HR 3461 IHCommentsClose CommentsPermalink

112th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

H. R. 3461CommentsClose CommentsPermalink

To improve the examination of depository institutions, and for other purposes.CommentsClose CommentsPermalink

IN THE HOUSE OF REPRESENTATIVESCommentsClose CommentsPermalink

November 17, 2011CommentsClose CommentsPermalink

Mrs. CAPITO (for herself, Mrs. MALONEY, Mr. BACHUS, Mr. SCHWEIKERT, Mr. POSEY, Mr. WESTMORELAND, Mr. RENACCI, Mr. CARNEY, Mr. PEARCE, and Mr. DUFFY) introduced the following bill; which was referred to the Committee on Financial ServicesCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

To improve the examination of depository institutions, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Financial Institutions Examination Fairness and Reform Act’.CommentsClose CommentsPermalink

SEC. 2. TIMELINESS OF 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:CommentsClose CommentsPermalink

‘SEC. 1012. TIMELINESS OF EXAMINATION REPORTS.

‘(a) In General-CommentsClose CommentsPermalink





‘(1) FINAL EXAMINATION REPORT- A Federal financial institutions regulatory agency shall provide a final examination report to a financial institution not later than 60 days after the later of--CommentsClose CommentsPermalink





‘(A) the exit interview for an examination of the institution; orCommentsClose CommentsPermalink





‘(B) the provision of additional information by the institution relating to the examination.CommentsClose CommentsPermalink





‘(2) EXIT INTERVIEW- If a financial institution is not subject to a resident examiner program, the exit interview shall occur not later than the end of the 9-month period beginning on the commencement of the examination, except that such period may be extended by the Federal financial institutions regulatory agency by providing written notice to the institution and the Office of Examination Ombudsman describing with particularity the reasons that a longer period is needed to complete the examination.CommentsClose CommentsPermalink





‘(b) Examination Materials- Upon the request of a financial institution, the Federal financial institutions regulatory agency shall include with the final report an appendix listing all examination or other factual information relied upon by the agency in support of a material supervisory determination.’.CommentsClose CommentsPermalink

SEC. 3. EXAMINATION STANDARDS.

(a) In General- The Federal Financial Institutions Examination Council Act of 1978 is further amended by adding after section 1012 the following:CommentsClose CommentsPermalink

‘SEC. 1013. EXAMINATION STANDARDS.

‘(a) In General- In the examination of financial institutions--CommentsClose CommentsPermalink





‘(1) a commercial loan shall not be placed in non-accrual status solely because the collateral for such loan has deteriorated in value;CommentsClose CommentsPermalink





‘(2) a modified or restructured commercial loan shall be removed from non-accrual status if the borrower demonstrates the ability to perform on such loan over a maximum period of 6 months, except that with respect to loans on a quarterly, semiannual, or longer repayment schedule such period shall be a maximum of 3 consecutive repayment periods;CommentsClose CommentsPermalink





‘(3) a new appraisal on a performing commercial loan shall not be required unless an advance of new funds is involved;CommentsClose CommentsPermalink





‘(4) in classifying a commercial loan in which there has been deterioration in collateral value, the amount to be classified shall be the portion of the deficiency relating to the decline in collateral value and repayment capacity of the borrower.CommentsClose CommentsPermalink





‘(b) Well Capitalized Institutions- The Federal financial institutions regulatory agencies may not require a financial institution that is well capitalized to raise additional capital in lieu of an action prohibited under subsection (a).CommentsClose CommentsPermalink





‘(c) Consistent Loan Classifications- The Federal financial institutions regulatory agencies shall develop and apply identical definitions and reporting requirements for non-accrual loans.’.CommentsClose CommentsPermalink





(b) Definition of Material Supervisory Determination- Section 309(f)(1)(A) of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4806(f)(1)(A)) is amended--CommentsClose CommentsPermalink





(1) in clause (ii), by striking ‘and’ at the end; andCommentsClose CommentsPermalink





(2) by inserting after clause (iii) the following:CommentsClose CommentsPermalink





‘(iv) any issue specifically listed in an exam report as a matter requiring attention by the institution’s management or board of directors; and’.CommentsClose CommentsPermalink

SEC. 4. EXAMINATION OMBUDSMAN.

