[Federal Register Volume 69, Number 53 (Thursday, March 18, 2004)]
[Notices]
[Pages 12855-12862]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6112]


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FEDERAL DEPOSIT INSURANCE CORPORATION


Intra-Agency Appeal Process: Guidelines for Appeals of Material 
Supervisory Determinations and Guidelines for Appeals of Deposit 
Insurance Assessment Determinations

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice and request for comment.

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SUMMARY: The Federal Deposit Insurance Corporation (``FDIC'') proposes 
to revise its Guidelines for Appeals of Material Supervisory 
Determinations; these revisions are intended to enhance the Supervision 
Appeals Review Committee (``SARC'') process by reconstituting the SARC 
and modifying the procedures for appeals to the SARC. The FDIC also 
proposes to issue Guidelines for Appeals of Deposit Insurance 
Assessment Determinations, which will reconstitute the Assessment 
Appeals Committee (``AAC''), and will also set forth procedures for 
pursuing appeals to the AAC. These changes are intended to benefit 
insured institutions seeking review of material supervisory 
determinations and assessment determinations.

DATES: Comments must be submitted on or before April 19, 2004.

ADDRESSES: Interested parties are invited to submit written comments to 
the FDIC by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
     Agency Web site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow the instructions for 
submitting comments on the FDIC Web site.
     E-mail: [email protected]. Include ``SARC/AAC 
Guidelines'' in the subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, 
Attention: Comments/Legal

[[Page 12856]]

ESS, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
     Hand Delivery/Courier: Comments may be hand-
delivered to the guard station located at the rear of the FDIC's 17th 
Street building (accessible from F Street) on business days between 7 
a.m. and 5 p.m.
    Instructions: All submissions received must include the agency name 
and use the title ``SARC/AAC Guidelines''. The FDIC may post comments 
on its Internet site at: http://www.fdic.gov/regulations/laws/federal/propose.html.
    Docket: For access to the docket to read background documents or 
comments received, go to the FDIC Public Information Center, Room 100, 
801 17th Street, NW., Washington, DC, between 9 a.m. and 4:30 p.m. on 
business days.

FOR FURTHER INFORMATION CONCERNING THE SARC GUIDELINES CONTACT: Lisa K. 
Roy, Associate Director, Division of Supervision and Consumer 
Protection, (202) 898-3764; Christopher Bellotto, Counsel, Legal 
Division, (202) 898-3801, Federal Deposit Insurance Corporation, 550 
17th St., NW., Washington, DC 20429.

FOR FURTHER INFORMATION CONCERNING THE AAC GUIDELINES CONTACT: William 
V. Farrell, Chief, Assessment Management Section, Division of Finance, 
(202) 416-7156; Diane Ellis, Associate Director, Division of Insurance 
and Research, (202) 898-8978; Lisa K. Roy, Associate Director, Division 
of Supervision and Consumer Protection, (202) 898-3764; Christopher 
Bellotto, Counsel, (202) 898-3801, Legal Division, Federal Deposit 
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION: The FDIC is publishing for notice and 
comment proposed revisions to the Guidelines for Appeals of Material 
Supervisory Determinations as well as proposed Guidelines for Appeals 
of Deposit Insurance Assessment Determinations. The FDIC considers it 
desirable in this instance to garner comments regarding these 
guidelines, although notice and comment rulemaking may not be employed 
in making future amendments.
    The proposed revised Guidelines for Appeals of Material Supervisory 
Determinations would be effective upon adoption and would supersede the 
FDIC's current Guidelines for Appeals of Material Supervisory 
Determinations that were adopted by the FDIC's Board of Directors on 
March 21, 1995. The proposed guidelines would incorporate changes to 
the composition of the SARC, reducing it from five to three voting 
members, and would make changes to the existing procedures governing 
SARC appeals. These amendments include new rules under which the FDIC's 
Division of Supervision and Consumer Protection (``DSC'') would issue 
written decisions if it denies requests for review of material 
supervisory determinations; if dissatisfied with the division's 
determination, institutions would decide for themselves whether to 
appeal to the SARC; and SARC decisions would be published, with exempt 
material redacted. The types of determinations that are eligible for 
review by the SARC and the standards by which such appeals are decided 
would remain unchanged.
    The AAC provides for FDIC appellate review of assessment payment 
computation and assessment risk classification determinations. The 
proposed Guidelines for Appeals of Deposit Insurance Assessment 
Determinations will change the composition of the AAC, reducing it from 
seven to five voting members, and will set forth procedures to be 
followed by insured depository institutions that choose to appeal 
adverse assessment determinations they have received from the 
appropriate FDIC division. As with the SARC, AAC decisions would be 
published, with exempt material redacted. The types of determinations 
that are eligible for review by the AAC and the standards by which such 
appeals are decided would remain unchanged.
    The FDIC has sought to conform the SARC and AAC structures and 
procedures to the extent appropriate, making both processes easier for 
institutions to navigate and the FDIC to administer.

