79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–589 

FINANCIAL INSTITUTIONS EXAMINATION FAIRNESS AND 

REFORM ACT 

MARCH 6, 2018.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 4545] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 4545) to amend the Federal Financial Institutions Examination Council Act of 1978 to improve the examination of depository institutions, and for other purposes, having considered the 

same, report favorably thereon without amendment and recommend that the bill do pass. 

PURPOSE AND SUMMARY

Introduced by Representative Tipton on December 4, 2017, the 

‘‘Financial Institutions Examination Fairness and Reform Act’’ 

amends the Federal Financial Institutions Examination Council 

Act of 1978 to establish deadlines within which regulatory agencies 

must hold exit interviews and issue final examination reports to financial institutions. The bill would also provide supervised financial institutions the right to have material supervisory determinations reviewed by a newly created Independent Examination Review Director within the Federal Financial Institutions Examination Council (FFIEC). 

2 

1 12 U.S. Code 4806. 

BACKGROUND AND NEED FOR LEGISLATION

Currently, federal law mandates a process to appeal regulatory 

determinations including examination results. In 1994, to promote 

fairness and transparency in examinations, Congress directed the 

federal regulators of financial institutions to establish an ‘‘independent intra-agency appellate process’’ by which an institution 

could seek review of certain regulatory determinations, including 

(1) examination ratings, (2) adequacy of loan loss reserves, and (3) 

classifications of loans significant to the institution.1 Collectively, 

these determinations are known as ‘‘material supervisory determinations.’’ Each federal financial regulator has instituted its own 

unique process for appeals of material supervisory determinations. 

The Committee has heard testimony that the intra-agency review 

to appeal material supervisory determinations provides financial 

institutions with limited opportunities to challenge, that the appeals process is not impartial, and that to either appeal or oppose 

examination findings incurs retaliation from regulators. 

In a letter of support for H.R. 4545 dated December 6, 2017, the 

American Bankers Association wrote: 

H.R. 4545 establishes clear standards by giving supervised financial institutions the right to have material supervisory determinations reviewed by an independent Examination Review Director to ensure the consistency of all 

examinations. The legislation would also ensure that financial institutions receive timely examination reports 

that include full documentation of the information the regulators used to make their determinations; would create 

an expedited process for banks to appeal examination decisions; and would impose safeguards to ensure institutions 

do not improperly use the review process. 

This legislation takes a major step toward a more balanced and transparent approach regarding regulators’ decision-making during the examination process. 

On December 12, 2017, the Independent Community Bankers Association wrote in support of H.R. 4545, stating: 

H.R. 4545 would create an Office of Independent Examination Review within the Federal Financial Institutions 

Examination Council (FFIEC) and give financial institutions a right to an expedited, independent review of a material supervisory determination before the Office’s Director . . . 

. . . Taking the appeals process out of the examining 

agencies is a positive step. While not completely independent of the agencies the FFIEC is com posed of each 

banking agency we expect that this level of separation between the appeals process and the agencies will provide a 

mea sure of distance and insulation. 

3 

HEARINGS

The Committee on Financial Services held a hearing examining 

matters relating to H.R. 4545 on April 26, 2017, and April 28, 

2017. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on December 13, 2017, and ordered H.R. 4545 to be reported favorably 

to the House without amendment by a recorded vote of 50 yeas to 

10 nays (FC–127), a quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The first recorded 

vote (FC–126) was on an amendment offered by Representative 

Waters (CA). The amendment failed by a vote of 26 ayes to 34 

nays. The second recorded vote was on a motion by Chairman Hensarling to report the bill favorably to the House without amendment. The motion was agreed to by a recorded vote of 50 yeas to 

10 nays (FC–127), a quorum being present. 

4 


Insert graphic folio 4 HR589.001

Record vote no. FC-126 

Representative Yea Nay Present Representative 

Mr. Hensarling···--··-··---·· 

Mr. McHenry ................ . 

Mr. King ---------------------

Mr. Royce (CA) ............. .. 

Mr Lucas----·---------------

Mr. Pearce-------------·-----

Mr. Posey---------------·----

Mr. Luetkemeyer ____________ __ 

Mr. Huizenga .............. .. 

