[House Report 119-216]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-216
======================================================================
FAIR AUDITS AND INSPECTIONS FOR REGULATORS' EXAMS ACT
_______
July 25, 2025.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hill of Arkansas, from the Committee on Financial Services,
submitted the following
R E P O R T
MINORITY VIEWS
[To accompany H.R. 940]
The Committee on Financial Services, to whom was referred
the bill (H.R. 940) 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, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 7
Background and Need for Legislation.............................. 8
Committee Consideration.......................................... 8
Related Hearings................................................. 9
Committee Votes.................................................. 9
Committee Oversight Findings..................................... 15
Performance Goals and Objectives................................. 15
Committee Cost Estimate.......................................... 15
New Budget Authority and CBO Cost Estimate....................... 15
Unfunded Mandates Statement...................................... 15
Earmark Statement................................................ 15
Federal Advisory Committee Act Statement......................... 15
Applicability to the Legislative Branch.......................... 16
Duplication of Federal Programs.................................. 16
Section-by-Section Analysis of the Legislation................... 16
Changes in Existing Law Made by the Bill, as Reported............ 17
Minority Views................................................... 38
The amendment is as follows:
Striking all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fair Audits and Inspections for
Regulators' Exams Act'' or the ``FAIR Exams Act''.
SEC. 2. TIMELINESS OF EXAMINATIONS AND EXAMINATION REPORTS.
The Federal Financial Institutions Examination Council Act of 1978
(12 U.S.C. 3301 et seq.) is amended by adding at the end the following:
``SEC. 1012. TIMELINESS OF EXAMINATIONS AND EXAMINATION REPORTS.
``(a) Timeliness of Examinations.--A Federal financial institutions
regulatory agency shall complete any examination of a financial
institution within 270 days of commencing the examination, except that
such period may be extended by the Federal financial institutions
regulatory agency by providing written notice to the financial
institution describing with particularity the reasons that a longer
period is needed.
``(b) Final Examination Report.--A Federal financial institutions
regulatory agency shall provide a final examination report to a
financial institution not later than 90 days after the later of--
``(1) the exit interview for an examination of the
institution; or
``(2) the provision of additional material information by the
institution relating to the examination.
``(c) Exit Interview Requirement.--Within 30 days of completing an
examination, a Federal financial institutions regulatory agency shall
conduct an exit interview with the financial institution's senior
management, except that such period may be extended by the Federal
financial institutions regulatory agency by providing written notice to
the institution and the Board describing with particularity the reasons
that a longer period is needed to complete the exit interview.
``(d) 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. 3. TIMELINESS OF REQUIRED PERMISSION, REGULATORY, AND REPORTING
GUIDANCE.
The Federal Financial Institutions Examination Council Act of 1978
(12 U.S.C. 3301 et seq.), as amended by section 2, is further amended
by adding at the end the following:
``SEC. 1013. TIMELINESS OF REQUIRED PERMISSION, REGULATORY, AND
REPORTING GUIDANCE.
``(a) Request for Permission or Guidance.--With respect to an action
that a financial institution is taking or is intending to take, the
financial institution may request a written determination by the
applicable Federal financial institutions regulatory agency of--
``(1) the agency's non-objection to the financial institution
conducting a particular activity;
``(2) the agency's interpretation of a law or regulation; and
``(3) the agency's interpretation of generally accepted
accounting principles or accounting objectives, standards, and
requirements.
``(b) Contents of Request.--A request made under subsection (a) shall
be in writing and contain--
``(1) the nature of the request;
``(2) applicable facts relating to the matter;
``(3) applicable law, regulation, or generally accepted
accounting principles relating to the matter; and
``(4) a summary of the request.
``(c) Response to Request.--A Federal financial institutions
regulatory agency receiving a request under subsection (a) shall, not
later than 30 days after receiving the request--
``(1) provide the financial institution making the request
with written notification that the agency received the request
and stating whether the request contains all of the information
required under subsection (b); and
``(2) if the request does not contain all of the information
required under subsection (b), provide the financial
institution with an explanation of what information is missing.
``(d) Providing Missing Information.--If a Federal financial
institutions regulatory agency informs the financial institution under
subsection (c) that the request does not contain all the information
required under subsection (b), the financial institution may provide
the missing information to the Federal financial institutions
regulatory agency during the 30-day period beginning on the date the
financial institution receives the explanation of the missing
information under subsection (c).
``(e) Determination.--A Federal financial institutions regulatory
agency receiving a request under subsection (a) shall make a
determination on the request and provide the financial institution with
a written notice of such determination--
``(1) if the initial request contains the information
required under subsection (b), not later than the end of the
60-day period beginning on the date the Federal financial
institutions regulatory agency notifies the financial
institution of the receipt of the request under subsection (c);
or
``(2) if the initial request does not contain the information
required under subsection (b), but the financial institution
provides the missing information during the 30-day period
described under subsection (d), not later than the end of the
60-day period beginning on the date such missing information is
provided; or
``(3) if the initial request does not contain the information
required under subsection (b), and the financial institution
does not provide the missing information during the 30-day
period described under subsection (d), not later than the end
of the 60-day period beginning on the end of such 30-day
period.
``(f) Reports and Publication.--Each Federal financial institutions
regulatory agency shall, within 120 days after making a determination
under paragraph (5), publish a summary of the determination on the
public website of the Federal financial institutions regulatory agency.
Each Federal financial institutions regulatory agency shall redact any
confidential supervisory information about the financial institution,
any identifying facts about the financial institution, and any
sensitive personally identifiable information, and anonymize any un-
redacted information that could, individually or in the aggregate,
identify the financial institution.''.
SEC. 4. OFFICE OF INDEPENDENT EXAMINATION REVIEW.
(a) In General.--The Federal Financial Institutions Examination
Council Act of 1978 (12 U.S.C. 3301 et seq.), as amended by section 3,
is further amended by adding at the end the following:
``SEC. 1014. OFFICE OF INDEPENDENT EXAMINATION REVIEW.
``(a) Establishment.--There is established in the Council an Office
of Independent Examination Review (the `Office').
``(b) Board of Independent Examination Review.--
``(1) In general.--The head of the Office shall be the Board
of Independent Examination Review, which shall be comprised of
3 members, appointed by the President, by and with the advice
and consent of the Senate.
``(2) Qualifications.--The President shall appoint the 1
member of the Board from each of the following classes of
individuals:
``(A) Individuals who have been employed by a Federal
financial institutions regulatory agency.
``(B) Individuals who--
``(i) are a licensed attorney or a certified
public accountant authorized to practice under
the laws of a State, the District of Columbia,
or a territory of the United States;
``(ii) have either academic or private sector
experience;
``(iii) have relevant work-related experience
in consumer affairs or compliance with consumer
protection laws with respect to financial
institutions; and
``(iv) are not, and were not during the
previous 10-year period, employed by a Federal
banking agency, a Federal reserve bank, or the
National Credit Union Administration.
