A proposal to create an independent office at the FDIC to oversee bank appeals of its supervisory decisions would serve “as a crucial backstop for fair and consistent supervision,” the American Bankers Association said today in a letter to the agency. The association also encouraged the FDIC to take additional steps to improve its appeals process.
The FDIC board has proposed rulemaking to eliminate the Supervision Appeals Review Committee and replace it with the independent Office of Supervisory Appeals. The agency eliminated the OSA in 2022 – not long after the office was formed as a replacement for SARC, which ABA and others said was an ineffective vehicle for banks to challenge supervisory findings.
ABA said it supports the creation of an independent office as the move would greatly strengthen both the credibility and efficiency of supervisory appeals and ensure due process for banks. “We appreciate that the OSA will be a standalone office that is separate from supervisory functions and staffed by officials with relevant supervisory experience, including former regulators and industry professionals,” it said.
Still, ABA said further refinements are necessary to create a fair appeals process. One recommendation was that the FDIC not place the burden of proof on appealing banks. “Such a requirement is not required by statute and is unnecessarily prescriptive because the process is not governed by the Administrative Procedures Act or other formal judicial review procedures,” the association said.
ABA urged greater transparency in the examination process by permitting institutions to respond to adverse findings before they are formally issued. It also recommended that the FDIC periodically review and publicize summary data on OSA decisions, with appropriate redactions; that the agency engage in clear communications with banks about the appeals process and the new office; that the FDIC monitor the transition to the OSA; and that it provide opportunities for banks to offer ongoing feedback as the OSA structure is implemented.
