[Federal Register Volume 87, Number 98 (Friday, May 20, 2022)]
[Notices]
[Pages 30942-30947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10904]


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FEDERAL DEPOSIT INSURANCE CORPORATION

RIN 3064-ZA20


Guidelines for Appeals of Material Supervisory Determinations

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice and request for comment.

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SUMMARY: On May 17, 2022, the Federal Deposit Insurance Corporation 
(FDIC) adopted revised Guidelines for Appeals of Material Supervisory 
Determinations. The revisions generally restore the Supervision Appeals 
Review Committee as the final level of review in the supervisory 
appeals process, consistent with the agency's longstanding practice of 
providing Board-level review of material supervisory determinations.

DATES: The revised Guidelines for Appeals of Material Supervisory 
Determinations took effect on May 17, 2022. Written comments must be 
received by the FDIC on or before June 21, 2022 for consideration.

ADDRESSES: Interested parties are invited to submit written comments, 
identified by RIN 3064-ZA20, by any of the following methods:
     Agency website: https://www.fdic.gov/resources/regulations/federal-register-publications/. Follow the instructions for 
submitting comments.
     Email: [email protected]. Include ``Guidelines for Appeals 
of Material Supervisory Determinations--RIN 3064-ZA20'' in the subject 
line of the message.
     Mail: James P. Sheesley, Assistant Executive Secretary, 
Attention: Comments--RIN 3064-ZA20, Federal Deposit Insurance 
Corporation, 550 17th Street NW, Washington, DC 20429.
     Hand Delivery/Courier: Guard station at the rear of the 
550 17th Street NW building (located on F Street NW) on business days 
between 7:00 a.m. and 5:00 p.m. (EST).
     Public Inspection: Comments received, including any 
personal information provided, may be posted without change to https://www.fdic.gov/resources/regulations/federal-register-publications/. 
Commenters should submit only information that the commenter wishes to 
make available publicly. The FDIC may review, redact, or refrain from 
posting all or any portion of any comment that it may deem to be 
inappropriate for publication, such as irrelevant or obscene material. 
The FDIC may post only a single representative example of identical or 
substantially identical comments, and in such cases will generally 
identify the number of identical or substantially identical comments 
represented by the posted example. All comments that have been 
redacted, as well as those that have not been posted, that contain 
comments on the merits of this notice will be retained in the public 
comment file and will be considered as required under all applicable 
laws. All comments may be accessible under the Freedom of Information 
Act.

FOR FURTHER INFORMATION CONTACT: Patricia Colohan, Associate Director, 
Division of Risk Management Supervision, [email protected], 202-898-
7283; Tara Oxley, Associate Director, Division of Depositor and 
Consumer Protection, [email protected], 202-898-6722; James Watts, 
Counsel, Legal Division, [email protected], 202-898-6678.

SUPPLEMENTARY INFORMATION:

Background

    Section 309(a) of the Riegle Community Development and Regulatory 
Improvement Act of 1994 required the FDIC (as well as the other Federal 
banking agencies and the National Credit Union Administration) to 
establish an ``independent intra-agency appellate process'' to review 
material supervisory determinations.\1\ The statute defines the term 
``independent appellate process'' to mean ``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.'' \2\ In the appeals process, the FDIC is required to ensure 
that: (1) An IDI's appeal of a material supervisory determination is 
heard and decided expeditiously; and (2) appropriate safeguards exist 
for protecting appellants from retaliation by agency examiners.\3\
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    \1\ 12 U.S.C. 4806(a).
    \2\ 12 U.S.C. 4806(f)(2).
    \3\ 12 U.S.C. 4806(b).
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    In 1995, the FDIC adopted Guidelines for Appeals of Material 
Supervisory Determinations to implement section 309(a). At that time, 
the FDIC's Board of Directors established the Supervision Appeals 
Review Committee (SARC) to consider and decide appeals of material 
supervisory determinations.\4\ The Board has modified the composition 
of the SARC over the years, but as of 2021, the SARC included: One 
inside member of the FDIC's Board of Directors (serving as 
Chairperson); one deputy or special assistant to each of the other 
inside Board members; and the General Counsel as a non-voting member.
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    \4\ 60 FR 15923 (Mar. 28, 1995).
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    In January 2021, the FDIC adopted Guidelines that generally 
replaced the SARC as the final level of review in appellate process 
with a standalone office within the FDIC, designated the Office of 
Supervisory Appeals (Office).\5\ This Office was granted delegated 
authority to consider and resolve appeals of material supervisory 
determinations, and would be staffed by reviewing officials with bank 
supervisory or examination experience. After appealing a material 
supervisory determination to the relevant Division Director, an 
institution would have the option to appeal to the Office. If a 
material supervisory determination was appealed to the Office, a three- 
or five-member panel of reviewing officials would consider the appeal 
and issue a written decision to the institution. The Guidelines did not 
provide for additional review beyond the Office.
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    \5\ 86 FR 6880 (Jan. 25, 2021).
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Restoring Committee Structure

