H.R.3461 - Financial Institutions Examination Fairness and Reform Act
To improve the examination of depository institutions, and for other purposes.
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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
SECTION 1. SHORT TITLE.
SEC. 2. TIMELINESS OF EXAMINATION REPORTS.
‘SEC. 1012. TIMELINESS OF EXAMINATION REPORTS.
‘(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
‘(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.
‘SEC. 1013. EXAMINATION STANDARDS.
‘(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
‘(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
SEC. 4. EXAMINATION OMBUDSMAN.
‘SEC. 1014. OFFICE OF EXAMINATION OMBUDSMAN.
‘(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
‘(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
‘(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
SEC. 5. RIGHT TO APPEAL BEFORE AN INDEPENDENT ADMINISTRATIVE LAW JUDGE.
‘SEC. 1015. RIGHT TO APPEAL BEFORE AN INDEPENDENT ADMINISTRATIVE LAW JUDGE.
‘(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
‘(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
‘(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
‘(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
‘(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 (
(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
‘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
‘(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 (
(c) Federal Credit Union Act- Section 205(j) of the Federal Credit Union Act (