by 
        or under the Constitution of the United States or other 
        Federal law.
          (7) Definitions.--For purpose of this section, the 
        following definitions shall apply:
                  (A) Host state, home state, out-of-State 
                bank.--The terms ``host State'', ``home 
                State'', and ``out-of-State bank'' have the 
                same meanings as in section 44(g).
                  (B) State supervisory fees.--The term ``State 
                supervisory fees'' means assessments, 
                examination fees, branch fees, license fees, 
                and all other fees that are levied or charged 
                by a State bank supervisor directly upon an 
                insured State bank or upon branches of an 
                insured State bank.
                  (C) Troubled condition.--Solely for purposes 
                of paragraph (2)(B), an insured State bank has 
                been determined to be in ``troubled condition'' 
                if the bank--
                          (i) has a composite rating, as 
                        determined in its most recent report of 
                        examination, of 4 or 5 under the 
                        Uniform Financial Institutions Ratings 
                        System;
                          (ii) is subject to a proceeding 
                        initiated by the Corporation for 
                        termination or suspension of deposit 
                        insurance; or
                          (iii) is subject to a proceeding 
                        initiated by the State bank supervisor 
                        of the bank's home State to vacate, 
                        revoke, or terminate the charter of the 
                        bank, or to liquidate the bank, or to 
                        appoint a receiver for the bank.
                  (D) Final determination.--For purposes of 
                paragraph (2)(B), the term ``final 
                determination'' means the transmittal of a 
                report of examination to the bank or 
                transmittal of official notice of proceedings 
                to the bank.
  (i) Flood Insurance Compliance by Insured Depository 
Institutions.--
          (1) Examinations.--The appropriate Federal banking 
        agency shall, during each scheduled on-site examination 
        required by this section, determine whether the insured 
        depository institution is complying with the 
        requirements of the national flood insurance program.
          (2) Report.--
                  (A) Requirement.--Not later than 1 year after 
                the date of enactment of the Riegle Community 
                Development and Regulatory Improvement Act of 
                1994 and biennially thereafter for the next 4 
                years, each appropriate Federal banking agency 
                shall submit a report to the Congress on 
                compliance by insured depository institutions 
                with the requirements of the national flood 
                insurance program.
                  (B) Contents.--Each report submitted under 
                this paragraph shall include a description of 
                the methods used to determine compliance, the 
                number of institutions examined during the 
                reporting year, a listing and total number of 
                institutions found not to be in compliance, 
                actions taken to correct incidents of 
                noncompliance, and an analysis of compliance, 
                including a discussion of any trends, patterns, 
                and problems, and recommendations regarding 
                reasonable actions to improve the efficiency of 
                the examinations processes.
  (j) Consultation Among Examiners.--
          (1) In general.--Each appropriate Federal banking 
        agency shall take such action as may be necessary to 
        ensure that examiners employed by the agency--
                  (A) consult on examination activities with 
                respect to any depository institution; and
                  (B) achieve an agreement and resolve any 
                inconsistencies in the recommendations to be 
                given to such institution as a consequence of 
                any examinations.
          (2) Examiner-in-charge.--Each appropriate Federal 
        banking agency shall consider appointing an examiner-
        in-charge with respect to a depository institution to 
        ensure consultation on examination activities among all 
        of the examiners of that agency involved in 
        examinations of the institution.
  (k) One-Year Restrictions on Federal Examiners of Financial 
Institutions.--
          (1) In general.--In addition to other applicable 
        restrictions set forth in title 18, United States Code, 
        the penalties set forth in paragraph (6) of this 
        subsection shall apply to any person who--
                  (A) was an officer or employee (including any 
                special Government employee) of a Federal 
                banking agency or a Federal reserve bank;
                  (B) served 2 or more months during the final 
                12 months of his or her employment with such 
                agency or entity as the senior examiner (or a 
                functionally equivalent position) of a 
                depository institution or depository 
                institution holding company with continuing, 
                broad responsibility for the examination (or 
                inspection) of that depository institution or 
                depository institution holding company on 
                behalf of the relevant agency or Federal 
                reserve bank; and
                  (C) within 1 year after the termination date 
                of his or her service or employment with such 
                agency or entity, knowingly accepts 
                compensation as an employee, officer, director, 
                or consultant from--
                          (i) such depository institution, any 
                        depository institution holding company 
                        that controls such depository 
                        institution, or any other company that 
                        controls such depository institution; 
                        or
                          (ii) such depository institution 
                        holding company or any depository 
                        institution that is controlled by such 
                        depository institution holding company.