    Prior to the establishment of the Office, the FDIC's supervisory 
appeals process had always provided for Board-level review by including 
a Board member on the SARC. The FDIC's experience suggests that its 
longstanding practice of providing Board-level review of material 
supervisory determinations would better promote independence and 
accountability in the appellate process. Allowing material supervisory 
determinations to be appealed to a Board-level committee underscores 
the significance of an independent review and lends credibility to the 
process. Furthermore, Board-level review has historically ensured that 
accountability for the FDIC's supervisory determinations ultimately 
remains with the agency's Board of Directors, consistent with sound 
corporate governance principles.
    The FDIC also believes that restoring the SARC as the final level 
of review for supervisory appeals will address staffing concerns that 
were inherent in the Office structure and may potentially threaten to 
hinder the effectiveness of the process going forward. The Guidelines 
provided that the Office

[[Page 30943]]

would be staffed with reviewing officials hired for terms, and current 
government officials were ineligible to serve as reviewing officials. 
The FDIC also noted that it expected to employ reviewing officials on a 
part-time, intermittent basis.\6\ Given these constraints, experience 
suggests that it may be challenging to recruit and retain individuals 
with sufficient expertise and judgment to make final supervisory 
decisions on behalf of the agency. Inability to adequately staff the 
Office on an ongoing basis would prevent the agency from satisfying its 
statutory mandate to expeditiously hear and decide appeals of material 
supervisory determinations. By contrast, vacancies on the SARC can be 
filled more promptly through existing routine internal processes, 
minimizing potential impact on the administration of appeals. Reliance 
on existing staff rather than employees dedicated solely to the appeals 
function (even on a part-time basis) is also a more cost-effective use 
of the Deposit Insurance Fund, given the historically infrequent nature 
of supervisory appeals.\7\
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    \6\ 85 FR 54377, 54378 (Sep. 1, 2020).
    \7\ In the fifteen years prior to the establishment of the 
Office, 51 appeals were submitted to the SARC out of 113,448 
examinations. Some of these appeals were withdrawn prior to a 
decision, raised issues that were not reviewable under the 
Guidelines, or became moot because the institution had failed.
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    For these reasons, the FDIC has reconstituted the SARC and adopted 
revised Guidelines that restore the SARC as the final level of review 
of material supervisory determinations made by the FDIC.\8\ Consistent 
with the composition of the SARC as it stood in 2021, the SARC will 
include: One inside member of the FDIC's Board of Directors (serving as 
Chairperson); a deputy or special assistant to each of the other inside 
Board members; and the General Counsel as a non-voting member. Also 
consistent with the prior structure of the SARC, the Chairperson of the 
FDIC's Board of Directors will have the authority to designate 
alternate members in the event of vacancies.
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    \8\ While the FDIC has periodically amended the Guidelines 
through the notice and comment process that generally applies to 
rulemakings, soliciting comment is not required.
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    The revised Guidelines also include changes to certain procedural 
provisions that are intended to reflect the restoration of the SARC 
structure in the appeals process. For example, the SARC Chairperson 
will have the authority to extend the timeframes where supervisory 
appeal rights are suspended while a formal enforcement action is being 
pursued, and to approve an institution's submission of evidence that 
was not previously submitted to the Division Director for review. The 
SARC Chairperson also may provide guidance to Division Directors in 
response to procedural questions relating to appeals. These authorities 
are consistent with the SARC Chairperson's authorities under the 
Guidelines that were in effect until December 2021.