``(C) Individuals--
``(i) with at least 10 years private sector
financial services senior management-level
experience; and
``(ii) recommended by--
``(I) an insured depository
institution;
``(II) an insured credit union; or
``(III) a trade association for such
institutions or credit unions.
``(3) Prohibition on certain individuals serving as a board
member.--The President may not appoint an individual as a
member of the Board if the individual--
``(A) is, or was during the previous 2-year period,
employed by a Federal financial institutions regulatory
agency or a Federal reserve bank;
``(B) is, or was during the previous 2-year period,
employed by a financial institution; or
``(C) is reporting, or was reporting in the past 5
years, directly or indirectly to a Federal financial
institutions regulatory agency official who makes
material supervisory determinations.
``(4) Consultation.--In appointing members of the Board, the
President shall consult with the Federal financial institutions
regulatory agencies and financial institutions.
``(5) Term.--
``(A) In general.--Each member of the Board shall
serve for a term of 3 years.
``(B) Term limitation.--No individual may serve more
than 2 full terms on the Board.
``(6) Political affiliation.--Not more than 2 members of the
Board shall be members of the same political party.
``(7) Quorum.--
``(A) In general.--3 members of the Board shall
constitute a quorum.
``(B) Initial quorum.--During the 6-month period
beginning on the date of enactment of this section, 1
member of the Board shall constitute a quorum until the
Board has 3 members.
``(c) Staffing.--The Board is authorized to hire staff to support the
activities of the Office of Independent Examination Review. One-fifth
of the costs and expenses of the Office, 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.
``(d) Duties.--The Board shall--
``(1) receive and, at the discretion of the Board,
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) 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;
``(4) conduct a continuing and regular program of examination
quality assurance for all examination types conducted by the
Federal financial institutions regulatory agencies;
``(5) carry out an independent review of any supervisory
appeal initiated under section 1015; 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 (5),
including compliance with the requirements set forth in section
1013 regarding timeliness of examination reports, and the
Board's recommendations for improvements in examination
procedures, practices, and policies.
``(e) Confidentiality.--The Board and the Council shall keep
confidential--
``(1) all meetings, discussions, and information provided by
financial institutions and Federal financial institutions
regulator agencies that involve confidential supervisory
information or privileged information;
``(2) all information and communications exchanged between a
financial institution and the Office of Independent Examination
Review; and
``(3) all information and communications exchanged between a
Federal financial institutions regulator agency and the Office
of Independent Examination Review.''.
(b) Definitions.--Section 1003 of the Federal Financial Institutions
Examination Council Act of 1978 (12 U.S.C. 3302) is amended--
(1) in paragraph (2), by striking ``and'' at the end; and
(2) by adding at the end the following:
``(4) the term `Board' means the Board of Independent
Examination Review established under section 1014(b);
``(5) the term `material supervisory determination' has the
meaning given such term in section 309(c) of the Riegle
Community Development and Regulatory Improvement Act of 1994;
``(6) the term `insured depository institution' has the
meaning given that term in section 3 of the Federal Deposit
Insurance Act; and
``(7) the term `insured credit union' has the meaning given
that term in section 101 of the Federal Credit Union Act.''.
SEC. 5. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SUPERVISORY
DETERMINATIONS.
The Federal Financial Institutions Examination Council Act of 1978
(12 U.S.C. 3301 et seq.), as amended by section 4, is further amended
by adding at the end the following:
``SEC. 1015. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SUPERVISORY
DETERMINATIONS.
``(a) In General.--A financial institution shall have the right to
obtain an independent review, as described in this section, 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 Board within 60 days after
receiving the final report of examination that is the subject
of such review.
``(2) Extension.--The institution may file a written request
with the Board for an extension of the 60-day time period
described under paragraph (1), which shall state good cause for
granting the extension. Such request shall be granted in the
sole discretion of the Board.
``(3) Identification of determination.--The written notice
shall--
``(A) identify the material supervisory determination
that is the subject of the requested independent
examination review;
``(B) state the reasons why the institution believes
that the material supervisory determination is
incorrect or should otherwise be modified; and
``(C) include--
``(i) a clear and complete statement of all
relevant facts and issues;
``(ii) all arguments that the institution
wishes to present; and
``(iii) all relevant and material documents
in the possession of the institution that the
institution wishes to be considered.
``(4) Information made available to institution.--An
institution seeking an appeal of a material supervisory
determination may, not later than 7 days after receiving the
final examination report, request that the Federal financial
institutions regulatory agency that made the material
supervisory determination provide the institution with all
examination and factual information relied upon by the agency
in making the material supervisory determination. The agency
shall provide that information to the institution not later
than 14 days after receiving the request.
``(c) Determination; Right to Hearing.--
``(1) In general.--The Board shall--
``(A) determine the merits of the appeal on the
record, including whether the material supervisory
determination being appealed should be upheld,
canceled, or modified; or
``(B) at the election of the financial institution,
conduct a hearing, which shall take place not later
than 60 days after the petition for review is received
by the Board.
``(2) Right to obtain testimony.--A financial institution
electing for a hearing under paragraph (1)(B) shall have the
right the obtain testimony under oath from agency employees and
obtain documents and other evidence at the hearing, or in
advance of the hearing, according to procedures instituted by
the Board consistent with those set forth under sections 556
and 557 of title 5, United States Code.
``(3) Basis of decision.--The Board shall issue a written
decision based upon the record of the examination, supplemented
by the record established at any hearing.
``(4) Standard of review.--The Board's review of a material
supervisory determination being appealed under this subsection
shall be de novo, and the Board shall not defer to the opinions
of the examiner or agency, but shall independently determine
the appropriateness of the agency's material supervisory
determination based upon the relevant statutes, regulations,
other appropriate guidance, and the evidentiary record.
``(d) Final Decision.--A decision by the Board on an independent
review under this section shall--
``(1) be made not later than 60 days after the record has
been closed; and
``(2) be deemed 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) Right to Judicial Review.--A financial institution shall have
the right to petition for review of a Board determination made under
subsection (d) by filing a petition for review not later than 60 days
after the date on which the decision is made in the United States Court
of Appeals for the District of Columbia Circuit or the Circuit in which
the financial institution is located.
``(f) Referral of Violations.--If the Board, in carrying out this
section, determines that a financial institution has violated a law or
regulation, the Board shall refer such determination to the applicable
Federal financial institutions regulatory agency.
``(g) Annual Report.--
``(1) In general.--The Board shall 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 actions taken under
this section, including the types of issues that the Board has
reviewed and the results of those reviews, including
information on each final determination with respect to a
material supervisory determination.
``(2) Confidentiality.--In reporting under paragraph (1), the
Board shall redact information about individual financial
institutions and any confidential or privileged information
shared by financial institutions, and shall anonymize any un-
redacted information that could, in the aggregate, identify a
financial institution.
``(h) Retaliation Prohibited.--
``(1) In general.--A Federal financial institutions
regulatory agency may not--
``(A) retaliate against a financial institution,
including service providers, or any institution-
affiliated party, for exercising appellate rights under
this section; or
``(B) 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.
