OCC 96-18
Subject:  National Bank Appeals Process   Description: Guidance 
                                                    for Bankers

TO:  Chief Executive Officers of all National Banks, Federal
     Branches and Agencies, Department and Division Heads, and
     all Examining Personnel


PURPOSE

This issuance consolidates the Office of the Comptroller of the
Currency's (OCC) procedures for national banks to appeal agency
decisions and actions.  This guidance includes matters subject to
the National Bank Appeals Process, published as revised in the
Federal Register on February 23, 1996, and the Shared National
Credit (SNC) Appeals Process.  It also introduces a new process
for appealing fair lending-related decisions.  This issuance,
along with the Federal Register document, supersedes Banking
Circular 272, "National Bank Appeals Process," issued June 11,
1993, and OCC Bulletin 94-28, "Appeals Procedures for Bankers,"
dated April 11, 1994.

POLICY

The OCC is responsible for fostering the safety and soundness of
the national banking system and monitoring and enforcing national
banks' compliance with laws and regulations.  It is also
responsible for encouraging competitiveness, integrity, and
stability of financial services provided by the national banking
system.  In fulfilling this mission, the OCC maintains open and
ongoing communication with both the institutions it supervises
and other affected persons.  The agency also fosters the fair and
equitable administration of the supervisory process.

The OCC ombudsman functions outside the bank supervision area and
reports directly to the Comptroller of the Currency.  With the
prior consent of the Comptroller, the ombudsman may supersede any
appealable agency decision or action during the resolution of an
appealable matter.  The ombudsman also may report weaknesses in
OCC policy to the Comptroller, and may make recommendations
regarding changes in OCC policy.  The establishment of a formal
national bank appeals process does not change the core philosophy
of the OCC concerning dispute resolution.  The agency remains
committed to making every effort to resolve disputes arising
during the supervisory process fairly and expeditiously, in an
amicable, informal manner. 


National banks and federal branches and agencies of foreign banks
(collectively referred to as "national banks" for the purpose of
this issuance) are encouraged to contact the ombudsman to discuss
any agency policy, decision, or action that might develop into an
appealable matter. The ombudsman's objective in these cases is to
seek an agreeable resolution to the dispute before it develops
into a formal appeal.  This avenue provides national banks with
an opportunity to resolve issues in the most efficient and
expeditious manner possible.

If national banks cannot resolve disagreements through informal
discussions, they are encouraged to seek a further review of the
OCC decisions or actions that are in dispute.  In addition, the
OCC official involved in the dispute should specifically
encourage the national bank to seek such further review.

This issuance establishes the process through which a national
bank can seek such a review of agency decisions and actions. 
These procedures also ensure that no one is disadvantaged by
filing an appeal.  If a national bank questions whether it should
make use of this appeal authority, it should contact the
ombudsman.  In addition, the ombudsman is available to act as a
liaison between the OCC and any affected person with respect to
any problem such person may have in dealing with the OCC
resulting from its regulatory activities.  Interested parties
should direct all communications with the ombudsman to the
following address:

                     Office of the Ombudsman
                 1000 Louisiana Street, Suite 950
                    Houston, Texas 77002-5008.
           Phone - (713) 650-0475, Fax - (713) 650-6248

PROCEDURES

Appealable Matters

Except as otherwise provided, a national bank may seek a review
of any agency decision or action, including a material
supervisory determination.  Examples of material supervisory
determinations include determinations relating to: (1)
examination ratings; (2) adequacy of loan loss reserve
provisions; and (3) classifications on loans that are significant
to an institution.


A national bank may not appeal to the ombudsman or its immediate
OCC supervisory office: (1) appointments of receivers and
conservators; (2) preliminary examination conclusions
communicated to the national bank before a final report of
examination or other written communication from the OCC is issued
(although a national bank is encouraged to discuss any concerns
or disagreements regarding these conclusions with its examiner-in-
charge or its supervisory office); (3) enforcement-related
actions or decisions, including decisions to take prompt
corrective action pursuant to Section 38 of the Federal Deposit
Insurance Act (12 U.S.C.  1831o); (4) formal and informal
rulemakings pursuant to the Administrative Procedure Act, 5
U.S.C. 500 et seq.; and, (5) requests for agency records or
information under, and submission of information to the OCC that
are governed by, the Freedom of Information Act, 5 U.S.C. 552, or
12 CFR Part 4.  

An enforcement-related action or decision commences, and
therefore becomes unappealable, when the national bank receives
notice from the OCC indicating its intention to pursue available
remedies under applicable statutes or published enforcement-related 
policies of the OCC.  Such policies include OCC's Policy
for Corrective Action (PPM 5310-3)(REV), Civil Money Penalty
Policy (PPM 5000-7)(REV), and Securities Enforcement Policy (PPM
5310-5).  These policies are available on request from the OCC's
Communications Division, 250 E Street, SW, Washington, DC 20219-0001, 
or by telephone at (202) 874-4700.  For purposes of this
issuance only, remarks in a report of examination do not
constitute notice of intent to pursue enforcement remedies.

