ABA: FDIC Exam Appeals Changes Need to Go Further

The FDIC’s proposed supervisory changes to expand banks’ exam appeals options are positive but not nearly enough to address exam fairness problems, the American Bankers Association said in a comment letter today. The letter provided feedback on the FDIC’s proposal to amend its supervisory guidelines to expand banks’ rights to appeal exam decisions and improve consistency with other agencies’ appeals processes, which came after a blistering report earlier this year from the agency’s independent watchdog on the FDIC’s handling of banks making tax refund anticipation loans.

The FDIC’s proposal would allow banks to appeal a determination of compliance with an existing formal enforcement action and a determination to initiate an informal enforcement action. It would also modify when formal enforcement actions become unappealable and provide additional Supervision Appeals Review Committee appeal rights.

While ABA welcomed the changes as “minor but positive,” ABA said the proposed guidelines “fall well short of establishing an independent appeals process that would allow prompt and adequate correction of examination excesses and errors,” adding that “[w]e are aware of other cases where errors from the field are not corrected by [examiners’] supervisors. There is no independent avenue for appealing this internal review process when it proves inadequate.”

ABA supports bipartisan exam fairness legislation in both houses of Congress that would provide an independent appeals option to financial institutions along with safeguards to protect against retaliation, and the association urged the FDIC to lend its support to the bills. For more information, contact ABA’s Shaun Kern.