I. Proposed Revised Guidelines for Appeals of Material Supervisory 
Determinations

    Section 309(a) of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (Public Law 103-325, 108 Stat. 2160) (``Riegle 
Act'') required the FDIC (as well as the other Federal banking agencies 
and the National Credit Union Administration Board) to establish an 
independent intra-agency appellate process to review material 
supervisory determinations. On March 21, 1995, the FDIC's Board of 
Directors adopted Guidelines for Appeals of Material Supervisory 
Determinations, which established and set forth procedures governing 
the SARC, whose purpose was to consider and decide appeals of material 
supervisory determinations as required by the Riegle Act.

A. Membership

    As set forth in the original guidelines, the SARC consisted of the 
FDIC Vice Chairperson (as chair of the SARC), the Director of the 
Division of Supervision (``DOS''), the Director of the Division of 
Compliance and Consumer Affairs (``DCA''), the Ombudsman, and the 
General Counsel (or their designees).
    The SARC guidelines were amended to add the Director of the 
Division of Insurance (now the Director of the Division of Insurance 
and Research (``DIR'')) as a voting SARC member, to provide formally 
that the Directors of DOS and DCA (now the DSC Director) would not vote 
on cases brought before the SARC by their respective (now consolidated) 
divisions, to provide that designees would be limited to the most 
senior members of a SARC member's staff, and to include Truth-in-
Lending (Regulation Z) restitution. In addition, the SARC was expressly 
authorized to consider appeals of denied filings as set forth in 12 CFR 
303.11(f) for which a Request for Reconsideration has been granted, 
other than denials of a change in bank control, change in senior 
executive officer or board of directors, or denial of an application 
pursuant to section 19 of the Federal Deposit Insurance Act (``FDI 
Act'') (which are contained in 12 CFR 308, subparts D, L, and M, 
respectively), if the filing was originally denied by the Director, 
Deputy Director or Associate Director of DSC.
    While the current guidelines satisfy the Riegle Act's requirement 
to establish an independent appellate process for the review of 
material supervisory determinations, the proposed changes, based on 
eight years' experience since approval of the original 1995 guidelines, 
should serve to facilitate the disposition of SARC appeals and further 
underscore the perception of the SARC as a fair and independent high-
level body for review of material supervisory determinations within the 
FDIC.
    The FDIC is proposing to modify its guidelines and change the 
composition of the SARC so that division directors and the Ombudsman no 
longer serve on the SARC, and new SARC members are drawn from the most 
senior levels of the Corporation. The Director of the DSC, who is 
responsible for the operations of two former divisions (DOS and DCA) 
and who represents the division that made the material supervisory 
determination under review, the Director of DIR, as well as the 
Ombudsman, would no longer be SARC members. As revised, the SARC 
membership would consist of three (3) voting members: (1) One FDIC 
Board

[[Page 12857]]

member, either the Chairperson, the Vice Chairperson, or the Director 
(Appointive), as designated by the FDIC Chairperson (this person would 
serve as the Chairperson of the SARC); (2) and (3) one deputy to each 
of the FDIC Board members who are not designated as the SARC 
Chairperson. The General Counsel would be the fourth, and non-voting, 
member of the SARC. The FDIC Chairperson would designate alternate 
member(s) to the SARC if vacancies occur so long as the alternate 
member was not directly or indirectly involved in making or affirming 
the material supervisory determination under review. In addition, a 
member of the SARC could designate and authorize the most senior member 
of his or her staff--within the substantive area--to act on his or her 
behalf in SARC matters.
    The DSC Director would retain the delegated authority formerly 
granted, respectively to the DOS and DCA Directors under the current 
SARC guidelines, to grant requests for review of material supervisory 
determinations in favor of banks dissatisfied with a decision made by 
their respective divisions.
    The current guidelines preclude the Ombudsman from considering the 
merits of any material supervisory determination for which an appeal 
had been initiated or a final decision made by the SARC, other than in 
the Ombudsman's role as a SARC member. Under the proposed guidelines, 
the subject matter of a material supervisory determination that has 
been appealed to the SARC or that has been resolved in a final SARC 
decision is similarly ineligible for consideration by the Ombudsman. 
Any other problems, however, that an institution may have in dealing 
with the FDIC are eligible for consideration by the Ombudsman.