``(2) Retaliation.--For purposes of this subsection,
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 a financial
institution's rights under this section.
``(i) Rulemaking.--The Board shall issue rules to establish
procedures for hearings described under this section, including that--
``(1) a financial institution may appear at the hearing
personally or through counsel;
``(2) a financial institution may provide an oral and written
presentation at the hearing;
``(3) the Board may ask questions of any person participating
in the hearing;
``(4) the hearing may not involve--
``(A) a cross-examination; or
``(B) discovery;
``(5) the hearing shall not be governed by the Federal Rules
of Evidence; and
``(6) the Board shall have a verbatim transcript of the
hearing prepared.
``(j) Safety and Soundness Exception.--The appeal of a material
supervisory determination by a financial institution under this section
shall not affect the authority of a Federal financial institutions
regulatory agency to enforce the material supervisory determination or
to take an action based on such material supervisory determination, if
the Federal financial institutions regulatory agency determines that
such enforcement or action is necessary to ensure the safety and
soundness of the financial institution.''.
SEC. 6. ADDITIONAL AMENDMENTS.
(a) Regulator Appeals Process, Ombudsman, and Alternative Dispute
Resolution.--
(1) In general.--Section 309 of the Riegle Community
Development and Regulatory Improvement Act of 1994 (12 U.S.C.
4806) is amended--
(A) in the heading, by striking ``regulatory appeals
process, ombudsman,'' and inserting ``ombudsman'' (and
by conforming the item relating to such section in the
table of contents in section 1(b));
(B) by striking subsections (a), (b), and (c);
(C) by redesignating subsections (d), (e), (f), and
(g) as subsections (a), (b), (c), and (d),
respectively;
(D) in subsection (b), as so redesignated--
(i) in paragraph (2)--
(I) in subparagraph (B), by striking
``and'' at the end;
(II) in subparagraph (C), by striking
the period and inserting ``; and''; and
(III) by adding at the end the
following:
``(D) ensure that appropriate safeguards exist for
protecting any party from retaliation by any agency for
exercising rights under this subsection.''; and
(ii) by adding at the end the following:
``(6) Retaliation.--For purposes of this subsection,
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 a financial
institution's rights under this section.''; and
(E) in paragraph (1)(A) of subsection (c), as so
redesignated--
(i) in clause (ii), by striking ``; and'' and
inserting a semicolon;
(ii) in clause (iii), by striking ``; and''
and inserting a semicolon; and
(iii) by adding at the end the following:
``(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 a
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''.
(2) Effect.--Nothing in this subsection affects the authority
of an appropriate Federal banking agency or the National Credit
Union Administration Board to take enforcement or other
supervisory action.
(b) Federal Credit Union Act.--Section 205(j) of the Federal Credit
Union Act (12 U.S.C. 1785(j)) is amended by inserting ``the Bureau of
Consumer Financial Protection,'' before ``the Administration'' each
place that term appears.
(c) Federal Financial Institutions Examination Council Act.--The
Federal Financial Institutions Examination Council Act of 1978 (12
U.S.C. 3301 et seq.), as amended by sections 2 through 4 of this Act,
is further amended--
(1) in section 1003 (12 U.S.C. 3302)--
(A) by striking paragraph (1) and inserting the
following:
``(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) includes the Bureau of Consumer Financial
Protection for purposes of sections 1012 through
1015;''; and
(B) in paragraph (3), by striking the semicolon at
the end and inserting ``, except that for purposes of
sections 1012 through 1015, the term `financial
institution' does not include a credit union that is
not an insured credit union;'';
(2) in section 1004(a)(4) (12 U.S.C. 3303), by striking
``Consumer Financial Protection Bureau'' and inserting ``Bureau
of Consumer Financial Protection''; and
(3) in section 1005 (12 U.S.C. 3304)--
(A) by striking ``One-fifth'' and inserting ``One-
fourth''; and
(B) by inserting ``described under section
1003(1)(A)'' after ``agencies''.
Purpose and Summary
H.R. 940, the Fair Audits and Inspections for Regulators'
(FAIR) Exams Act, was introduced on February 4, 2025 by
Chairman French Hill (AR-02). H.R. 940 establishes an Office of
Independent Examination Review within the Federal Financial
Institutions Examination Council (FFIEC) to review material
supervisory determinations issued by the federal banking
agencies. The bill allows all financial institutions--including
community banks, rural banks, and credit unions--to appeal
supervisory findings without fear of retaliation. It requires
bank examiners to complete examinations within 60 days of the
exit interview and to share all materials used to support the
supervisory determination with the institution under review.
Background and Need for Legislation
Section 309 of the Riegle Community Development and
Regulatory Improvement Act of 1994 (Riegle Act) directed each
federal banking agency and the National Credit Union
Administration (NCUA) to create an intra-agency process for
reviewing material supervisory determinations. However, the law
provided little guidance on implementation, and in practice,
the resulting appeals processes have proven opaque,
inconsistent, and largely ineffective. Agencies narrowly define
what qualifies for appeal, and decisions overwhelmingly favor
examiners, resulting in minimal accountability.
Between 2018 and 2022, the Federal Deposit Insurance
Corporation (FDIC), Office of the Comptroller of the Currency
(OCC), and Federal Reserve received only 24 appeals combined.
Of those, just four were decided partially in favor of the
institution, according to the Government Accountability Office.
The rest were either denied or withdrawn--illustrating a
systemic failure in the current framework. This lack of
meaningful recourse undermines financial institutions' trust in
supervision, particularly among small, community-focused banks
that often lack the legal and financial resources to navigate
prolonged disputes.
H.R. 940 addresses these shortcomings by creating a truly
independent review body and ensuring timely and transparent
examination procedures. By improving fairness and reducing
examiner overreach, the bill strengthens--not weakens--
prudential supervision.
Committee Consideration
119TH CONGRESS
On February 4, 2025, Chairman Hill introduced H.R. 940, the
Fair Audits and Inspections for Regulators' (FAIR) Exams Act,
with Representatives Dan Meuser (R-PA), Ann Wagner (R-MO), Bill
Huizenga (R-MI), William Timmons (R-SC), Tim Moore (R-NC), and
Roger Williams (R-TX), as original cosponsors. Representatives
Mike Haridopolos (R-FL), Pete Sessions (R-TX), David Scott (D-
GA), and Cleo Fields (D-LA) were added subsequently as
cosponsors.
The bill was referred solely to the Committee on Financial
Services. The bill was attached to the February 5, 2025 hearing
titled ``Make Community Banking Great Again.''
On May 21, 2025, the Committee met in open session to
consider, among others, H.R. 940. The Committee favorably
reported H.R. 940, as amended to the House of Representatives.
118TH CONGRESS
On April 18, 2024, Representative Hill introduced H.R.
8071, the Fair Audits and Inspections for Regulators' Exams
Act, with Representative Scott (D-GA) as an original cosponsor.