Mr. Duffy .................... . 

Mr. St1vers ·------------------

Mr. Hultgren-----------------

Mr. Ross---------------------

Mr. Pittenger ____ .. _ .. ______ __ 

Mrs. Wagner ______ .. ________ _ 

Mr. Barr ·--·--------------··· Mr. Rothfus ________________ __ 

Mr. Messer __________________ _ 

Mr. Tipton--------------------

Mr. Williams----------------· 

Mr. Poliquin------------------

Mrs. Love--------------------

Mr. Hill ·---------------------

Mr. Emmer-------------------

Mr. Zeldin-------------------· 

Mr. Trott---------------------

Mr Loudermilk---------------

Mr. Mooney (WV) ____________ __ 

Mr. MacArthur ---------------

Mr Dav1dson................. ~ 

Mr. Budd -------------------- X 

Mr. Kustoff (TNL____________ X 

Ms. Tenney------------------- -~ 

Mr. Hollingsworth_____________ -~ 

Ms. Maxine Waters (CA) ------

Mrs. Carolyn B. Maloney (NYL 

Ms. Velazquez ____ ------------

Mr Sherman-----------------

Mr. Meeks -------------------

Mr. Capuano-----------------

Mr. Clay --------------------- Mr. Lynch __ .. _ .... _ .. ______ __ 

Mr. David Scott (GA) ----------

Mr. AI Green (TX) ........... .. 

Mr. Cleaver------------------

Ms. Moore--------------------

Mr. Ellison-------------------

Mr. Perlmutter ---------------

Mr. Himes -------------------

Mr Foster_. __ ... _______ .. __ .. 

Mr K1ldee __________ .. __ ..... _ 

Mr. Delaney------------------

Ms. Smema ------------------

Mrs. Beatty------------------

Mr Heck---------------------

Mr. Vargas-------------------

Mr. Gottheimer ---------------

Mr. Gonzalez (TX) ___________ __ 

Mr. Crist---------------------

Mr. Kihuen -------------------

Yea Nay Present 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 

~ 
5 


Insert graphic folio 5 HR589.002

Representative 

Mr. Hensarling ............. .. 

Mr. McHenry ......•.....•..•. 

Mr. King ....•..............•. 

Mr. Royce (CA) _______ ... _ .... 

Mr. lucas ...................• 

Mr. Pearce···-------·-·-····· 

Mr. Posey ................•.•. 

Mr. Luetkemeyer. ___________ .. 

Mr. Huizenga ............... . 

Mr. Duffy ····----------------

Mr. Stivers···--·------··-···· 

Mr. Hultgren---·------------· 

Mr. Ross·····-·-----·-·--···· 

Mr. Pittenger--·-············· 

Mrs. Wagner···-···--·-------

Mr. Barr .................... . 

Mr. Rothfus ·····-------------

Mr. Messer .................. . 

Mr. Tipton--·····-------------

Mr. Williams ·······----------

Mr. Poliquin ................ .. 

Mrs. Love ................... . 

Mr. Hill ----·--·--------------

Mr Emmer---···-------------

Mr. Zeldin .... __ ............ _. 

Mr. Trott .••••................ 

Yea 

Mr. Loudermilk_______________ X 

Mr. Mooney (WV)... .... .. ... • . X 

Mr. MacArthur .............. . 

Mr. Davidson ________________ _ 

Mr. Budd ·······-------------

Mr. Kustoff (TNL ........... . 

Ms. Tenney--·····------------

Mr. Hollingsworth ____________ _ 

Record vote no. FC-127 

Nay Present Representative 

Ms. Maxine Waters (CA) _____ _ 

Mrs. Carolyn B. Maloney (NY) __ 

Ms. Velazquez····--·····-----

Mr. Sherman ................ . 

Mr. Meeks __________________ _ 

Mr. Capuano ............... .. 

Mr. Clay ................... .. 

Mr. lynch ................... . 

Mr. David Scott (GAl ________ __ 

Mr. AI Green (TX) ............ . 

Mr. Cleaver ................ .. 

Ms. Moore .................. . 

Mr. Ellison _________________ __ 

Mr. Perlmutter ______________ _ 

Mr. Himes ------------------· 

Mr. Foster ................... . 