Communications With Supervisory Staff

    The revised Guidelines also eliminate a provision that was added in 
2021 specifically to accommodate an independent Office of Supervisory 
Appeals. This provision required that any communications between the 
Office and supervisory staff be in writing and shared with an appealing 
bank. As a conforming change, and given the broad responsibilities that 
SARC members have in their normal duties, the FDIC believes that a 
provision limiting communications with supervisory staff is no longer 
appropriate.

Formal Enforcement-Related Decisions

    In the revised Guidelines, the FDIC is retaining the provisions for 
considering formal enforcement-related decisions (and their underlying 
facts and circumstances) that were adopted in 2021 to clarify the 
intersection of the supervisory appeals process and the administrative 
enforcement process. The revised Guidelines include one enhancement to 
these provisions. Specifically, the Guidelines previously stated that 
if the FDIC provided written notice to an institution that it is 
determining whether a formal enforcement action is merited, the FDIC 
would have 120 days from the date of the notice to issue an Order of 
Investigation, a Notice of Charges, or to provide the institution with 
a draft consent order; if the FDIC failed to do so, supervisory appeal 
rights would be made available under the Guidelines. In some instances, 
however, when the FDIC provides notice that it is determining whether a 
formal enforcement action is merited, it invites the institution to 
provide additional information. This can serve as an important channel 
of communication between institutions and supervisory staff, but the 
timeframes contained in the Guidelines did not account for the 
possibility of an institution providing information in response to the 
FDIC's notice. The FDIC believes that the process should provide ample 
opportunity to review information provided by the institution before 
taking enforcement action. Accordingly, the revised Guidelines provide 
that the FDIC has 120 days to take action from the date of its notice 
to the institution or the date of the most recent submission of 
information from the institution, whichever is later.

Other Aspects of the Appeals Process

    Aside from the substitution of the SARC for the Office as the final 
level of review, most aspects of the supervisory appeals process remain 
unchanged. The revised Guidelines continue to encourage institutions to 
make good-faith efforts to resolve disputes with the on-site examiner 
and/or the appropriate Regional Office. While such efforts are not 
required under the process, the FDIC's experience suggests that they 
may narrow the matters in dispute or eliminate the need for an appeal 
in some instances.
    The revised Guidelines also continue to provide for review by the 
appropriate Division Director before an appeal to the SARC may be 
submitted. The Division Director will have 45 days to consider the 
appeal and issue a written decision on the supervisory matters at 
issue.
    In addition, the revised Guidelines continue to include provisions 
for considering formal enforcement-related decisions (and their 
underlying facts and circumstances) that were adopted in 2021 to 
clarify the intersection of the supervisory appeals process and the 
administrative enforcement process. These provisions were intended to 
allow sufficient time to review the facts and circumstances that lead 
to formal enforcement actions and ensure that such actions were not 
brought prematurely, and to allow sufficient time for institutions to 
consider and execute consent orders.\9\ The FDIC believes these 
clarifying provisions have been beneficial and should be retained.
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    \9\ See 85 FR 54377, 54380 (Sep. 1, 2020).
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Effective Date

    These revised Guidelines took effect on May 17, 2022. The FDIC 
believes that taking action quickly in this instance minimizes the 
potential for confusion among insured depository institutions with 
respect to the process they must follow in the event they wish to 
appeal a material supervisory determination.

Request for Comment

    The FDIC invites comment on all aspects of the revised Guidelines. 
In particular, the FDIC is considering how it may further enhance the 
supervisory appeals process to include the Ombudsman's perspective. 
When the FDIC amended the Guidelines in 2021, it formalized its process 
for including the Ombudsman's views in the consideration of appeals. 
Specifically, copies of appeals to the Office were also

[[Page 30944]]

provided to the Ombudsman, and the Ombudsman could submit views to the 
panel for consideration. The revised Guidelines retain this process, 
allowing the Ombudsman to submit views regarding an appeal to the SARC. 
Are there other enhancements to the process the FDIC should consider to 
include the Ombudsman's perspective, while remaining consistent with 
the Ombudsman's role as a neutral liaison between supervised 
institutions and the FDIC?
    For the reasons set out in the preamble, the Federal Deposit 
Insurance Corporation adopts the Guidelines for Appeals of Material 
Supervisory Determinations as set forth below.