This bill is an earlier iteration of H.R. 940. The bill was
referred solely to the Committee on Financial Services. In
addition, Senator Jerry Moran (R-KS) introduced S. 3541, a
companion bill to H.R. 8071 with Senators Joe Manchin (D-WV),
Bill Hagerty (R-TN), and Thom Tillis (R-NC) as original
cosponsors.
Related Hearings
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the following hearing was used to
develop H.R. 940:
The Full Committee held a hearing on February 5, 2025
entitled ``Make Community Banking Great Again.'' A discussion
draft version of the bill was attached to the hearing. The
following witnesses testified: Ms. Cathy Owen, Executive
Chairman, Eagle Bank & Trust Company; Ms. Susannah Marshall,
Bank Commissioner, Arkansas State Bank Department; Ms. Rebeca
Romero Rainey, President and CEO, Independent Community Bankers
of America; Mr. Patrick J. Kennedy, Jr., Founding Partner,
Kennedy Sutherland LLP; and Ms. Mitria Spotser, Vice President,
Federal Policy, Center for Responsible Lending.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include for
each record vote on a motion to report the measure or matter
and on any amendments offered to the measure or matter the
total number of votes for and against and the names of the
Members voting for and against.
On May 21, 2025, the Committee ordered H.R. 940, as
amended, to be reported favorably to the House by a recorded
vote of 35 yeas and 17 nays, a quorum being present. (Record
Vote No. FC-132).
The Committee considered the following amendments to H.R.
940:
Chairman Hill offered an amendment in the
nature of a substitute, which included several changes,
including: improving accountability around timeliness
throughout the examination process, such as extending
the deadline for final exam reports from 60 days to 90
days; restructured the Office of Independent
Examination Review to be led by a three-member board
rather than a single director and including explicit
prohibitions to avoid conflicts of interest; and
enhanced protections against retaliation, clarifying
reporting obligations to ensure that Congress remains
informed while safeguarding the confidentiality of
financial institutions. This amendment was adopted by a
voice vote.
Representative Maxine Waters (D-CA) offered
an amendment (No. 8), designated WATERS_069. This
amendment directs the Federal banking agencies to
design a strategic plan on how the agencies will
escalate matters and hold large banks accountable when
such an institution engages in a pattern of compliance
failures. This strategic plan would include an outline
of penalties and require a report to Congress. This
amendment failed by a recorded vote of 23 yeas and 29
nays, a quorum being present. (Record Vote No. FC-129).
Representative Scott offered an amendment
(No. 9), designated HR940_5. This amendment modifies
the qualifications for individuals to serve on the new
Board of Independent Examination Review, requires the
three-member Board to not have more than two members of
the same political party, and clarifies when the Board
constitutes a quorum to align with other federal
financial regulatory agencies. This amendment was
agreed to by a recorded vote of 52 yeas and 0 nays, a
quorum being present. (Record Vote No. FC-130).
Representative Waters offered an amendment
(No. 10), designated AMENDHR_940_4. This amendment
prevents any individual affiliated with the Department
of Government Efficiency (DOGE) from accessing
confidential supervisory information. This amendment
failed by a recorded vote of 23 yeas and 29 nays, a
quorum being present. (Record Vote No. FC-131).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Oversight Findings
Pursuant to clause 3(c) 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 goal of H.R. 940 is to allow all
financial institutions to appeal supervisory findings without
fear of retaliation.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 940. The
Committee has requested but not received a cost estimate from
the Director of the Congressional Budget Office. However,
pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee will adopt as its own
the cost estimate by the Director of the Congressional Budget
Office once it has been prepared.
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, a cost estimate was not made
available to the Committee in time for the filing of this
report. The Chairman of the Committee shall cause such estimate
to be printed in the Congressional Record upon its receipt by
the Committee.
Unfunded Mandates Statement
The Committee has requested but not received from the
Director of the Congressional Budget Office an estimate of the
Federal mandates pursuant to section 423 of the Unfunded
Mandates Reform Act. The Committee will adopt the estimate once
it has been prepared by the Director.
Earmark Statement
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 resolution 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.
Federal Advisory Committee Act Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to the 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 section
102(b)(3) of the Congressional Accountability Act.
Duplication of Federal Programs
Pursuant to 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 a program of
the Federal Government known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of the Public Law
111-139 or the most recent Catalog of Federal Domestic
Assistance.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section cites H.R. 940 as the ``Fair Audits and
Inspections for Regulators' Exams Act'' or the ``FAIR Exams
Act.''
Section 2. Timeliness of examinations and examination reports
This section amends the Federal Financial Institutions
Examination Council Act of 1978 by adding a provision requiring
federal financial institutions regulatory agencies to complete
any examination within 270 days of commencement, except that
the agency may extend this period by providing written notice
to the financial institution explaining the justification for
the extension. The section further mandates that the regulatory
agency conduct an exit interview with the senior management of
the financial institution within 30 days following the
completion of the examination. Additionally, the final
examination report must be delivered within 90 days of the exit
interview or the receipt of any additional information from the
institution, whichever is later. Upon the request of the
financial institution, the agency is required to include an
appendix in the final report listing all examination or other
factual information used to support any material supervisory
determination.
Section 3. Timeliness of required permission, regulatory, and reporting
guidance
This section requires federal financial institutions
regulatory agencies to respond promptly to written requests
submitted by financial institutions seeking permission,
regulatory interpretations, or accounting guidance. Agencies
are obligated to acknowledge receipt and completeness of such
requests within 30 days and to specify any missing information.
If a request is deemed complete, the agency must issue a
written determination within 60 days. Furthermore, the agencies
must publish summaries of these determinations on their public
websites within 120 days, while ensuring that any confidential
or identifying information is redacted.
Section 4. Office of Independent Examination Review
This section establishes the Office of Independent
Examination Review within the FFIEC to review material
supervisory determinations issued by federal banking agencies.
The office shall be led by a three-member Board, consisting of
individuals with expertise in federal regulation, law or
accounting, and private sector financial management. The Board
is tasked with investigating complaints related to
examinations, conducting quarterly meetings, reviewing agency
examination procedures, and performing quality assurance
reviews to ensure the integrity and fairness of examinations.
Section 5. Right to independent review of material supervisory
determinations
This section grants financial institutions the right to
request an independent review of material supervisory
determinations made in final examination reports. The financial
institution must file a written notice of appeal with the Board
within 60 days of receiving the determination, with the
possibility of an extension for good cause. The Board is
required to review the appeal on the record or, if requested by
the institution, conduct a hearing where testimony and evidence
may be presented. The Board must issue a written de novo
decision within 60 days of the record's closure. The section
also prohibits retaliation by regulators against financial
institutions exercising their appeal rights. Additionally, the
Board is required to submit an annual report to the House
Committee on Financial Services and the Senate Committee on
Banking, Housing, and Urban Affairs detailing the reviews.