(a) In General- The Federal Financial Institutions Examination Council Act of 1978 is further amended by adding after section 1013 the following:CommentsClose CommentsPermalink

‘SEC. 1014. OFFICE OF EXAMINATION OMBUDSMAN.

‘(a) Establishment- There is established in the Council an Office of Examination Ombudsman.CommentsClose CommentsPermalink





‘(b) Head of Office- There is established the position of the Ombudsman, who shall serve as the head of the Office of Examination Ombudsman, and who shall be hired separately by the Council and shall be independent from any member agency of the Council.CommentsClose CommentsPermalink





‘(c) Staffing- The Ombudsman is authorized to hire staff to support the activities of the Office of Examination Ombudsman.CommentsClose CommentsPermalink





‘(d) Duties- The Ombudsman shall--CommentsClose CommentsPermalink





‘(1) receive and, at the Ombudsman’s discretion, investigate complaints from financial institutions, their representatives, or another entity acting on behalf of such institutions, concerning examinations, examination practices, or examination reports;CommentsClose CommentsPermalink





‘(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;CommentsClose CommentsPermalink





‘(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 established by the Council;CommentsClose CommentsPermalink





‘(4) conduct a continuing and regular program of examination quality assurance for all examination types conducted by the Federal financial institutions regulatory agencies;CommentsClose CommentsPermalink





‘(5) process any supervisory appeal initiated under section 1015 or section 309(e) of the Riegle Community Development and Regulatory Improvement Act of 1994; andCommentsClose CommentsPermalink





‘(6) report annually to the Committee on Financial Services of the House of Representatives, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Council, on the reviews carried out pursuant to paragraphs (3) and (4), including compliance with the requirements set forth in section 1012 regarding timeliness of examination reports, and the Council’s recommendations for improvements in examination procedures, practices, and policies.CommentsClose CommentsPermalink





‘(e) Confidentiality- The Ombudsman shall keep confidential all meetings, discussions, and information provided by financial institutions.’.CommentsClose CommentsPermalink





(b) Definition- Section 1003 of the Federal Financial Institutions Examination Council Act of 1978 is amended--CommentsClose CommentsPermalink





(1) in paragraph (2), by striking ‘and’ at the end;CommentsClose CommentsPermalink





(2) in paragraph (3), by adding ‘and’ at the end; andCommentsClose CommentsPermalink





(3) by adding at the end the following:CommentsClose CommentsPermalink





‘(4) the term ‘Ombudsman’ means the Ombudsman established under section 1014(a).’.CommentsClose CommentsPermalink

SEC. 5. RIGHT TO APPEAL BEFORE AN INDEPENDENT ADMINISTRATIVE LAW JUDGE.

The Federal Financial Institutions Examination Council Act of 1978 is further amended by adding after section 1014 the following:CommentsClose CommentsPermalink

‘SEC. 1015. RIGHT TO APPEAL BEFORE AN INDEPENDENT ADMINISTRATIVE LAW JUDGE.

‘(a) In General- A financial institution shall have the right to appeal a material supervisory determination contained in a final report of examination.CommentsClose CommentsPermalink





‘(b) Notice-CommentsClose CommentsPermalink





‘(1) TIMING- A financial institution seeking an appeal under this section shall file a written notice with the Ombudsman within 60 days after receiving the final report or examination that is the subject of such appeal.CommentsClose CommentsPermalink





‘(2) IDENTIFICATION OF DETERMINATION- The written notice shall identify the material supervisory determination that is the subject of the appeal, and a statement of the reasons why the institution believes that the determination is incorrect or should otherwise be modified.CommentsClose CommentsPermalink





‘(3) INFORMATION TO BE PROVIDED TO INSTITUTION- Any information relied upon by the agency in the final report that is not in the possession of the financial institution may be requested by the financial institution and shall be delivered promptly by the agency to the financial institution.CommentsClose CommentsPermalink





‘(c) Hearing Before Independent Administrative Law Judge-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Ombudsman shall determine the merits of the appeal on the record, after an opportunity for a hearing before an independent administrative law judge.CommentsClose CommentsPermalink





‘(2) HEARING PROCEDURES- If a hearing is requested by the financial institution, the hearing shall--CommentsClose CommentsPermalink