Mr. Kildee ................... . 

Mr. Delaney _________________ _ 

Ms. Sinema ----------·------· 

Mrs. Beatty ------·-----------

Mr. Heck--------------------· 

Mr. Vargas------------------· 

Mr. Gottheimer .............. . 

Mr. Gonzalez (TX) ............ . 

Mr. Crist ___________________ __ 

Mr K1huen -------------------

Yea Nay Present 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

.X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 
6 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 4545 will reform the federal financial regulatory agency examination process to 

make it more efficient, responsive, and fair for financial institutions. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, February 12, 2018. 

Hon. JEB HENSARLING, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4545, the Financial Institutions Examination Fairness and Reform Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Stephen Rabent. 

Sincerely, 

KEITH HALL, Director. 

Enclosure. 

H.R. 4545—Financial Institutions Examination Fairness and Reform Act 

Summary: H.R. 4545 would establish the Office of Independent 

Examination Review within the Federal Financial Institutions Examination Council (FFIEC). The new office would investigate complaints from financial institutions about examinations, regularly review the quality of examinations, and adjudicate appeals of determinations made within examinations. 

7 

CBO estimates that enacting H.R. 4545 would increase net direct spending by $82 million and reduce revenues by $41 million over 

the 2018–2027 period. In total, CBO estimates, enacting H.R. 4545 

would increase budget deficits by $123 million over the 2018–2027 

period. Implementing H.R. 4545 would not affect spending subject 

to appropriation. 

Because enacting the bill would affect direct spending and revenues, pay-as-you-go procedures apply. 

CBO estimates that enacting H.R. 4545 would not increase net direct spending or on-budget deficits by more than $2.5 billion in 

any of the four consecutive 10-year periods beginning in 2028. 

H.R. 4545 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA). If financial regulators increase fees to offset some of the costs of implementing the 

bill, H.R. 4545 would increase the cost of an existing mandate on 

private entities required to pay those fees. Using information from 

the affected agencies, CBO estimates that the incremental cost of 

the mandate would fall well below the annual threshold for private-sector mandates established in UMRA ($156 million in 2017, 

adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary effect of H.R. 4545 is shown in the following table. The costs 

of the legislation fall within budget function 370 (commerce and 

housing credit). 

By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018– 

2022 

2018– 

2027 

INCREASES IN DIRECT SPENDING 

Office of Independent Examination Review: 

Estimated Budget Authority ............. 0 6 9 9 9 9 9 9 9 10 34 79 

Estimated Outlays ............................ 0 5 8 9 9 9 9 9 9 10 33 78 

Other Administrative Costs: 

Estimated Budget Authority ............. 0 * * * 1 1 1 1 1 1 2 5 

Estimated Outlays 0 * * * 1 1 1 1 1 1 2 4 

Total: 

Estimated Budget: 

Authority ................................... 0 7 9 9 9 9 10 10 10 10 36 84 

Estimated Outlays ................... 0 6 9 9 9 9 10 10 10 10 35 82 

DECREASES IN REVENUES 

Federal Reserve ......................................... 0 ¥3 ¥4 ¥4 ¥5 ¥5 ¥5 ¥5 ¥5 ¥5 ¥17 ¥41 

NET INCREASE IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES 

Effect on the Deficit .................................. 0 9 13 14 14 14 14 15 15 15 50 123 

Components may not sum to totals because of rounding; * = between zero and $500,000. 

Basis of estimate: For this estimate, CBO assumes that H.R. 

4545 will be enacted near the end of fiscal year 2018. Estimated 

spending is based on historical patterns for similar regulatory activities. 

Background 

The FFIEC was established to promote uniformity in supervision 

of financial institutions. Generally, the majority of its operating 

costs are borne by four financial regulatory agencies: the Office of 

the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union AdministraVerDate Sep 11 2014 07:25 Mar 07, 2018 Jkt 079006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR589.XXX HR589
8 

tion (NCUA), and the Federal Reserve System. Some costs currently are covered by the Consumer Financial Protection Bureau 

(CFPB) and the Department of Housing and Urban Development. 