Section 6. Additional amendments
This section removes outdated regulatory appeals procedures
from the Riegle Community Development and Regulatory
Improvement Act of 1994 and updates the role of the regulatory
ombudsman to include protections against regulatory
retaliation. It further amends the Federal Credit Union Act to
incorporate the Consumer Financial Protection Bureau as a
covered regulatory agency. Finally, this section updates
definitions and cost-sharing provisions within the Federal
Financial Institutions Examination Council Act to align with
current regulatory frameworks.
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):
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) includes the Bureau of Consumer Financial
Protection for purposes of sections 1012
through 1015;
(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[;], except that for purposes of sections 1012
through 1015, the term ``financial institution'' does
not include a credit union that is not an insured
credit union;
(4) the term ``Board'' means the Board of Independent
Examination Review established under section 1014(b);
(5) the term ``material supervisory determination''
has the meaning given such term in section 309(c) of
the Riegle Community Development and Regulatory
Improvement Act of 1994;
(6) the term ``insured depository institution'' has
the meaning given that term in section 3 of the Federal
Deposit Insurance Act; and
(7) the term ``insured credit union'' has the meaning
given that term in section 101 of the Federal Credit
Union Act.
establishment of the council
Sec. 1004. (a) There is established the Financial
Institutions Examination Council which shall consist of--
(1) the Comptroller of the Currency,
(2) the Chairman of the Board of Directors of the
Federal Deposit Insurance Corporation,
(3) a Governor of the Board of Governors of the
Federal Reserve System designated by the Chairman of
the Board,
(4) the Director of the [Consumer Financial
Protection Bureau] Bureau of Consumer Financial
Protection,
(5) the Chairman of the National Credit Union
Administration Board, and
(6) the Chairman of the State Liaison Committee.
(b) The members of the Council shall select the first
chairman of the Council. Thereafter the chairmanship shall
rotate among the members of the Council.
(c) The term of the Chairman of the Council shall be two
years.
(d) The members of the Council may, from time to time,
designate other officers or employees of their respective
agencies to carry out their duties on the Council.
(e) Each member of the Council shall serve without additional
compensation but shall be entitled to reasonable expenses
incurred in carrying out his official duties a such a member.
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 described under section 1003(1)(A). 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 EXAMINATIONS AND EXAMINATION REPORTS.
(a) Timeliness of Examinations.--A Federal financial
institutions regulatory agency shall complete any examination
of a financial institution within 270 days of commencing the
examination, except that such period may be extended by the
Federal financial institutions regulatory agency by providing
written notice to the financial institution describing with
particularity the reasons that a longer period is needed.
(b) Final Examination Report.--A Federal financial
institutions regulatory agency shall provide a final
examination report to a financial institution not later than 90
days after the later of--
(1) the exit interview for an examination of the
institution; or
(2) the provision of additional material information
by the institution relating to the examination.
(c) Exit Interview Requirement.--Within 30 days of completing
an examination, a Federal financial institutions regulatory
agency shall conduct an exit interview with the financial
institution's senior management, except that such period may be
extended by the Federal financial institutions regulatory
agency by providing written notice to the institution and the
Board describing with particularity the reasons that a longer
period is needed to complete the exit interview.
(d) 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. TIMELINESS OF REQUIRED PERMISSION, REGULATORY, AND REPORTING
GUIDANCE.
(a) Request for Permission or Guidance.--With respect to an
action that a financial institution is taking or is intending
to take, the financial institution may request a written
determination by the applicable Federal financial institutions
regulatory agency of--
(1) the agency's non-objection to the financial
institution conducting a particular activity;
(2) the agency's interpretation of a law or
regulation; and
(3) the agency's interpretation of generally accepted
accounting principles or accounting objectives,
standards, and requirements.
(b) Contents of Request.--A request made under subsection (a)
shall be in writing and contain--
(1) the nature of the request;
(2) applicable facts relating to the matter;
(3) applicable law, regulation, or generally accepted
accounting principles relating to the matter; and
(4) a summary of the request.
(c) Response to Request.--A Federal financial institutions
regulatory agency receiving a request under subsection (a)
shall, not later than 30 days after receiving the request--
(1) provide the financial institution making the
request with written notification that the agency
received the request and stating whether the request
contains all of the information required under
subsection (b); and
(2) if the request does not contain all of the
information required under subsection (b), provide the
financial institution with an explanation of what
information is missing.
(d) Providing Missing Information.--If a Federal financial
institutions regulatory agency informs the financial
institution under subsection (c) that the request does not
contain all the information required under subsection (b), the
financial institution may provide the missing information to
the Federal financial institutions regulatory agency during the
30-day period beginning on the date the financial institution
receives the explanation of the missing information under
subsection (c).
(e) Determination.--A Federal financial institutions
regulatory agency receiving a request under subsection (a)
shall make a determination on the request and provide the
financial institution with a written notice of such
determination--
(1) if the initial request contains the information
required under subsection (b), not later than the end
of the 60-day period beginning on the date the Federal
financial institutions regulatory agency notifies the
financial institution of the receipt of the request
under subsection (c); or
(2) if the initial request does not contain the
information required under subsection (b), but the
financial institution provides the missing information
during the 30-day period described under subsection
(d), not later than the end of the 60-day period
beginning on the date such missing information is
provided; or
(3) if the initial request does not contain the
information required under subsection (b), and the
financial institution does not provide the missing
information during the 30-day period described under
subsection (d), not later than the end of the 60-day
period beginning on the end of such 30-day period.
(f) Reports and Publication.--Each Federal financial
institutions regulatory agency shall, within 120 days after
making a determination under paragraph (5), publish a summary
of the determination on the public website of the Federal
financial institutions regulatory agency. Each Federal
financial institutions regulatory agency shall redact any
confidential supervisory information about the financial
institution, any identifying facts about the financial
institution, and any sensitive personally identifiable
information, and anonymize any un-redacted information that
could, individually or in the aggregate, identify the financial
institution.
SEC. 1014. OFFICE OF INDEPENDENT EXAMINATION REVIEW.
(a) Establishment.--There is established in the Council an
Office of Independent Examination Review (the ``Office'').
(b) Board of Independent Examination Review.--
(1) In general.--The head of the Office shall be the
Board of Independent Examination Review, which shall be
comprised of 3 members, appointed by the President, by
and with the advice and consent of the Senate.
(2) Qualifications.--The President shall appoint the
1 member of the Board from each of the following
classes of individuals:
(A) Individuals who have been employed by a
Federal financial institutions regulatory
agency.
(B) Individuals who--
(i) are a licensed attorney or a
certified public accountant authorized
to practice under the laws of a State,
the District of Columbia, or a
territory of the United States;
(ii) have either academic or private
sector experience;
(iii) have relevant work-related
experience in consumer affairs or
compliance with consumer protection
laws with respect to financial
institutions; and
(iv) are not, and were not during the
previous 10-year period, employed by a
Federal banking agency, a Federal
reserve bank, or the National Credit
Union Administration.