Filing an Appeal

A national bank may seek review of appealable matters by filing
an appeal with either the ombudsman or the bank's immediate OCC
supervisory office. (In the case of an appealable matter
specifically relating to an individual as opposed to a national
bank, such as section 914 or Change in Bank Control Act notices,
a national bank may file an appeal on behalf of that individual.) 
Except as otherwise provided in the process for appealing Shared
National Credit decisions and fair lending-related matters, all
appealable matters can be received in either location.  The
choice of where to file is left to the discretion of the bank,
with a few exceptions.  The procedures for filing an appeal under
these options are outlined below.


o    Appeals to the Ombudsman.  Formal appeals to the ombudsman
     may arise from two sources: (1) appeals filed directly with
     the ombudsman, or (2) second-tier appeals of supervisory
     office appeal decisions and decisions rendered under one of
     the appeals procedures designed specifically for the issue
     in dispute [fair lending-related appeals and Shared National
     Credit appeals].

          Appeals Directly to the Ombudsman: National banks
          filing appeals with the ombudsman should submit
          information in writing fully describing the matter in
          dispute.  When the ombudsman receives an appeal, he/she
          will contact the OCC management official(s) involved in
          the dispute.  That management official(s) will submit
          written materials and relevant OCC documents pertaining
          to the appeal within 10 calendar days of the notice
          from the ombudsman.  The ombudsman will contact the
          bank to ensure that the OCC has all relevant materials. 
          If requested by either the OCC management involved in
          the dispute or a senior bank official, the ombudsman
          will arrange a meeting or a telephone call to more
          fully discuss the appeal and any related issues.  In
          the absence of any extenuating circumstances, the
          ombudsman will issue a written response to the appeal
          within 45 calendar days of receipt.

          Second-Tier Appeals:  If a national bank disagrees with
          the decision rendered through a supervisory office
          appeal or a decision rendered under one of the
          specifically designated appeals procedures, the bank
          may further appeal the matter to the ombudsman.  The
          bank must file written notice of this second-tier
          appeal within 30 calendar days of receiving the appeal
          decision letter from the appropriate deputy comptroller
          or district administrator.

          When the ombudsman receives the second-tier appeal,
          he/she shall review any material considered in the
          preparation of the initial appeal response.  The
          ombudsman will contact the national bank to ensure that
          the OCC is in possession of all relevant material.  If
          requested by either OCC management involved in the
          appeal or a senior official of the national bank filing
          the appeal, the ombudsman will arrange a meeting or a
          telephone call to more fully discuss the appeal and
          related issues.  In the absence of any extenuating
          circumstances, the ombudsman will issue a written
          response to the second-tier appeal within 30 calendar
          days of the filing of that appeal. 

          Recusal of the Ombudsman:  In cases where the ombudsman
          should be recused from reviewing the decision under
          appeal, the ombudsman will transfer the appeal to a
          senior official designated by the Comptroller.

o    Supervisory Office Appeals.  Supervisory office appeals
     should be filed with the deputy comptroller or district
     administrator representing the OCC supervisory office that
     supervises the bank.  Community banks and regional banks
     should file such appeals with the deputy comptroller or
     district administrator of the OCC district in which the bank
     is headquartered.  Banks in the Multinational Banking and
     Special Supervision programs using this option should file
     appeals with the deputy comptroller for the appropriate
     program in the Washington Office.  National banks which
     choose not to file appeals of corporate decisions directly
     with the ombudsman should file with the deputy comptroller
     for Bank Organization and Structure.

     National banks filing supervisory office appeals should
     submit information in writing fully describing the matter in
     dispute and setting forth their bases for requesting an
     appeal.  Upon receipt of an appeal, a supervisory office
     official will contact the OCC employee(s) involved in the
     matter under appeal.  The supervisory office official
     includes the appropriate deputy comptroller or district
     administrator, or a designee who has not directly or
     indirectly participated in making the decision in dispute. 
     The supervisory office official should also not be directly
     or indirectly responsible to the agency official who made
     the decision under review.  The OCC employee(s) will submit
     written or oral information concerning the basis of the
     appeal.  If requested by a senior official of the national
     bank filing the appeal, the appropriate deputy comptroller
     or district administrator will arrange a meeting or a
     telephone call to more fully discuss the appeal and related
     issues.