Of the regulators, the OCC, the FDIC, and the NCUA collect fees 

to offset operating costs. Because of lags between the time costs are 

incurred by some of the financial regulators and when additional 

fees would be imposed, not all additional costs resulting from the 

bill would be recovered within the next 10 years. Costs borne by 

the CFPB are recorded in the budget as direct spending because 

the agency has permanent authority to spend amounts transferred 

from the Federal Reserve. Finally, costs incurred by the Federal 

Reserve would reduce remittances to the Treasury (which are recorded as revenues). 

Currently, the FFIEC is supported by 16 people who are employed by the regulatory agencies but assigned to the council. 

Office of Independent Examination Review 

CBO expects that establishing the new office would require a significant increase in the council’s staff. Using information from the 

FFIEC, CBO estimates that an additional 60 staff positions would 

be needed to meet the bill’s requirements to investigate and resolve 

appeals and to review examination procedures. Under H.R. 4545, 

the costs of the office would be covered by the OCC, the NCUA, the 

FDIC, the CFPB, and the Federal Reserve. CBO expects that it 

would take several years to reach the new staffing level and that 

the costs would be spread evenly among the five regulatory agencies. 

Based on the average cost for each employee of $225,000, CBO 

estimates that establishing the office would cost $192 million over 

the 2018–2027 period to supply the FFIEC with additional people 

and to cover other operating expenses. That amount reflects some 

savings to the regulators because a portion of the complaints they 

receive under current law would instead be handled by FFIEC. 

CBO estimates that 80 percent of the net cost, or $154 million, 

would be spread equally among the FDIC, the OCC, the NCUA and 

the CFPB—increasing gross direct spending by that amount. 

Three of those regulators collect fees to offset operating costs. 

CBO estimates that over the 10-year period, additional fees collected from financial institutions would total about $76 million. On 

net, CBO estimates, enacting H.R. 4545 would increase direct 

spending by $78 million over the 2018–2027 period. 

The remaining 20 percent of the costs would be charged to the 

Federal Reserve (see ‘‘The Federal Reserve’’ below). 

Other administrative costs 

H.R. 4545 also would establish deadlines for the federal banking 

regulators to complete examination reports. Using information 

from those agencies, CBO estimates that they would need to hire 

additional staff to meet the deadlines established in the bill, at an 

estimated net cost of about $4 million over the 2018–2027 period. 

That cost accounts for anticipated increases in fee collections during the period. 

9 

The Federal Reserve 

Because the Federal Reserve remits its profits to the Treasury, 

increasing the costs of operating the Federal Reserve reduces federal revenues. CBO estimates that the portion of the costs to establish the Office of Independent Examination Review that would be 

allocated to the Federal Reserve, combined with additional administrative costs to meet deadlines established under the bill, would 

average about $4 million per year over the 2018–2027 period. CBO 

estimates that revenues would decline by $42 million over the next 

10 years under H.R. 4545. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays and revenues that are subject to those pay-asyou-go procedures are shown in the following table. 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4545, AS ORDERED REPORTED BY THE 

HOUSE COMMITTEE ON FINANCIAL SERVICES ON DECEMBER 13, 2017 

By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018– 

2022 

2018– 

2027 

NET INCREASE IN THE DEFICIT 

Statutory Pay-As-You-Go Impact ............... 0 9 13 14 14 14 14 15 15 15 50 123 

Memorandum: 

Changes in Outlays .......................... 0 6 9 9 9 9 10 10 10 10 33 82 

Changes in Revenues ....................... 0 ¥3 ¥4 ¥4 ¥5 ¥5 ¥5 ¥5 ¥5 ¥5 ¥17 ¥41 

Increase in long-term direct spending and deficits: CBO estimates that enacting H.R. 4545 would not increase net direct spending or on-budget deficits by more than $2.5 billion in any of the 

four consecutive 10-year periods beginning in 2028. 

Mandates: H.R. 4545 contains no intergovernmental mandates as 

defined in UMRA. 

If financial regulators increased fees to offset some of the costs 

of implementing the new activities of the FFIEC, the bill would increase the cost of an existing mandate on private entities required 

to pay those fees. Using information from the affected agencies, 

CBO estimates that the incremental cost of the mandate would 

amount to no more than $25 million over the 2018–2022 period and 

would fall well below the annual threshold for private-sector mandates established in UMRA ($156 million in 2017, adjusted annually for inflation). 