Guidelines for Appeals of Material Supervisory Determinations

A. Introduction

    Section 309(a) of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (Pub. L. 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 Guidelines for Appeals of Material Supervisory 
Determinations (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 inside 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); and (2) one deputy or special assistant to each of the inside 
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, insured 
branches of foreign banks, and state savings associations), and to 
other insured depository institutions for 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.
    (1) Material supervisory determinations include:
    (a) CAMELS ratings under the Uniform Financial Institutions Rating 
System;
    (b) IT ratings under the Uniform Rating System for Information 
Technology;
    (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 appropriateness of loan loss 
reserve provisions;
    (j) Classifications of loans and other assets in dispute the amount 
of which, individually or in the aggregate, exceeds 10 percent of an 
institution's total capital;
    (k) Determinations relating to violations of a statute or 
regulation that may affect 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 Act (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 Federal 
Deposit Insurance Act (FDI Act), 12 U.S.C. 1829 (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 the Division of Depositor and Consumer Protection (DCP) or 
the Division of Risk Management Supervision (RMS);
    (n) Decisions to initiate informal enforcement actions (such as 
memoranda of understanding);
    (o) Determinations regarding the institution's level of compliance 
with a formal enforcement action; however, if the FDIC determines that 
the lack of compliance with an existing formal enforcement action 
requires an additional formal enforcement action, the proposed new 
enforcement action is not appealable;
    (p) Matters requiring board attention; and
    (q) Any other supervisory determination (unless otherwise not 
eligible for appeal) that may affect the capital, earnings, operating 
flexibility, or capital category for prompt corrective action purposes 
of an institution, or that otherwise affects the nature and level of 
supervisory oversight accorded an institution.
    (2) Material supervisory determinations do not include:
    (a) Decisions to appoint a conservator or receiver for an insured 
depository institution, and other decisions made in furtherance of the 
resolution or receivership process, including but not limited to 
determinations pursuant to parts 370, 371, and 381, and section 360.10 
of the FDIC's rules and regulations;
    (b) Decisions to take prompt corrective action pursuant to section 
38 of the FDI 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); and
    (d) Formal enforcement-related actions and decisions, including 
determinations and the underlying facts and circumstances that form the 
basis of a recommended or pending formal enforcement action.
    (3) A formal enforcement-related action or decision commences, and 
becomes unappealable, when the FDIC initiates a formal investigation 
under 12 U.S.C. 1820(c) (Order of Investigation), issues a notice of 
charges or a notice of assessment under 12 U.S.C. 1818 or other 
applicable laws (Notice of Charges), provides the institution with a 
draft consent order, or otherwise provides written notice to the 
institution that the FDIC is reviewing the facts and circumstances 
presented to determine if a formal enforcement action is merited under 
applicable