B. Appeal

    Under the current SARC guidelines, if the Director of DSC 
determines not to grant a request for review of a material supervisory 
determination, no written determination is issued. Instead, the 
Director must forward that request directly to the SARC for its 
appellate determination. In this sense, the institution's request for 
review is also its appeal to the SARC, if the DSC Director does not 
grant the request. This process of automatic appeal to the SARC differs 
from the AAC process, under which an institution must file an appeal to 
the AAC if it wishes to obtain further review of a determination 
received at the division level.
    Under the proposed SARC guidelines, an automatic appeal to the SARC 
is eliminated. Instead, institutions that wish to obtain SARC review of 
material supervisory determinations would be required to file an 
appeal--within 30 calendar days from the date of the division 
director's written determination--to the SARC. The FDIC believes that 
this procedural change will benefit both institutions seeking review of 
material supervisory determinations and the FDIC. Unlike the present 
process, institutions would receive a written determination issued by 
DSC within 30 days, setting forth the reasons for the division's 
denial. Based on DSC's determination, institutions could then decide 
for themselves whether to appeal to the SARC. Institutions may, for 
example, decide that the issue presented is not one that merits 
expending the time or effort of seeking a SARC determination. The SARC 
could also benefit from a diminished caseload since not every 
institution that receives a denial at the division level may choose to 
file a SARC appeal. Finally, the appeal requirement for SARC will bring 
that process closer in line with the AAC process, making both easier 
for institutions to navigate and the FDIC to administer.
    An appeal to the SARC would be considered filed if received by the 
FDIC within 30 calendar days from the date of the determination being 
appealed or if placed in the United States mail within 30 calendar days 
from the date of that determination. Institutions would include their 
name and address, the name and address of any representative, a copy of 
the determination being appealed, and all of the reasons, factual or 
legal, why the institution disagrees with the DSC Director's 
determination. FDIC staff would analyze the filing for the SARC. Any 
FDIC staff analysis would be considered part of the intra-agency 
deliberative process and would not be disclosed to insured 
institutions. The decision of the SARC would be provided to the 
institution and would set forth the rationale for the agency's 
determination.
    The original SARC guidelines permitted the institution to request 
an appearance before the SARC to present evidence or otherwise support 
its position, which the SARC may allow in its discretion. Under the 
proposed guidelines, the SARC would have the discretion, whether or not 
a request is made, to determine to allow an oral presentation. If an 
institution wishes to make an oral presentation, it should include in 
its appeal a statement to that effect. Oral presentations would 
generally be granted only if the SARC determines in its discretion that 
the oral presentation would be helpful or would otherwise be in the 
public interest. At the oral presentation, the institution would 
present its position and respond to any questions the SARC might have. 
The SARC could also require that FDIC staff participate in the oral 
presentation as the SARC deems appropriate.
    Only matters previously reviewed at the division level, resulting 
either in a written determination or direct referral to the SARC, could 
be appealed to the SARC. Submission of new evidence not presented at 
the division level would be prohibited unless authorized by the SARC 
Chairperson. No discovery or other such rights would be created in the 
SARC process.

C. Other Provisions

    The current guidelines also provide that while SARC decisions 
constitute the final supervisory determination of the FDIC, the SARC 
can reconsider its decision if new information is presented and good 
cause is shown why that information is material to the dispute. In 
practice, however, such new information has never been presented to the 
SARC, and therefore the FDIC proposes to eliminate this reconsideration 
provision. In doing so, the FDIC notes that both the SARC and the AAC 
have implicit authority to correct errors or omissions that may have 
occurred in the administrative process and to revise final decisions as 
necessary.
    The types of determinations that are eligible for review by the 
SARC and the standards by which SARC appeals are decided remain 
unchanged.

II. Proposed Guidelines for Appeals of Deposit Insurance Assessment 
Determinations

    The FDIC Board of Directors created the AAC in 1999 to provide a 
high-level process for considering all deposit insurance assessment 
appeals brought from determinations made by the appropriate FDIC 
Divisions. Responsibility for deposit insurance assessments is shared 
by the Division of Finance (``DOF''), DIR and, in some respects, DSC. 
DOF is responsible for calculating the assessments owed by individual 
insured institutions based on assessment risk classifications assigned 
by DIR, which in turn uses supervisory information provided by DSC. To 
calculate an institution's assessment, DOF applies the assessment rate 
that corresponds to the institution's assessment risk classification to 
that institution's assessment base. DOF determines the assessment base 
from deposit and other data submitted in the institution's Report of 
Condition or Thrift Financial Report. An insured

[[Page 12858]]

institution may request revision of its quarterly assessment payment by 
following the procedures set forth at 12 CFR 327.3(h); similarly, an 
insured institution may request review of its assessment risk 
classification by following the procedures set forth at 12 CFR 
327.4(d). Having complied with those procedures and received a 
determination from the appropriate division, an institution 
dissatisfied with that division's determination may file an appeal with 
the AAC. After reviewing the determination made at the division level, 
the AAC will issue a final determination.