Estimate prepared by: Federal costs: Stephen Rabent and Sarah 

Puro, Revenues: Nathaniel Frentz, Mandates: Rachel Austin. 

Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995. 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

10 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, (115th Congress), the following statement is made concerning directed rule makings: The 

Committee estimates that the bill requires no directed rule makings within the meaning of such section. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section cites H.R. 4545 as the ‘‘Financial Institutions Examination Fairness and Reform Act.’’ 

Section 2. Amendment to definition of financial institution 

This section amends the definition of ‘‘financial institution’’ in 

the Federal Financial Institutions Examination Council Act of 1978 

to include, for the purposes of sections 1012, 1013, and 1014, a nondepository covered person subject to supervision by the Bureau of 

Consumer Financial Protection. 

Section 3. Timeliness of examination reports 

This section amends the Federal Financial Institutions Examination Council Act of 1978 to require a federal financial institutions 

regulatory agency to make a final examination report to a financial 

institution within 60 days after the later of: (1) the exit interview 

11 

for an examination of the institution, or (2) the provision of additional information by the institution relating to the examination. 

Section 4. Independent Examination Review Director 

This section establishes in the Federal Financial Institutions Examination Council (FFIEC) the Office of Independent Examination 

Review, headed by a Director appointed by the FFIEC, but independent from any member agency of the FFIEC. 

Section 5. Right to independent review of material supervisory determinations 

This section entitles a financial institution to appeal a material 

supervisory determination contained in a final report of examination; requires the Director to determine the merits of the appeal 

and grants a financial institution the right to petition for judicial 

review of the Director’s decision. 

This section allows for a limited review by the FFIEC if there is 

substantial evidence that the Director’s decision would pose an imminent threat to the safety and soundness of the financial institution. 

This section also prohibits a federal financial institutions regulatory agency from retaliating against a financial institution or delaying or denying any agency action that would benefit a financial 

institution. 

Section 6. Additional amendments 

This section requires the Consumer Financial Protection Bureau 

to establish an independent intra-agency appellate process in connection with the regulatory appeals process, and establishes safeguards to protect an insured depository institution or insured credit 

union from retaliation by any federal banking agency for exercising 

its rights. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

FEDERAL FINANCIAL INSTITUTIONS EXAMINATION 

COUNCIL ACT OF 1978 

* * * * * * * 

12 

TITLE X—FEDERAL FINANCIAL INSTITUTIONS 

EXAMINATION COUNCIL 

* * * * * * * 

DEFINITIONS

SEC. 1003. As used in this title— 

ø(1) the term ‘‘Federal financial institutions regulatory agencies’’ means the Office of the Comptroller of the Currency, the 

Board of Governors of the Federal Reserve System, the Federal 

Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration;¿ 

(1) the term ‘‘Federal financial institutions regulatory agencies’’— 

(A) means the Office of the Comptroller of the Currency, 

the Board of Governors of the Federal Reserve System, the 

Federal Deposit Insurance Corporation, and the National 

Credit Union Administration; and 

(B) for purposes of sections 1012, 1013, and 1014, includes the Bureau of Consumer Financial Protection; 

(2) the term ‘‘Council’’ means the Financial Institutions Examination Council; and 

ø(3) the term ‘‘financial institution’’ means a commercial 

bank, a savings bank, a trust company, a savings association, 

a building and loan association, a homestead association, a cooperative bank, or a credit union;¿ 

(3) the term ‘‘financial institution’’— 

(A) means a commercial bank, a savings bank, a trust 

company, a savings association, a building and loan association, a homestead association, a cooperative bank, or a 

credit union; and 

(B) for purposes of sections 1012, 1013, and 1014, includes a nondepository covered person subject to supervision by the Bureau of Consumer Financial Protection 

under section 1024 of the Consumer Financial Protection 

Act of 2010 (12 U.S.C. 5514). 

* * * * * * * 

EXPENSES OF THE COUNCIL

SEC. 1005. øOne-fifth¿ One-fourth of the costs and expenses of 

the Council, including the salaries of its employees, shall be paid 

by each of the Federal financial institutions regulatory agencies. 