(C) Individuals--
(i) with at least 10 years private
sector financial services senior
management-level experience; and
(ii) recommended by--
(I) an insured depository
institution;
(II) an insured credit union;
or
(III) a trade association for
such institutions or credit
unions.
(3) Prohibition on certain individuals serving as a
board member.--The President may not appoint an
individual as a member of the Board if the individual--
(A) is, or was during the previous 2-year
period, employed by a Federal financial
institutions regulatory agency or a Federal
reserve bank;
(B) is, or was during the previous 2-year
period, employed by a financial institution; or
(C) is reporting, or was reporting in the
past 5 years, directly or indirectly to a
Federal financial institutions regulatory
agency official who makes material supervisory
determinations.
(4) Consultation.--In appointing members of the
Board, the President shall consult with the Federal
financial institutions regulatory agencies and
financial institutions.
(5) Term.--
(A) In general.--Each member of the Board
shall serve for a term of 3 years.
(B) Term limitation.--No individual may serve
more than 2 full terms on the Board.
(6) Political affiliation.--Not more than 2 members
of the Board shall be members of the same political
party.
(7) Quorum.--
(A) In general.--3 members of the Board shall
constitute a quorum.
(B) Initial quorum.--During the 6-month
period beginning on the date of enactment of
this section, 1 member of the Board shall
constitute a quorum until the Board has 3
members.
(c) Staffing.--The Board is authorized to hire staff to
support the activities of the Office of Independent Examination
Review. One-fifth of the costs and expenses of the Office,
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.
(d) Duties.--The Board shall--
(1) receive and, at the discretion of the Board,
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) 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;
(4) conduct a continuing and regular program of
examination quality assurance for all examination types
conducted by the Federal financial institutions
regulatory agencies;
(5) carry out an independent review of any
supervisory appeal initiated under section 1015; 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 (5), including compliance with the
requirements set forth in section 1013 regarding
timeliness of examination reports, and the Board's
recommendations for improvements in examination
procedures, practices, and policies.
(e) Confidentiality.--The Board and the Council shall keep
confidential--
(1) all meetings, discussions, and information
provided by financial institutions and Federal
financial institutions regulator agencies that involve
confidential supervisory information or privileged
information;
(2) all information and communications exchanged
between a financial institution and the Office of
Independent Examination Review; and
(3) all information and communications exchanged
between a Federal financial institutions regulator
agency and the Office of Independent Examination
Review.
SEC. 1015. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SUPERVISORY
DETERMINATIONS.
(a) In General.--A financial institution shall have the right
to obtain an independent review, as described in this section,
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 Board
within 60 days after receiving the final report of
examination that is the subject of such review.
(2) Extension.--The institution may file a written
request with the Board for an extension of the 60-day
time period described under paragraph (1), which shall
state good cause for granting the extension. Such
request shall be granted in the sole discretion of the
Board.
(3) Identification of determination.--The written
notice shall--
(A) identify the material supervisory
determination that is the subject of the
requested independent examination review;
(B) state the reasons why the institution
believes that the material supervisory
determination is incorrect or should otherwise
be modified; and
(C) include--
(i) a clear and complete statement of
all relevant facts and issues;
(ii) all arguments that the
institution wishes to present; and
(iii) all relevant and material
documents in the possession of the
institution that the institution wishes
to be considered.
(4) Information made available to institution.--An
institution seeking an appeal of a material supervisory
determination may, not later than 7 days after
receiving the final examination report, request that
the Federal financial institutions regulatory agency
that made the material supervisory determination
provide the institution with all examination and
factual information relied upon by the agency in making
the material supervisory determination. The agency
shall provide that information to the institution not
later than 14 days after receiving the request.
(c) Determination; Right to Hearing.--
(1) In general.--The Board shall--
(A) determine the merits of the appeal on the
record, including whether the material
supervisory determination being appealed should
be upheld, canceled, or modified; or
(B) at the election of the financial
institution, conduct a hearing, which shall
take place not later than 60 days after the
petition for review is received by the Board.
(2) Right to obtain testimony.--A financial
institution electing for a hearing under paragraph
(1)(B) shall have the right the obtain testimony under
oath from agency employees and obtain documents and
other evidence at the hearing, or in advance of the
hearing, according to procedures instituted by the
Board consistent with those set forth under sections
556 and 557 of title 5, United States Code.
(3) Basis of decision.--The Board shall issue a
written decision based upon the record of the
examination, supplemented by the record established at
any hearing.
(4) Standard of review.--The Board's review of a
material supervisory determination being appealed under
this subsection shall be de novo, and the Board shall
not defer to the opinions of the examiner or agency,
but shall independently determine the appropriateness
of the agency's material supervisory determination
based upon the relevant statutes, regulations, other
appropriate guidance, and the evidentiary record.
(d) Final Decision.--A decision by the Board on an
independent review under this section shall--
(1) be made not later than 60 days after the record
has been closed; and
(2) be deemed 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) Right to Judicial Review.--A financial institution shall
have the right to petition for review of a Board determination
made under subsection (d) by filing a petition for review not
later than 60 days after the date on which the decision is made
in the United States Court of Appeals for the District of
Columbia Circuit or the Circuit in which the financial
institution is located.
(f) Referral of Violations.--If the Board, in carrying out
this section, determines that a financial institution has
violated a law or regulation, the Board shall refer such
determination to the applicable Federal financial institutions
regulatory agency.
(g) Annual Report.--
(1) In general.--The Board shall 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 actions
taken under this section, including the types of issues
that the Board has reviewed and the results of those
reviews, including information on each final
determination with respect to a material supervisory
determination.
(2) Confidentiality.--In reporting under paragraph
(1), the Board shall redact information about
individual financial institutions and any confidential
or privileged information shared by financial
institutions, and shall anonymize any un-redacted
information that could, in the aggregate, identify a
financial institution.
(h) Retaliation Prohibited.--
(1) In general.--A Federal financial institutions
regulatory agency may not--
(A) retaliate against a financial
institution, including service providers, or
any institution-affiliated party, for
exercising appellate rights under this section;
or
(B) 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.
(2) Retaliation.--For purposes of this subsection,
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 a financial institution's
rights under this section.
(i) Rulemaking.--The Board shall issue rules to establish
procedures for hearings described under this section, including
that--
(1) a financial institution may appear at the hearing
personally or through counsel;
(2) a financial institution may provide an oral and
written presentation at the hearing;
(3) the Board may ask questions of any person
participating in the hearing;
(4) the hearing may not involve--
(A) a cross-examination; or
(B) discovery;
(5) the hearing shall not be governed by the Federal
Rules of Evidence; and
(6) the Board shall have a verbatim transcript of the
hearing prepared.
(j) Safety and Soundness Exception.--The appeal of a material
supervisory determination by a financial institution under this
section shall not affect the authority of a Federal financial
institutions regulatory agency to enforce the material
supervisory determination or to take an action based on such
material supervisory determination, if the Federal financial
institutions regulatory agency determines that such enforcement
or action is necessary to ensure the safety and soundness of
the financial institution.