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statutes or published enforcement-related policies of the FDIC, 
including written notice of a referral to the Attorney General pursuant 
to the Equal Credit Opportunity Act (ECOA) or a notice to the Secretary 
of Housing and Urban Development (HUD) for violations of ECOA or the 
Fair Housing Act (FHA). Such notice may be provided in the transmittal 
letter accompanying a Report of Examination. For the purposes of these 
Guidelines, remarks in a Report of Examination do not constitute 
written notice that the FDIC is reviewing the facts and circumstances 
presented to determine if a proposed enforcement action is merited. 
Commencement of a formal enforcement-related action or decision will 
not suspend or otherwise affect a pending request for review or appeal 
that was submitted before the commencement of the formal enforcement-
related action or decision.
    (4) Additional Appeal Rights:
    (a) In the case of any written notice from the FDIC to the 
institution that the FDIC is determining whether a formal enforcement 
action is merited, the FDIC must issue an Order of Investigation, issue 
a Notice of Charges, or provide the institution with a draft consent 
order within 120 days of such a notice, or the most recent submission 
of information from the institution, whichever is later, or appeal 
rights will be made available pursuant to these Guidelines. If the FDIC 
timely provides the institution with a draft consent order and the 
institution rejects the draft consent order in writing, the FDIC must 
issue an Order of Investigation or a Notice of Charges within 90 days 
from the date on which the institution rejects the draft consent order 
in writing or appeal rights will be made available pursuant to these 
Guidelines. The FDIC may extend these periods, with the approval of the 
SARC Chairperson, after the FDIC notifies the institution that the 
relevant Division Director is seeking formal authority to take an 
enforcement action.
    (b) In the case of a referral to the Attorney General for 
violations of the ECOA, beginning on the date the referral is returned 
to the FDIC, the FDIC must proceed in accordance within paragraph (a), 
including within the specified timeframes, or appeal rights will be 
made available pursuant to these Guidelines.
    (c) In the case of providing notice to HUD for violations of the 
ECOA or the FHA, beginning on the date the notice is provided, the FDIC 
must proceed in accordance within paragraph (a), including within the 
specified timeframes, or appeal rights will be made available pursuant 
to these Guidelines.
    (d) Written notification will be provided to the institution within 
10 days of a determination that appeal rights have been made available 
under this section.
    (e) The relevant FDIC Division and the institution may mutually 
agree to extend the timeframes in paragraphs (a), (b), and (c) if the 
parties deem it appropriate.

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 the appropriate Regional Office is encouraged, but seeking 
such a resolution is not a condition to filing a request for review 
with the appropriate Division, either DCP, RMS, or the Division of 
Complex Institution Supervision and Resolution (CISR), or to filing a 
subsequent appeal with the SARC under these Guidelines.

F. Filing a Request for Review With the Appropriate Division

    (1) An institution may file a request for review of a material 
supervisory determination with the Division that made the 
determination, either the Director, DCP, the Director, RMS, or the 
Director, CISR (Director or Division Director), 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. Requests for review also may be 
submitted electronically. To ensure confidentiality, requests should be 
submitted through securemail.fdic.gov, directing the message to 
[email protected]. A request for review must be in writing 
and must include:
    (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 or senior 
management has considered the merits of the request and has authorized 
that it be filed. Senior management is defined as the core group of 
individuals directly accountable to the board of directors for the 
sound and prudent day-to-day management of the institution. If an 
institution's senior management files an appeal, it must inform the 
board of directors of the substance of the appeal before filing and 
keep the board of directors informed of the appeal's status.
    (2) Within 45 calendar days after receiving a request for review 
described in paragraph (1), the Division Director will:
    (a) Review the appeal, considering whether the material supervisory 
determination is consistent with applicable laws, regulations, and 
policy, make his or her own supervisory determination without deferring 
to the judgments of either party, and issue a written determination on 
the request for review, setting forth the grounds for that 
determination; or
    (b) refer the request for review to the SARC for consideration as 
an appeal under Section G and provide written notice to the institution 
that the request for review has been referred to the SARC.
    (3) No appeal to the SARC will be allowed unless an institution has 
first filed a timely request for review with the appropriate Division 
Director.
    (4) In any decision issued pursuant to paragraph (2)(a) of this 
section, the Director 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.
    (5) The Division Director may request guidance from the SARC 
Chairperson or the Legal Division as to procedural or other questions 
relating to any request for review.

G. Appeal to the SARC

    An institution that does not agree with the written determination 
rendered by the Division Director may appeal that determination to the 
SARC within 30 calendar days after the date of receipt of that 
determination. Failure to file within the 30-day time limit may result 
in denial of the appeal by the SARC.
1. 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