A. Membership

    As presently constituted, the AAC membership consists of the Vice 
Chairperson of the Board (as Chairperson of the AAC), the Deputy to the 
Office of the Comptroller of the Currency's (``OCC'') member on the 
FDIC's Board of Directors, the Deputy to the Office of Thrift 
Supervision's (``OTS'') member on the FDIC's Board of Directors; the 
General Counsel, the Director of the Division of Supervision and 
Consumer Protection; the Deputy to the Chairperson and Chief Financial 
Officer or the DOF Director; and the DIR Director. Any member may 
designate the most senior members of his or her staff to act in the 
member's stead. If a member's division made the determination that is 
subject to appeal, that member or designee does not vote with respect 
to that appeal.
    Since its creation in 1999, the AAC membership has included 
individuals who are knowledgeable and experienced in matters related to 
the FDIC's assessment activities, bringing to the AAC the necessary 
experience and judgment to make well-informed decisions concerning 
determinations on appeal. The FDIC believes that the long-range 
interests of both the agency and the institutions it insures are best 
served by assuring that all assessment determinations are as fair and 
accurate as possible, both in practice and in perception.
    The FDIC is now proposing to modify the composition of the AAC by 
eliminating the division directors and drawing new members from the 
most senior levels of the Corporation. As revised, the AAC would 
consist of five (5) voting members: (1) One FDIC Board member, either 
the Vice Chairperson or the Director (Appointive), as designated by the 
FDIC Chairperson (this person would serve as Chairperson of the AAC); 
(2) a deputy to the FDIC Chairperson, to be designated by the FDIC 
Chairperson; (3) a deputy to the OCC member on the FDIC's Board of 
Directors; (4) a deputy to the OTS member on the FDIC's Board of 
Directors; and (5) a deputy to either the Vice Chairperson or the FDIC 
Director (Appointive), whoever is not the AAC Chairperson. The General 
Counsel would be the sixth, and non-voting, member of the AAC. The FDIC 
Chairperson would designate alternate member(s) to the AAC if vacancies 
occur so long as the alternate member was not directly or indirectly 
involved in making or affirming the determination under review. A 
member of the AAC could designate and authorize the most senior member 
of his or her staff within the substantive area to act on his or her 
behalf in AAC matters.
    The proposed changes, which would eliminate division directors as 
AAC members, should serve to underscore the perception of the AAC as a 
fair and independent high-level body for review of assessment disputes.

B. AAC Proceedings

    Under the FDIC's assessment regulations, institutions that dispute 
the computation of their quarterly assessment payments must comply with 
the filing requirements set forth at 12 CFR 327.3(h) and institutions 
that dispute their risk classification must comply with the filing 
requirements set forth at 12 CFR 327.4(d).
    Current Sec.  327.3(h) provides that an institution may request 
revision of the computation of its quarterly assessment payment and 
sets out the procedures for doing so. Any such request must be made 
within 60 days of the quarterly assessment invoice for which a revision 
is requested, or within 60 days of detection of an error in the 
institution's quarterly Call Report and must include any supporting 
documentation. Assessment audit and assessment refund determinations 
are also subject to review under section 327.3(h), although not 
expressly mentioned in the rule. Any additional information requested 
by the FDIC must be provided within 21 days. Section 327.3(h) mandates 
that the FDIC respond within 60 days and provides that the response 
should include the FDIC's determination wherever feasible; otherwise, 
the FDIC's determination--rendered by the Chief Financial Officer or 
designee (usually DOF)--is to be made as promptly as possible.
    Under current Sec.  327.4(d), an institution may request review of 
its assessment risk classification within 90 days from the date it 
receives notice of that classification by the FDIC. Supporting 
documentation must be included with the request. Any additional 
information requested by the FDIC must be provided within 21 days. The 
FDIC--through the appropriate division--either DIR or DSC--must 
promptly notify the institution of its determination.
    An insured depository institution that is dissatisfied with the 
determination made by the appropriate division pursuant to 12 CFR 
327.3(h) or 327.4(d) may appeal that determination to the AAC. The AAC 
will review the determination being appealed and, unless the AAC 
determines to refer the matter to the FDIC Board of Directors for 
consideration, render a final determination which will constitute final 
agency action. FDIC staff would analyze the filing for the AAC. Any 
FDIC staff analysis would be considered part of the intra-agency 
deliberative process and would not be disclosed to insured 
institutions. The decision of the AAC would be provided to the 
institution and would set forth the rationale for the agency's 
determination.
    As with the SARC, the AAC would have the discretion, whether or not 
a request is made, to determine to allow an oral presentation. The 
institution's appeal should contain a statement regarding whether it 
wishes to make an oral presentation. Oral presentations would generally 
be granted only if the AAC determines in its discretion that oral 
presentation would be helpful or would otherwise be in the public 
interest. At the oral presentation, the institution would present its 
position and respond to any questions the AAC might have. The AAC could 
also require that FDIC staff participate as the AAC deems appropriate.
    Only matters previously reviewed at the division level would be 
subject to AAC review. Submission of new evidence not presented at the 
division level would be prohibited unless authorized by the AAC 
Chairperson. No discovery or other such rights would be created in the 
AAC process.
    Like the SARC, the AAC has implicit authority to correct errors 
that may have occurred in the administrative process and to revise 
final decisions as necessary.
    For the aforementioned reasons, the FDIC Board of Directors 
proposes the Guidelines for Appeals of Material Supervisory 
Determinations be revised as set forth below. The Board's proposed 
Guidelines for Appeals of Deposit Insurance Assessment Determinations 
immediately follow the proposed revisions to the Guidelines for Appeals 
of Material Supervisory Determinations.
* * * * *