          (2) Definitions.--For purposes of this subsection--
                  (A) the term ``depository institution'' 
                includes an uninsured branch or agency of a 
                foreign bank, if such branch or agency is 
                located in any State; and
                  (B) the term ``depository institution holding 
                company'' includes any foreign bank or company 
                described in section 8(a) of the International 
                Banking Act of 1978.
          (3) Rules of construction.--For purposes of this 
        subsection, a foreign bank shall be deemed to control 
        any branch or agency of the foreign bank, and a person 
        shall be deemed to act as a consultant for a depository 
        institution, depository institution holding company, or 
        other company, only if such person directly works on 
        matters for, or on behalf of, such depository 
        institution, depository institution holding company, or 
        other company.
          (4) Regulations.--
                  (A) In general.--Each Federal banking agency 
                shall prescribe rules or regulations to 
                administer and carry out this subsection, 
                including rules, regulations, or guidelines to 
                define the scope of persons referred to in 
                paragraph (1)(B).
                  (B) Consultation required.--The Federal 
                banking agencies shall consult with each other 
                for the purpose of assuring that the rules and 
                regulations issued by the agencies under 
                subparagraph (A) are, to the extent possible, 
                consistent, comparable, and practicable, taking 
                into account any differences in the supervisory 
                programs utilized by the agencies for the 
                supervision of depository institutions and 
                depository institution holding companies.
          (5) Waiver.--
                  (A) Agency authority.--A Federal banking 
                agency may grant a waiver, on a case by case 
                basis, of the restriction imposed by this 
                subsection to any officer or employee 
                (including any special Government employee) of 
                that agency, and the Board of Governors of the 
                Federal Reserve System may grant a waiver of 
                the restriction imposed by this subsection to 
                any officer or employee of a Federal reserve 
                bank, if the head of such agency certifies in 
                writing that granting the waiver would not 
                affect the integrity of the supervisory program 
                of the relevant Federal banking agency.
                  (B) Definition.--For purposes of this 
                paragraph, the head of an agency is--
                          (i) the Comptroller of the Currency, 
                        in the case of the Office of the 
                        Comptroller of the Currency;
                          (ii) the Chairman of the Board of 
                        Governors of the Federal Reserve 
                        System, in the case of the Board of 
                        Governors of the Federal Reserve 
                        System; and
                          (iii) the Chairperson of the Board of 
                        Directors, in the case of the 
                        Corporation.
          (6) Penalties.--
                  (A) In general.--In addition to any other 
                administrative, civil, or criminal remedy or 
                penalty that may otherwise apply, whenever a 
                Federal banking agency determines that a person 
                subject to paragraph (1) has become associated, 
                in the manner described in paragraph (1)(C), 
                with a depository institution, depository 
                institution holding company, or other company 
                for which such agency serves as the appropriate 
                Federal banking agency, the agency shall impose 
                upon such person one or more of the following 
                penalties:
                          (i) Industry-wide prohibition 
                        order.--The Federal banking agency 
                        shall serve a written notice or order 
                        in accordance with and subject to the 
                        provisions of section 8(e)(4) for 
                        written notices or orders under 
                        paragraph (1) or (2) of section 8(e), 
                        upon such person of the intention of 
                        the agency--
                                  (I) to remove such person 
                                from office or to prohibit such 
                                person from further 
                                participation in the conduct of 
                                the affairs of the depository 
                                institution, depository 
                                institution holding company, or 
                                other company for a period of 
                                up to 5 years; and
                                  (II) to prohibit any further 
                                participation by such person, 
                                in any manner, in the conduct 
                                of the affairs of any insured 
                                depository institution for a 
                                period of up to 5 years.
                          (ii) Civil monetary penalty.--The 
                        Federal banking agency may, in an 
                        administrative proceeding or civil 
                        action in an appropriate United States 
                        district court, impose on such person a 
                        civil monetary penalty of not more than 
                        $250,000. Any administrative proceeding 
                        under this clause shall be conducted in 
                        accordance with section 8(i). In lieu 
                        of an action by the Federal banking 
                        agency under this clause, the Attorney 
                        General of the United States may bring 
                        a civil action under this clause in the 
                        appropriate United States district 
                        court.
                  (B) Scope of prohibition order.--Any person 
                subject to an order issued under subparagraph 
                (A)(i) shall be subject to paragraphs (6) and 
                (7) of section 8(e) in the same manner and to 
                the same extent as a person subject to an order 
                issued under such section.
                  (C) Definitions.--Solely for purposes of this 
                paragraph, the ``appropriate Federal banking 
                agency'' for a company that is not a depository 
                institution or depository institution holding 
                company shall be the Federal banking agency on 
                whose behalf the person described in paragraph 
                (1) performed the functions described in 
                paragraph (1)(B).

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