----------
RIEGLE COMMUNITY DEVELOPMENT AND REGULATORY IMPROVEMENT ACT OF 1994
SECTION 1. SHORT TITLE; TABLE OF CONTENTS
(a) Short Title.--This Act may be cited as the ``Riegle
Community Development and Regulatory Improvement Act of 1994''.
(b) Table of Contents.--The table of contents for this Act is
as follows:
Sec. 1. Short title; table of contents.
* * * * * * *
TITLE III--PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT
Sec. 301. Incorporated definitions.
* * * * * * *
Sec. 309. [Regulatory appeals process, ombudsman,] Ombudsman and
alternative dispute resolution.
* * * * * * *
TITLE III--PAPERWORK REDUCTION AND REGULATORY IMPROVEMENT
* * * * * * *
SEC. 309. [REGULATORY APPEALS PROCESS, OMBUDSMAN,] 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
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.
[(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)] (a) 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)] (b) 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 any party from retaliation by
any agency for exercising 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.
(6) Retaliation.--For purposes of this subsection,
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 a financial institution's
rights under this section.
[(f)] (c) 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 a
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)] (d) 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.
(4) Exceptions.--
(A) Certain older offenses.--
(i) In general.--With respect to an
individual, paragraph (1) shall not
apply to an offense if--
(I) it has been 7 years or
more since the offense
occurred; or
(II) the individual was
incarcerated with respect to
the offense and it has been 5
years or more since the
individual was released from
incarceration.
(ii) Offenses committed by
individuals 21 or younger.--For
individuals who committed an offense
when they were 21 years of age or
younger, paragraph (1) shall not apply
to the offense if it has been more than
30 months since the sentencing
occurred.
(iii) Limitation.--This subparagraph
shall not apply to an offense described
under paragraph (1)(B).
(B) Expungement and sealing.--With respect to
an individual, paragraph (1) shall not apply to
an offense if--
(i) there is an order of expungement,
sealing, or dismissal that has been
issued in regard to the conviction in
connection with such offense; and
(ii) it is intended by the language
in the order itself, or in the
legislative provisions under which the
order was issued, that the conviction
shall be destroyed or sealed from the
individual's State, Tribal, or Federal
record, even if exceptions allow the
record to be considered for certain
character and fitness evaluation
purposes.
(C) De minimis exemption.--
(i) In general.--Paragraph (1) shall
not apply to such de minimis offenses
as the Board determines, by rule.
(ii) Confinement criteria.--In
issuing rules under clause (i), the
Board shall include a requirement that
the offense was punishable by a term of
three years or less confined in a
correctional facility, where such
confinement--
(I) is calculated based on
the time an individual spent
incarcerated as a punishment or
a sanction, not as pretrial
detention; and
(II) does not include
probation or parole where an
individual was restricted to a
particular jurisdiction or was
required to report occasionally
to an individual or a specific
location.
(iii) Bad check criteria.--In setting
the criteria for de minimis offenses
under clause (i), if the Board
establishes criteria with respect to
insufficient funds checks, the Board
shall require that the aggregate total
face value of all insufficient funds
checks across all convictions or
program entries related to insufficient
funds checks is $2,000 or less.
(iv) Designated lesser offenses.--
Paragraph (1) shall not apply to
certain lesser offenses (including the
use of a fake ID, shoplifting,
trespass, fare evasion, driving with an
expired license or tag, and such other
low-risk offenses as the Board may
designate) if 1 year or more has passed
since the applicable conviction or
program entry.
(5) Consent applications.--
(A) In general.--The Board shall accept
consent applications from an individual and
from an insured credit union on behalf of an
individual that are filed separately or
contemporaneously with a regional office of the
Board.
(B) Sponsored applications filed with
regional offices.--Consent applications filed
at a regional office of the Board by an insured
credit union on behalf of an individual--
(i) shall be reviewed by such office;
(ii) may be approved or denied by
such office, if such authority has been
delegated to such office by the Board;
and
(iii) may only be denied by such
office if the general counsel of the
Board (or a designee) certifies that
the denial is consistent with this
section.
(C) Individual applications filed with
regional offices.--Consent applications filed
at a regional office by an individual--
(i) shall be reviewed by such office;
and
(ii) may be approved or denied by
such office, if such authority has been
delegated to such office by the Board,
except with respect to--
(I) cases involving an
offense described under
paragraph (1)(B); and
(II) such other high-level
security cases as may be
designated by the Board.
(D) National office review.--The national
office of the Board shall--
(i) review any consent application
with respect to which a regional office
is not authorized to approve or deny
the application; and
(ii) review any consent application
that is denied by a regional office, if
the individual requests a review by the
national office.
(E) Forms and instructions.--
(i) Availability.--The Board shall
make all forms and instructions related
to consent applications available to
the public, including on the website of
the Board.
(ii) Contents.--The forms and
instructions described under clause (i)
shall provide a sample cover letter and
a comprehensive list of items that may
accompany the application, including
clear guidance on evidence that may
support a finding of rehabilitation.
(F) Consideration of criminal history.--
(i) Regional office consideration.--
In reviewing a consent application, a
regional office shall--
(I) primarily rely on the
criminal history record of the
Federal Bureau of
Investigation; and
(II) provide such record to
the applicant to review for
accuracy.
(ii) Certified copies.--The Board may
not require an applicant to provide
certified copies of criminal history
records unless the Board determines
that there is a clear and compelling
justification to require additional
information to verify the accuracy of
the criminal history record of the
Federal Bureau of Investigation.
(G) Consideration of rehabilitation.--
Consistent with title VII of the Civil Rights
Act of 1964 (42 U.S.C. 2000e et seq.), the
Board shall--
(i) conduct an individualized
assessment when evaluating consent
applications that takes into account
evidence of rehabilitation, the
applicant's age at the time of the
conviction or program entry, the time
that has elapsed since conviction or
program entry, and the relationship of
individual's offense to the
responsibilities of the applicable
position;
(ii) consider the individual's
employment history, letters of
recommendation, certificates
documenting participation in substance
abuse programs, successful
participating in job preparation and
educational programs, and other
relevant mitigating evidence; and
(iii) consider any additional
information the Board determines
necessary for safety and soundness.
(H) Scope of employment.--With respect to an
approved consent application filed by an
insured credit union on behalf of an
individual, if the Board determines it
appropriate, such approved consent application
shall allow the individual to work for the same
employer (without restrictions on the location)
and across positions, except that the prior
consent of the Board (which may require a new
application) shall be required for any proposed
significant changes in the individual's
security-related duties or responsibilities,
such as promotion to an officer or other
positions that the employer determines will
require higher security screening credentials.
(I) Coordination with fdic.--In carrying out
this subsection, the Board shall consult and
coordinate with the Federal Deposit Insurance
Corporation as needed to promote consistent
implementation where appropriate.