     In the absence of any extenuating circumstances, the
     appropriate deputy comptroller or district administrator
     will issue an appeal decision letter within 45 calendar days
     of the filing of the appeal.  Immediately after issuing a
     decision letter, the deputy comptroller or district
     administrator will forward to the ombudsman copies of all
     relevant materials considered in the preparation of the
     decision letter, including all written submissions by the
     bank.


     If the national bank disagrees with the response from the
     deputy comptroller or district administrator, a senior
     official of the bank may further appeal the matter to the
     ombudsman.  The appeal decision letter from the deputy
     comptroller to the bank will notify the bank of this option. 
     The bank must file written notice of this second-tier appeal
     within 30 calendar days of receiving the appeal decision
     letter from the appropriate deputy comptroller or district
     administrator.

          Recusal of the Deputy Comptroller or District
          Administrator:  In cases where the deputy comptroller
          or district administrator directly or indirectly
          participated in making the decision under review,
          he/she must transfer the appeal to the ombudsman after
          advising the appellant. The same is true if he/she
          directly or indirectly reports to the agency official
          who made the decision under review.

o    Fair Lending-Related Matters.  When the OCC has made a
     determination that there is reason to believe there exists
     an instance or pattern or practice of discrimination that
     will result in either a referral to the Department of
     Justice or notification to the Department of Housing and
     Urban Development, the senior deputy comptroller for Bank
     Supervision-Operations will provide written notice to the
     bank of this finding.  National banks may file an appeal to
     the ombudsman for reconsideration of this decision within 15
     calendar days of the date of this letter.

o    Shared National Credits.  Bank senior management should
     notify the examiner-in-charge assigned to the bank when any
     significant disagreement becomes apparent with a decision
     rendered through the Shared National Credit Program.  If the
     bank and the examining team are unable to resolve the
     disagreement through informal discussions, the bank is
     encouraged to appeal the decision to the deputy comptroller
     for Multinational Banking.

          Who May Submit a SNC Appeal:  A SNC appeal may be
          submitted by the agent bank directly, or on behalf of
          any of the participating national banks.  If the agent
          bank refuses, for whatever reason, to file the appeal
          on behalf of the bank group, Multinational Banking will
          accept an appeal from any one participating bank. 
          Banks must file SNC appeals with the regulator that
          supervises the agent bank.  Therefore, if a state
          member bank is a participant in a credit that is
          agented by a national bank, the state-member bank must
          file its appeal with the OCC.  Conversely, if a
          national bank is a participant in a credit for which a
          state-member bank is agent, the national bank must file
          its appeal with the Federal Reserve Board.  When there
          is no agent bank named, the appeal should be filed
          through the regulator that supervises the bank at which
          the SNC was reviewed.  To ensure that the bank's senior
          management supports the appeal, the chief executive
          officer (CEO) must submit all SNC appeals.

          Timing of SNC Appeals:  The agent bank should normally
          file a SNC appeal within 14 days of notification by the
          examiner-in-charge of the preliminary disposition of
          the credit.  Multinational Banking will evaluate the
          timing of SNC appeals filed by a participant bank(s)
          (in the absence of an appeal by the agent), if not
          filed within the 14-day period.  Multinational Banking
          will also evaluate on a case-by-case basis the
          reasonableness of appeals delayed by other extenuating
          circumstances.

          Participating banks sometimes comment that they are
          unable to file an appeal within the prescribed time
          frames.  This is because they are not aware of the
          disposition of any credit until officially notified by
          OCC at the end of the SNC processing period (usually
          late July or early August).  Agent and participant
          banks should follow standards for "prudent transfer of
          credit information" as described in Banking Circular
          181 (REV), "Purchases of Loans in Whole or in Part 
          Participations."  The guidance set forth in that
          issuance applies to all participating banks, whatever
          their relationship to the lead or agent bank.  The SNC
          preliminary notification letter authorizes agent or
          review banks, at their option, to notify participating
          banks of the preliminary disposition of each credit. 
          The regulatory agencies perform the SNC review at the
          same time each year.  In the absence of such
          preliminary notification from the agent during the
          Spring review or Fall re-reviews, participating banks
          should request from the agent the information on facts
          underlying any examiner criticisms of loans in the SNC
          program.

          The report of shared national credits is issued
          annually to national banks participating in the SNC
          Program at the end of each SNC review.  Because of
          processing deadlines, the report may not reflect
          decisions on SNC appeals submitted beyond the 14-day
          filing period.  In such cases, Multinational Banking
          will send a supplemental letter to each participating
          institution notifying them of the results of the
          appeal.  The letter will also communicate any necessary
          revisions to each bank's report of shared national
          credits. 

          SNC Appeal Letter:  In drafting a SNC appeal letter,
          senior bank management should explain why it disagrees
          with the SNC decision.  The SNC appeal letter must
          identify the credit, commitment amount, disposition,
          basis for the bank's disagreement, and any
          documentation that supports management's position on
          the matter(s) in dispute.  Banks should address all SNC
          appeals as follows: Deputy Comptroller for
          Multinational Banking, Comptroller of the Currency,
          Washington, DC  20219.