‘(A) take place not later than 60 days after the notice of the appeal was received by the Ombudsman; andCommentsClose CommentsPermalink





‘(B) be conducted pursuant to the procedures set forth under sections 556 and 557 of title 5, United States Code.CommentsClose CommentsPermalink





‘(3) JUDGE RECOMMENDATION; STANDARD OF REVIEW- In any hearing under this subsection--CommentsClose CommentsPermalink





‘(A) the administrative law judge shall recommend to the Ombudsman what determination should be made; andCommentsClose CommentsPermalink





‘(B) in making such recommendation, the administrative law judge shall not defer to the opinions of the examiner or agency, but shall independently determine the appropriateness of the agency’s decision based upon the relevant statutes, regulations, and other appropriate guidance.CommentsClose CommentsPermalink





‘(d) Final Decision- A decision by the Ombudsman on an appeal under this section shall--CommentsClose CommentsPermalink





‘(1) be made not later than 60 days after the record has been closed; andCommentsClose CommentsPermalink





‘(2) be final agency action and shall bind the agency whose supervisory determination was the subject of the appeal and the financial institution making the appeal.CommentsClose CommentsPermalink





‘(e) Report- The Ombudsman 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 on actions taken on appeals under this section, including the types of issues that financial institutions have appealed and the results of those appeals. In no case shall such a report contain information about individual financial institutions or any confidential or privileged information shared by financial institutions.CommentsClose CommentsPermalink





‘(f) Retaliation Prohibited- A Federal financial institutions regulatory agency may not--CommentsClose CommentsPermalink





‘(1) retaliate against a financial institution, including service providers, or any institution-affiliated party, for exercising appellate rights under this section; orCommentsClose CommentsPermalink





‘(2) delay or deny any agency action that would benefit a financial institution or any institution-affiliated party on the basis that an appeal under this section is pending under this section.’.CommentsClose CommentsPermalink

SEC. 6. ADDITIONAL AMENDMENTS.

(a) Riegle Community Development and Regulatory Improvement Act of 1994- Section 309 of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4806), is amended--CommentsClose CommentsPermalink





(1) in subsection (a), by inserting after ‘appropriate Federal banking agency’ the following: ‘, the Bureau of Consumer Financial Protection,’;CommentsClose CommentsPermalink





(2) in subsection (b)--CommentsClose CommentsPermalink





(A) in paragraph (2), by striking ‘the appellant from retaliation by agency examiners’ and inserting ‘the insured depository institution or insured credit union from retaliation by the agencies referred to in subsection (a)’; andCommentsClose CommentsPermalink





(B) by adding at the end the following flush-left text:CommentsClose CommentsPermalink





‘For purposes of this subsection and subsection (e), retaliation includes delaying consideration of, or withholding approval of, any request, notice, or application that otherwise would have been approved, but for the exercise of the institution’s or credit union’s rights under this section.’; andCommentsClose CommentsPermalink





(3) in subsection (e)(2)--CommentsClose CommentsPermalink





(A) in subparagraph (B), by striking ‘and’ at the end;CommentsClose CommentsPermalink





(B) in subparagraph (C), by striking the period and inserting ‘; and’; andCommentsClose CommentsPermalink





(C) by adding at the end the following:CommentsClose CommentsPermalink





‘(D) ensure that appropriate safeguards exist for protecting the insured depository institution or insured credit union from retaliation by any agency referred to in subsection (a) for exercising its rights under this subsection.’.CommentsClose CommentsPermalink





(b) Federal Deposit Insurance Act- Section 18(x) of the Federal Deposit Insurance Act (12 U.S.C. 1828(x)) is amended by inserting ‘the Bureau of Consumer Financial Protection,’ before ‘any Federal banking agency’ each place such term appears.CommentsClose CommentsPermalink





(c) 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 such term appears.CommentsClose CommentsPermalink





(d) Technical Corrections- The Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3301 et seq.) is amended--CommentsClose CommentsPermalink





(1) in section 1003(1), by striking ‘the Office of Thrift Supervision,’; andCommentsClose CommentsPermalink





(2) in section 1005, by striking ‘One-fifth’ and inserting ‘One-fourth’.CommentsClose CommentsPermalink