(6) Definitions.--In this subsection:
(A) Consent application.--The term ``consent
application'' means an application filed with
Board by an individual (or by an insured credit
union on behalf of an individual) seeking the
written consent of the Board under paragraph
(1)(A).
(B) Criminal offense involving dishonesty.--
The term ``criminal offense involving
dishonesty''--
(i) means an offense under which an
individual, directly or indirectly--
(I) cheats or defrauds; or
(II) wrongfully takes
property belonging to another
in violation of a criminal
statute;
(ii) includes an offense that
Federal, State, or local law defines as
dishonest, or for which dishonesty is
an element of the offense; and
(iii) does not include--
(I) a misdemeanor criminal
offense committed more than one
year before the date on which
an individual files a consent
application, excluding any
period of incarceration; or
(II) an offense involving the
possession of controlled
substances.
(C) Pretrial diversion or similar program.--
The term ``pretrial diversion or similar
program'' means a program characterized by a
suspension or eventual dismissal or reversal of
charges or criminal prosecution upon agreement
by the accused to restitution, drug or alcohol
rehabilitation, anger management, or community
service.
(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
This bill would impose certain timelines for examiners from
the Federal Reserve, Federal Deposit Insurance Corporation
(FDIC), Office of the Comptroller of the Currency (OCC),
National Credit Union Administration (NCUA), and Consumer
Financial Protection Bureau (CFPB) to share exam reports, as
well as all supporting documentation, with a financial
institution they supervise following an exam. This bill would
also establish an Office of Independent Examination Review
(OIER) within the Federal Financial Institutions Examination
Council (FFIEC) to review appeals of material supervisory
determinations (MSD) issued by these Federal agencies for
financial institutions they supervise, including the largest
banks and large nonbank financial companies (e.g. big tech
payment providers, nonbank mortgage companies, credit bureaus,
etc.), which would further be subject to judicial review.
The Fed, FDIC, OCC, NCUA, and CFPB would be required to
defer to OIER rulings even though this office has no mandate to
ensure the safety and soundness of depository intuitions,
consumer protection, or financial stability. Moreover, the bill
would allow not just small community banks and credit unions,
but also the largest banks and other financial institutions, to
challenge any MSD a regulator may give, which could interfere
with ensuring the institution promptly addresses compliance
problems that could become bigger safety and soundness or
consumer protection problems if not promptly addressed.
For example, consider the multiple supervisory warnings
Silicon Valley Bank received in the lead up to their failure in
2023. GAO and other experts said the problem was not due
process, but rather, that supervisory concerns were not
elevated quickly enough to ensure they were addressed.\1\ The
Committee found similar dynamics at Wells Fargo, as the bank
received various citations that snowballed into significant and
repeated consumer harm.\2\ Accordingly, this bill would weaken
the supervisory framework and undermine consumer protection as
well as the safety and soundness of depository institutions.
---------------------------------------------------------------------------
\1\Id. Also see GAO, Bank Supervision: More Timely Escalation of
Supervisory Action Needed (Mar. 6, 2024).
\2\FSC, Waters Releases Staff Report on Pattern of Consumer Abuse
from Wells Fargo (Sep. 29, 2017); and FSC, In Advance of Wells Fargo
Hearings, Waters and Green Release Investigative Report Exposing
Failures of Megabank's Management, Board, and Regulators (Mar. 4,
2020).
---------------------------------------------------------------------------
Consumer groups including Americans for Financial Reform
(AFR) and Public Citizen oppose the bill. In a statement
opposing a similar measure in 2018, AFR explained: ``This new
appeals process is an addition to formal appeals processes and
ombudsmen already present at the banking agencies. The agencies
affected by this legislation--including the CFPB, FDIC, OCC,
Federal Reserve, and National Credit Union Administration--each
already have an agency ombudsman and an intra-agency formal
review and appeals process. In addition, banks are already free
to bring a court challenge to any formal regulatory enforcement
action. By layering an entirely new appeals process on top of
existing processes, this bill would greatly increase the
ability of banks to resist supervisory oversight and ignore or
delay changes called for by supervisors. The impact would be
most pronounced at the largest banks, which can receive dozens
or hundreds of material findings from every examination. The
ability to appeal every one of those material supervisory
findings, or just to threaten to appeal them, would create an
enormous new barrier to effective supervision of big
banks.''\3\ (emphasis added)
---------------------------------------------------------------------------
\3\AFR, Statement on H.R. 4545, the ``Financial Institutions
Examination Fairness and Reform Act,'' (Mar. 12, 2018).
---------------------------------------------------------------------------
The Committee previously passed a bill last Congress, H.R.
8337 (118th), the ``Bank Resilience and Regulatory Improvement
Act,'' that included similar provisions, by a 24-22 party-line
vote.\4\ Before that, in 2018, the Committee considered another
similar bill, H.R. 1515 (115th Cong.), which passed the House
though did not advance further in the Senate.\5\
---------------------------------------------------------------------------
\4\FSC, Markup of H.R. 758, H.R. 3161, H.R. 8337, H.R. 8338, H.R.
8339, H.R. 4551, H.J. Res. 100, H.R. 8302. H.R. 3507, H.R. 7480, H.R.
8340 (May 16, 2024).
\5\H.R. 4545 (115th Cong.), the ``Financial Institutions
Examination Fairness and Reform Act'' (Tipton).
---------------------------------------------------------------------------
During the debate, several amendments were considered.
Ranking Member Maxine Waters (D-CA) offered an amendment that
would require Federal banking regulators to develop a strategic
plan on how they will escalate supervisory matters to promptly
address compliance deficiencies concerns. This would help
ensure we don't have a repeat of Silicon Valley Bank, when
matters were not escalated fast enough. Ranking Member Waters
offered another amendment, in light of DOGE recently visiting
FDIC and the Federal Reserve Bank of Kansas City, to prohibit
DOGE employees from accessing confidential bank held by Federal
regulators, including bank exam files. These amendments were
rejected by Republicans.
Rep. David Scott (D-GA) offered an amendment that attempts
to ensure that there is consumer protection expertise on the
appeals oversight board to review appeals that banks may have
on supervisory outcomes. This amendment would also prevent more
than two members of the board from being part of the same
political party. These changes, which were adopted by the
Committee, make some modest improvements to the underlying
bill, though as Ranking Member Waters discussed, there would
need to be further modifications to ensure they cannot be
gamed, as President Trump is doing now, for example by firing
individuals from a different political party serving on a
bipartisan Federal board. Moreover, these changes do not fix
many of the underlying concerns that the bill will have to make
it harder to hold the biggest banks accountable for their
actions and delay remediation for harmed consumers.
For these reasons, we oppose H.R. 940.
Sincerely,
Maxine Waters,
Ranking Member.
Nydia M. Velazquez,
Stephen F. Lynch,
Al Green,
Emanuel Cleaver, II,
Joyce Beatty,
Rashida Tlaib,
Sylvia R. Garcia,
Nikema Williams,
Members of Congress.
[all]