[[Page 12859]]

Proposed Revised Guidelines for Appeals of Material Supervisory 
Determinations

A. Introduction

    Section 309(a) of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (Public Law 103-325, 108 Stat. 2160) (``Riegle 
Act'') required the Federal Deposit Insurance Corporation (``FDIC'') to 
establish an independent intra-agency appellate process to review 
material supervisory determinations made at insured depository 
institutions that it supervises. The FDIC adopted its Guidelines for 
Appeals of Material Supervisory Determinations (``guidelines'') in 1995 
and now proposes to revise them. The guidelines describe the types of 
determinations that are eligible for review and the process by which 
appeals will be considered and decided. The procedures set forth in 
these guidelines establish an appeals process for the review of 
material supervisory determinations by the Supervision Appeals Review 
Committee (``SARC'').

B. SARC Membership

    The following individuals comprise the three (3) voting members of 
the SARC: (1) One FDIC Board member, either the Chairperson, the Vice 
Chairperson, or the FDIC Director (Appointive), as designated by the 
FDIC Chairperson (this person would serve as the Chairperson of the 
SARC); (2) and (3) one deputy to each of the FDIC Board members who are 
not designated as the SARC Chairperson. The General Counsel is a non-
voting member of the SARC. The FDIC Chairperson may designate alternate 
member(s) to the SARC if there are vacancies so long as the alternate 
member was not involved in making or affirming the material supervisory 
determination under review. A member of the SARC may designate and 
authorize the most senior member of his or her staff within the 
substantive area of responsibility related to cases before the SARC to 
act on his or her behalf.

C. Institutions Eligible To Appeal

    The guidelines apply to the insured depository institutions that 
the FDIC supervises (i.e., insured State nonmember banks (except 
District banks) and insured branches of foreign banks) and also to 
other insured depository institutions with respect to which the FDIC 
makes material supervisory determinations.

D. Determinations Subject To Appeal

    An institution may appeal any material supervisory determination 
pursuant to the procedures set forth in these guidelines. Material 
supervisory determinations include:
    (a) CAMELS ratings under the Uniform Financial Institutions Rating 
System;
    (b) EDP ratings under the Uniform Interagency Rating System for 
Data Processing Operations;
    (c) Trust ratings under the Uniform Interagency Trust Rating 
System;
    (d) CRA ratings under the Revised Uniform Interagency Community 
Reinvestment Act Assessment Rating System;
    (e) Consumer compliance ratings under the Uniform Interagency 
Consumer Compliance Rating System;
    (f) Registered transfer agent examination ratings;
    (g) Government securities dealer examination ratings;
    (h) Municipal securities dealer examination ratings;
    (i) Determinations relating to the adequacy of loan loss reserve 
provisions;
    (j) Classifications of loans and other assets in dispute the amount 
of which, individually or in the aggregate, exceed 10 percent of an 
institution's total capital;
    (k) Determinations relating to violations of a statute or 
regulation that may impact the capital, earnings, or operating 
flexibility of an institution, or otherwise affect the nature and level 
of supervisory oversight accorded an institution;
    (l) Truth in Lending (Regulation Z) restitution;
    (m) Filings made pursuant to 12 CFR 303.11(f), for which a Request 
for Reconsideration has been granted, other than denials of a change in 
bank control, change in senior executive officer or board of directors, 
or denial of an application pursuant to section 19 of the FDI Act 
(which are contained in 12 CFR 308, subparts D, L, and M, 
respectively), if the filing was originally denied by the DSC Director, 
Deputy Director or Associate Director; and
    (n) Any other supervisory determination (unless otherwise not 
eligible for appeal) that may impact the capital, earnings, operating 
flexibility, or capital category for prompt corrective action purposes 
of an institution, or otherwise affect the nature and level of 
supervisory oversight accorded an institution.
    Material supervisory determinations do not include:
    (a) Decisions to appoint a conservator or receiver for an insured 
depository institution;
    (b) Decisions to take prompt corrective action pursuant to section 
38 of the Federal Deposit Insurance Act, 12 U.S.C. 1831o;
    (c) Determinations for which other appeals procedures exist (such 
as determinations of deposit insurance assessment risk classifications 
and payment calculations);
    (d) Decisions to initiate formal enforcement actions under section 
8 of the Federal Deposit Insurance Act, 12 U.S.C. 1818 (including 
assessment of civil money penalties) or under any other provisions of 
law or regulation; and
    (e) Decisions to initiate informal enforcement actions (such as 
memoranda of understanding).
    The FDIC recognizes that, although determinations to take prompt 
corrective action or initiate formal or informal enforcement actions 
are not appealable, the determinations upon which such actions may be 
based (e.g., loan classifications) are appealable provided they 
otherwise qualify.