Annual assessments for such share shall be levied by the Council 

based upon its projected budget for the year, and additional assessments may be made during the year if necessary. 

* * * * * * * 

SEC. 1012. TIMELINESS OF EXAMINATION REPORTS. 

(a) IN GENERAL.— (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— 

13 

(A) the exit interview for an examination of the institution; or 

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

(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 

Independent Examination Review Director describing with particularity the reasons that a longer period is needed to complete 

the examination. 

(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. 

SEC. 1013. OFFICE OF INDEPENDENT EXAMINATION REVIEW. 

(a) ESTABLISHMENT.—There is established in the Council an Office of Independent Examination Review (the ‘‘Office’’). 

(b) HEAD OF OFFICE.—There is established the position of the 

Independent Examination Review Director (the ‘‘Director’’), as the 

head of the Office. The Director shall be appointed by the Council 

and shall be independent from any member agency of the Council. 

(c) TERM.—The Director shall serve for a term of 5 years, and 

may be appointed to serve a subsequent 5-year term. 

(d) STAFFING.—The Director is authorized to hire staff to support 

the activities of the Office. 

(e) DUTIES.—The Director shall— 

(1) receive and, at the Director’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; 

(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; 

(3) in accordance with subsection (f), 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; 

(4) conduct a continuing and regular review of examination 

quality assurance for all examination types conducted by the 

Federal financial institutions regulatory agencies; 

(5) adjudicate any supervisory appeal initiated under section 

1014; and 

(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 

14 

regarding timeliness of examination reports, and the Council’s 

recommendations for improvements in examination procedures, 

practices, and policies. 

(f) STANDARD FOR REVIEWING EXAMINATION PROCEDURES.—In 

conducting reviews pursuant to subsection (e)(4), the Director shall 

prioritize factors relating to the safety and soundness of the financial system of the United States. 

(g) REMOVAL.—If the Director is removed from office, the Council 

shall communicate in writing the reasons for any such removal to 

the Committee on Financial Services of the House of Representatives 

and the Committee on Banking, Housing, and Urban Affairs of the 

Senate not later than 30 days before the removal. 

(h) CONFIDENTIALITY.—The Director shall keep confidential all 

meetings with, discussions with, and information provided by financial institutions. 

SEC. 1014. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SUPERVISORY DETERMINATIONS. 

(a) IN GENERAL.—A financial institution shall have the right to 

obtain an independent review of a material supervisory determination contained in a final report of examination. 

(b) NOTICE.— 

(1) TIMING.—A financial institution seeking review of a material supervisory determination under this section shall file a 

written notice with the Independent Examination Review Director (the ‘‘Director’’) within 60 days after receiving the final report of examination that is the subject of such review. 

(2) IDENTIFICATION OF DETERMINATION.—The written notice 

shall identify the material supervisory determination that is the 

subject of the independent examination review, and a statement 

of the reasons why the institution believes that the determination is incorrect or should otherwise be modified. 

(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. 

(c) RIGHT TO HEARING.— 

(1) IN GENERAL.—The Director shall determine the merits of 

the appeal on the record or, at the financial institution’s election, shall refer the appeal to an Administrative Law Judge to 

conduct a confidential hearing pursuant to the procedures set 

forth under sections 556 and 557 of title 5, United States Code, 

which hearing shall take place not later than 60 days after the 

petition for review was received by the Director, and to issue a 

proposed decision to the Director based upon the record established at such hearing. 

(2) STANDARD OF REVIEW.—In rendering a determination or 

recommendation under this subsection, neither the Administrative Law Judge nor the Director shall defer to the opinions of 

the examiner or agency, but shall conduct a de novo review to 

independently determine the appropriateness of the agency’s decision based upon the relevant statutes, regulations, and other 

appropriate guidance, as well as evidence adduced at any hearing. 

15 

(d) FINAL DECISION.—A decision by the Director on an independent review under this section shall— 

(1) be made not later than 60 days after the record has been 

closed; and 

(2) subject to subsection (e), be deemed a final agency action 

and shall bind the agency whose supervisory determination was 

the subject of the review and the financial institution requesting 

the review. 