[[Page 30946]]

days after the date of receipt of the Division Director's written 
determination or if the written appeal is placed in the U.S. mail 
within that 30-day period. The appeal should be sent to the address 
indicated on the Division Director's determination being appealed, or 
sent via email to [email protected]. An acknowledgment of the appeal 
will be provided to the institution, and copies of the institution's 
appeal will be provided to the Office of the Ombudsman and the 
appropriate Division Director.
2. 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 
Division Director's determination being appealed. If oral presentation 
is sought, that request should be included in the appeal. If expedited 
review is requested, the appeal should state the reason for the 
request. Only matters submitted to the appropriate Division Director in 
a request for review may be appealed to the SARC. Evidence not 
presented for review to the Division Director is generally not 
permitted; such evidence may be submitted to the SARC only if approved 
by the SARC Chairperson and with a reasonable time for the Division 
Director to review and respond. The institution should set forth all of 
the reasons, legal and factual, why it disagrees with the Division 
Director's determination. Nothing in the SARC administrative process 
shall create any discovery or other such rights.
3. 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.
4. Submissions From the Ombudsman and the Division Director
    The Ombudsman and the Division Director each may submit views 
regarding the appeal to the SARC within 30 calendar days of the date on 
which the appeal is received by the SARC.
5. Oral Presentation
    The SARC will, if a request is made by the institution or by FDIC 
staff, allow an oral presentation. The SARC may hear oral presentations 
in person, telephonically, electronically, or through other means 
agreed upon by the parties. If an oral presentation is held, the 
institution and FDIC staff will be allowed to present their positions 
on the issues raised in the appeal and to respond to any questions from 
the SARC.
6. Consolidation, Dismissal, and Rejection
    Appeals based upon similar facts and circumstances may be 
consolidated for expediency. 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. 
The SARC will decline to consider an appeal if the institution's right 
to appeal is not yet available under Section D(4), above.
7. Scope of Review and Decision
    The SARC will be an appellate body and will make independent 
supervisory determinations. 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. The SARC's 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. The SARC will 
not consider any aspect of an appeal that seeks to change or modify 
existing FDIC rules or policy. The SARC, after consultation with the 
Legal Division, will refer any appeals that raise policy matters of 
first impression to the Chairperson's Office for its consideration. The 
SARC will notify the institution, in writing, of its decision 
concerning the disputed material supervisory determination(s) within 45 
days after the date the SARC meets to consider the appeal, which 
meeting will be held within 90 days after either the date of the filing 
of the appeal or the date that the Division Director refers the appeal 
to the SARC.

H. Publication of Decisions

    Decisions of the SARC will be published as soon as practicable, and 
the published decisions will be redacted to avoid disclosure of the 
name of the appealing institution and any information exempt from 
disclosure under the Freedom of Information Act and the FDIC's document 
disclosure regulations found in 12 CFR part 309. In cases in which 
redaction is deemed insufficient to prevent improper disclosure, 
published decisions may be presented in summary form. Published SARC 
decisions may be cited as precedent in appeals to the SARC. Annual 
reports on the SARC's decisions and Division Directors' decisions with 
respect to institutions' requests for review of material supervisory 
determinations also will be published.

I. Appeal Guidelines Generally

    Appeals to the SARC will be governed by these Guidelines. The SARC, 
with the concurrence of the Legal Division, will retain discretion to 
waive any provision of the Guidelines for good cause. Supplemental 
rules governing the SARC's operations may be adopted.
    Institutions may request extensions of the time period for 
submitting appeals under these Guidelines from either the appropriate 
Division Director or the SARC Chairperson, as appropriate. If a filing 
under these Guidelines is due on a Saturday, Sunday, or a Federal 
holiday, the filing may be made on the next business day.

J. 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. 
However, pursuant to Section (G)(4) of these Guidelines, the Ombudsman 
may submit views to the SARC for its consideration in connection with 
any pending appeal.

K. 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, DCP, the Director, RMS, or the 
Director, CISR, as appropriate, 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 regulatory 
authority will be left to those parties to resolve.

L. 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 during the appeal or

[[Page 30947]]

affect the FDIC's authority to take any supervisory or enforcement 
action against that institution.

M. 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 that 
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.

N. 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, 3501 Fairfax Drive Suite E-2022, 
Arlington, Virginia, 22226, 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 appropriate Division 
Director to resolve the allegation of retaliation.

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on May 17, 2022.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2022-10904 Filed 5-19-22; 8:45 am]
BILLING CODE 6714-01-P