E. Good Faith Resolution

    An institution should make a good faith effort to resolve any 
dispute concerning a material supervisory determination with the on-
site examiner and/or the appropriate Regional Office. The on-site 
examiner and the Regional Office will promptly respond to any concerns 
raised by an institution regarding a material supervisory 
determination. Informal resolution of disputes with the on-site 
examiner and/or the appropriate Regional Office is encouraged, but 
seeking such a resolution is not a condition to filing a request for 
review with the Division of Supervision and Consumer Protection or an 
appeal to the SARC under these guidelines.

F. Filing a Request for Review With the FDIC Division of Supervision 
and Consumer Protection

    An institution may file a request for review of a material 
supervisory determination with the Director, Division of Supervision 
and Consumer Protection, 550 17th Street NW., Room F-4076, Washington, 
DC 20429, within 60 calendar days following the institution's receipt 
of a report of examination containing a material supervisory 
determination or other written communication of a material supervisory 
determination. A request for review must be in writing and must 
include:

[[Page 12860]]

    (a) A detailed description of the issues in dispute, the 
surrounding circumstances, the institution's position regarding the 
dispute and any arguments to support that position (including citation 
of any relevant statute, regulation, policy statement or other 
authority), how resolution of the dispute would materially affect the 
institution, and whether a good faith effort was made to resolve the 
dispute with the on-site examiner and the Regional Office; and
    (b) A statement that the institution's board of directors has 
considered the merits of the request and authorized that it be filed.
    The Director, Division of Supervision and Consumer Protection, will 
issue a written determination of the request for review, setting forth 
the grounds for that determination, within 30 days of receipt of the 
request. No appeal to the SARC will be allowed unless an institution 
has first filed a request for review with the Division of Supervision 
and Consumer Protection.

G. Appeal to the SARC

    An institution that does not agree with the written determination 
rendered by the Director of the Division of Supervision and Consumer 
Protection must appeal that determination to the SARC within 30 
calendar days from the date of that determination. The Director's 
determination will inform the institution of the 30-day time period for 
filing with the SARC and will provide the mailing address for any 
appeal the institution may wish to file. Failure to file within the 30-
day time limit may result in denial of the appeal by the SARC. If the 
Director of the Division of Supervision and Consumer Protection 
determines that an institution is entitled to relief that the Director 
lacks delegated authority to grant, the Director may, with the approval 
of the Chairperson of the SARC, transfer the matter directly to the 
SARC without issuing a determination.

H. Filing With the SARC

    An appeal to the SARC will be considered filed if the written 
appeal is received by the FDIC within 30 calendar days from the date of 
the division director's written determination or if the written appeal 
is placed in the U.S. mail within that 30-day period. If the 30th day 
after the date of the division director's written determination is a 
Saturday, Sunday or Federal holiday, filing may be made on the next 
business day. The appeal should be sent to the address indicated on the 
determination being appealed.

I. Contents of Appeal

    The appeal should be labeled to indicate that it is an appeal to 
the SARC and should contain the name, address, and telephone number of 
the institution and any representative, as well as a copy of the 
determination being appealed. Only matters previously reviewed at the 
division level, resulting in a written determination or direct referral 
to the SARC, may be appealed to the SARC. Evidence not presented at the 
division level may be submitted only if authorized by the SARC 
Chairperson. The institution should set forth all of the reasons, legal 
and factual, why it disagrees with the determination. Nothing in the 
SARC administrative process shall create any discovery or other such 
rights.

J. Burden of Proof

    The burden of proof as to all matters at issue in the appeal, 
including timeliness of the appeal if timeliness is at issue, rests 
with the institution.

K. Oral Presentation

    The SARC may, in its discretion, whether or not a request is made, 
determine to allow an oral presentation. The SARC generally grants a 
request for oral presentation only if it determines that oral 
presentation would be helpful or would otherwise be in the public 
interest. If oral presentation is held, the institution will be allowed 
to present its positions on the issues raised in the appeal and to 
respond to any questions from the SARC. The SARC may also require that 
FDIC staff participate as the SARC deems appropriate.

L. Dismissal and Withdrawal

    An appeal may be dismissed by the SARC if it is not timely filed, 
if the basis for the appeal is not discernable from the appeal, or if 
the institution moves to withdraw the appeal.