          SNC Appeal Processing:  Once a SNC appeal is received
          in the Washington Office, the deputy comptroller for
          Multinational Banking will immediately acknowledge
          receipt by letter to the CEO of the bank filing the
          appeal.  Multinational Banking will normally forward a
          copy of the appeal letter and supporting information to
          the voting team within three working days of the
          receipt date.  The voting team will then confirm the
          accuracy of the facts presented in the appeal letter.

          Multinational Banking will also forward a copy of the
          appeal letter to the examiner-in-charge of the bank and
          to the appropriate SNC field coordinator.  Each
          individual should provide his/her formal comments and
          opinions to the deputy comptroller for Multinational
          Banking within 10 working days after the receipt date. 
          The deputy comptroller for Multinational Banking will
          normally grant requests by bank management for a
          meeting to discuss the issues in dispute.

          A SNC appeals panel, consisting of examiners designated
          by the deputy comptroller of Multinational Banking, or
          his/her designee, will evaluate the decision of the
          voting team.  Until the regulatory agencies develop an
          interagency statement on SNC appeals, the OCC will
          consult with FRB and FDIC on all appeals from national
          banks.  Multinational Banking will normally conclude
          the entire SNC appeal process by July 31.  Immediately
          after issuing a decision letter, the deputy comptroller
          for Multinational Banking will forward to the ombudsman
          copies of all relevant materials considered in
          preparation of the response, including all written
          submissions by the bank.  If a bank disagrees with the
          decision rendered through the SNC appeals process, it
          may further appeal the matter to the ombudsman.  The
          appeal decision letter from the deputy comptroller to
          the bank will notify the bank of this option.  The bank
          must file written notice of this second-tier appeal
          within 30 calendar days of receiving the appeal
          decision letter from the deputy comptroller for
          Multinational Banking.

     For more information concerning the appeal of a Shared
     National Credit decision, please contact the Washington SNC
     Program Manager in Multinational Banking at (202) 874-4610.

Effect of Filing an Appeal

As a general rule, filing an appeal under any of the options
available serves to stay all agency decisions and actions until
the appropriate OCC official resolves the appeal.  A stay does
not allow a corporate matter to be approved simply by the passage
of time.  In the appropriate circumstances, however, the
ombudsman or appropriate OCC official may put the disputed agency
decision or action into effect while the appeal is still pending.

Follow-up by the Ombudsman

After the appropriate OCC official renders a decision on an
appeal, the ombudsman will contact the appellant bank to ask
whether the bank believes OCC examiners have taken actions
against the bank in retaliation for its appeal.  The ombudsman
will make these contacts (1) six months after the date of the
decision letter, and (2) six months after the date of completion
of the first examination of the appellant bank following its
appeal.  A national bank may, of course, contact the ombudsman
any time during or after the appeal if the bank reasonably
believes that an OCC official is retaliating against it for its
appeal.

Upon identifying or learning of any possible retaliatory actions,
the ombudsman will investigate the complaint.  In the absence of
extenuating circumstances, such investigations will be completed
within 30 days.  If the ombudsman finds that retaliation has
occurred, he/she will forward the complaint to the senior deputy
comptroller for Bank Supervision-Operations or inspector general
for appropriate action, including disciplinary action consistent
with OCC policies and procedures.  In addition, to prevent future
retaliation for an appeal, the ombudsman may recommend to the
Comptroller that the next examination of the national bank
exclude personnel involved in a ruling appealed by that bank. 
The Comptroller will make the final decision on any exclusion.

Liaison Activity of Ombudsman

In addition to hearing and deciding appeals brought by national
banks, the ombudsman is available to act as a liaison between the
OCC and any affected person(s).  Such help may relate to any
problem or question the party may have in dealing with the OCC
resulting from the OCC's regulatory activities.  The ombudsman
will either provide the requested information or direct the
person to the appropriate point of contact.  In so doing, the
ombudsman will ensure that safeguards exist to encourage persons
to come forward and to preserve the confidentiality of those
seeking information or identifying a concern.

Interested parties may also call the OCC's Customer Assistance
Hotline, located in the OCC's Washington office, to report any
problems or concerns they may have regarding national banks.  The
toll-free number is 1-800-613-6743.  In addition, interested
persons may also comment on proposed OCC rulemakings published in
the Federal Register for notice and comment by filing written
comments with the OCC, as described in the rulemaking.




                                                  
Eugene A. Ludwig
Comptroller of the Currency
Date: February 23, 1996

Attachment:
Fed. Reg. Vol. 61, No. 37, pg. 7042, February 23, 1996