M. Scope of Review and Decision

    The SARC will review the appeal for consistency with the policies, 
practices and mission of the FDIC and the overall reasonableness of and 
the support offered for the positions advanced, and notify the 
institution, in writing, of its decision concerning the disputed 
material supervisory determination(s) within 60 days from the date the 
appeal is filed, or within 60 days from oral presentation, if held. 
SARC review will be limited to the facts and circumstances as they 
existed prior to or at the time the material supervisory determination 
was made, even if later discovered, and no consideration will be given 
to any facts or circumstances that occur or corrective action taken 
after the determination was made.

N. Publication of Decisions

    SARC decisions will be published. Published SARC decisions will be 
redacted to avoid disclosure of exempt information. Published SARC 
decisions may be cited as precedent in appeals to the SARC.

O. SARC Guidelines Generally

    Appeals to the SARC will be governed by these guidelines. The SARC 
will retain the discretion to waive any provision of the guidelines for 
good cause; the SARC may adopt supplemental rules governing SARC 
operations; the SARC may order that material be kept confidential; and 
the SARC may consolidate similar appeals.

P. Limitation on Agency Ombudsman

    The subject matter of a material supervisory determination for 
which either an appeal to the SARC has been filed or a final SARC 
decision issued is not eligible for consideration by the Ombudsman.

Q. Coordination With State Regulatory Authorities

    In the event that a material supervisory determination subject to a 
request for review is the joint product of the FDIC and a State 
regulatory authority, the Director, Division of Supervision and 
Consumer Protection, will promptly notify the appropriate State 
regulatory authority of the request, provide the regulatory authority 
with a copy of the institution's request for review and any other 
related materials, and solicit the regulatory authority's views 
regarding the merits of the request before making a determination. In 
the event that an appeal is subsequently filed with the SARC, the SARC 
will notify the institution and the State regulatory authority of its 
decision. Once the SARC has issued its determination, any other issues 
that may remain between the institution and the State authority will be 
left to those parties to resolve.

R. Effect on Supervisory or Enforcement Actions

    The use of the procedures set forth in these guidelines by any 
institution will not affect, delay, or impede any formal or informal 
supervisory or enforcement action in progress or affect the FDIC's 
authority to take any supervisory or enforcement action against that 
institution.

[[Page 12861]]

S. Effect on Applications or Requests for Approval

    Any application or request for approval made to the FDIC by an 
institution that has appealed a material supervisory determination 
which relates to or could affect the approval of the application or 
request will not be considered until a final decision concerning the 
appeal is made unless otherwise requested by the institution.

T. Prohibition on Examiner Retaliation

    The FDIC has an experienced examination workforce and is proud of 
its professionalism and dedication. FDIC policy prohibits any 
retaliation, abuse, or retribution by an agency examiner or any FDIC 
personnel against an institution. Such behavior against an institution 
that appeals a material supervisory determination constitutes 
unprofessional conduct and will subject the examiner or other personnel 
to appropriate disciplinary or remedial action. Institutions that 
believe they have been retaliated against are encouraged to contact the 
Regional Director for the appropriate FDIC region. Any institution that 
believes or has any evidence that it has been subject to retaliation 
may file a complaint with the Director, Office of the Ombudsman, 
Federal Deposit Insurance Corporation, 550 17th Street, Washington, DC 
20429, explaining the circumstances and the basis for such belief or 
evidence and requesting that the complaint be investigated and 
appropriate disciplinary or remedial action taken. The Office of the 
Ombudsman will work with the Division of Supervision and Consumer 
Protection to resolve the allegation of retaliation.
* * * * *

Proposed Guidelines for Appeals of Deposit Insurance Assessment 
Determinations

A. Introduction

    The Assessment Appeals Committee (``AAC'') was formed in 1999 and, 
pursuant to the direction of the FDIC Board of Directors, has been 
functioning as the appellate entity responsible for making final 
determinations pursuant to part 327 of the FDIC's regulations regarding 
the assessment risk classification and the assessment payment 
calculation of insured depository institutions. The AAC provides a 
process for considering all deposit insurance assessment appeals 
brought from determinations made by the appropriate FDIC divisions. The 
procedures set forth in these guidelines apply to all appeals to the 
AAC.

B. AAC Membership

    The following individuals comprise the five (5) voting members of 
the AAC, representing each member of the FDIC Board of Directors: (1) 
One FDIC Board member, either the Vice Chairperson or the Director 
(Appointive), as designated by the FDIC Chairperson (this person would 
serve as Chairperson of the AAC); (2) one of the deputies to the FDIC 
Chairperson, to be designated by the FDIC Chairperson; (3) a deputy to 
the Office of the Comptroller of the Currency's member on the FDIC's 
Board of Directors; (4) a deputy to the Office of the Office of Thrift 
Supervision's member on the FDIC's Board of Directors; and (5) a deputy 
to either the Vice Chairperson or the Director (Appointive), whoever is 
not the AAC Chairperson. The General Counsel is a non-voting member of 
the AAC. The FDIC Chairperson may designate alternative member(s) for 
the AAC if vacancies occur. A member of the AAC may designate and 
authorize the most senior member of his or her staff within the 
substantive area of responsibility related to cases before the AAC to 
act on his or her behalf.

C. Institutions Eligible to Appeal

    These guidelines apply to all depository institutions insured by 
the FDIC.

D. Determinations Subject to Appeal

    The AAC, upon appeal by an insured depository institution, reviews 
determinations of the Director of the Division of Insurance and 
Research or the Director of the Division of Supervision and Consumer 
Protection made pursuant to the procedures set forth at 12 CFR 327.4(d) 
regarding the assessment risk classification assigned by the FDIC to 
the institution and renders a final determination. The AAC also, upon 
appeal by an insured depository institution, reviews determinations 
made pursuant to 12 CFR 327.3(h) by the Chief Financial Officer (or the 
Director of the Division of Finance, as designee) regarding the 
computation of the institution's assessment payment and renders a final 
determination.

E. Appeal to the AAC

    An institution that does not agree with the written determination 
rendered by the appropriate division director pursuant to 12 CFR 
327.4(d) and 12 CFR 327.3(h) must appeal that determination to the AAC 
within 30 calendar days from the date of the determination. The 
division director's determination will inform the institution of the 
30-day time limit for filing with the AAC and will provide the mailing 
address for any appeal the institution may wish to file. Failure to 
file within the 30-day time period may result in denial of the appeal 
by the AAC. If a division director determines that an institution is 
entitled to relief that the director lacks delegated authority to 
grant, the director may, with the approval of the Chairperson of the 
AAC, transfer the matter directly to the AAC without issuing a 
determination.

F. Filing With the AAC

    An appeal to the AAC will be considered filed if the written appeal 
is received by the FDIC within 30 calendar days from the date of the 
division director's written determination or if the written appeal is 
placed in the U.S. mail within that 30-day period. If the 30th day 
after the date of the division director's written determination is a 
Saturday, Sunday or Federal holiday, filing may be made on the next 
business day. The appeal should be sent to the address indicated on the 
determination being appealed.

G. Contents of Appeal

    The appeal should be labeled to indicate that it is an appeal to 
the AAC and should contain the name, address, and telephone number of 
the institution and any representative, as well as a copy of the 
determination being appealed. Only matters previously reviewed at the 
division level, resulting in either a written determination or a direct 
referral to the AAC, may be appealed to the AAC. Evidence not presented 
at the division level may be submitted only if authorized by the AAC 
Chairperson. The institution should set forth all of the reasons, legal 
and factual, why it disagrees with the determination. Nothing in the 
AAC administrative process shall create any discovery or other such 
rights.

H. Burden of Proof

    The burden of proof as to all matters at issue in the appeal, 
including timeliness of the appeal if timeliness is at issue, rests 
with the institution.

I. Oral Presentation

    The AAC may, in its discretion, whether or not a request is made, 
determine to allow an oral presentation. The AAC generally grants a 
request for oral presentation only if it determines that oral 
presentation would be helpful or would otherwise be in the public 
interest. If oral presentation is held, the institution will be allowed 
to present its position on the issues raised in the appeal and to 
respond to any questions from the AAC. The AAC may also

[[Page 12862]]

require that FDIC staff participate as the AAC deems appropriate.

J. Dismissal and Withdrawal

    An appeal may be dismissed by the AAC if it is not timely filed, if 
the legal or factual basis for the appeal is not discernable from the 
appeal, or if the institution moves to withdraw the appeal.

K. Scope of Review and Decision

    The AAC will review all submissions concerning an appeal, review 
the final determination being appealed, consider any other matters it 
deems in its discretion to be appropriate, and issue a written decision 
within 60 days from the date the appeal is filed, or within 60 days 
from oral presentation, if held.

L. Publication of Decisions

    AAC decisions will be published. Published AAC decisions will be 
redacted to avoid disclosure of exempt information. Published decisions 
of the AAC may be cited as precedent in appeals to the AAC.

M. AAC Guidelines Generally

    Appeals to the AAC will be governed by these guidelines. The AAC 
will retain the discretion to waive any provision of the guidelines for 
good cause; the AAC may adopt supplemental rules governing AAC 
operations; the AAC may order that material be kept confidential; and 
the AAC may consolidate similar appeals.

N. Effect on Deposit Insurance Assessment Payments

    The use of the procedures set forth in these guidelines by an 
insured institution will not affect, delay, or impede the obligation of 
that institution to make timely payment of any deposit insurance 
assessment.

    Dated at Washington, DC, this 10th day of March, 2004.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 04-6112 Filed 3-17-04; 8:45 am]
BILLING CODE 6714-01-P