(e) LIMITED REVIEW BY FFIEC.— 

(1) IN GENERAL.—If the agency whose supervisory determination was the subject of the review believes that the Director’s decision under subsection (d) would pose an imminent threat to 

the safety and soundness of the financial institution, such agency may file a written notice seeking review of the Director’s decision with the Council within 10 days of receiving the Director’s 

decision. 

(2) STANDARD OF REVIEW.—In making a determination under 

this subsection, the Council shall conduct a review to determine 

whether there is substantial evidence that the Director’s decision would pose an imminent threat to the safety and soundness of the financial institution. 

(3) FINAL DETERMINATION.—A determination by the Council 

shall— 

(A) be made not later than 30 days after the filing of the 

notice pursuant to paragraph (1); and 

(B) be deemed a final agency action and shall bind the 

agency whose supervisory determination was the subject of 

the review and the financial institution requesting the review. 

(f) RIGHT TO JUDICIAL REVIEW.—A financial institution shall 

have the right to petition for review of final agency action under this 

section by filing a Petition for Review within 60 days of the Director’s decision or the Council’s decision in the United States Court 

of Appeals for the District of Columbia Circuit or the Circuit in 

which the financial institution is located. 

(g) REPORT.—The Director shall report annually to the Committee 

on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate on actions taken under this section, including the types of issues that the 

Director has reviewed and the results of those reviews. In no case 

shall such a report contain information about individual financial 

institutions or any confidential or privileged information shared by 

financial institutions. 

(h) RETALIATION PROHIBITED.—A Federal financial institutions 

regulatory agency may not— 

(1) retaliate against a financial institution, including service 

providers, or any institution-affiliated party (as defined under 

section 3 of the Federal Deposit Insurance Act), for exercising 

appellate rights under this section; or 

(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. 

(i) RULE OF CONSTRUCTION.—Nothing in this section may be construed— 

16 

(1) to affect the right of a Federal financial institutions regulatory agency to take enforcement or other supervisory actions 

related to a material supervisory determination under review 

under this section; or 

(2) to prohibit the review under this section of a material supervisory determination with respect to which there is an ongoing enforcement or other supervisory action. 

RIEGLE COMMUNITY DEVELOPMENT AND REGULATORY 

IMPROVEMENT ACT OF 1994 

* * * * * * * 

TITLE III—PAPERWORK REDUCTION 

AND REGULATORY IMPROVEMENT 

* * * * * * * 

SEC. 309. REGULATORY APPEALS PROCESS, OMBUDSMAN, AND ALTERNATIVE DISPUTE RESOLUTION. 

(a) IN GENERAL.—Not later than 180 days after the date of enactment of this Act, each appropriate Federal banking agency, the Bureau of Consumer Financial Protection, and the National Credit 

Union Administration Board shall establish an independent intraagency appellate process. The process shall be available to review 

material supervisory determinations made at insured depository institutions or at insured credit unions that the agency supervises. 

(b) REVIEW PROCESS.—In establishing the independent appellate 

process under subsection (a), each agency shall ensure that— 

(1) any appeal of a material supervisory determination by an 

insured depository institution or insured credit union is heard 

and decided expeditiously; and 

(2) appropriate safeguards exist for protecting øthe appellant 

from retaliation by agency examiners¿ the insured depository 

institution or insured credit union from retaliation by the agencies referred to in subsection (a) . 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. 

(c) COMMENT PERIOD.—Not later than 90 days after the date of 

enactment of this Act, each appropriate Federal banking agency 

and the National Credit Union Administration Board shall provide 

public notice and opportunity for comment on proposed guidelines 

for the establishment of an appellate process under this section. 

(d) AGENCY OMBUDSMAN.— (1) ESTABLISHMENT REQUIRED.—Not later than 180 days 

after the date of enactment of this Act, each Federal banking 

agency and the National Credit Union Administration Board 

shall appoint an ombudsman. 

(2) DUTIES OF OMBUDSMAN.—The ombudsman appointed in 

accordance with paragraph (1) for any agency shall— 

(A) act as a liaison between the agency and any affected 

person with respect to any problem such party may have 

17 

in dealing with the agency resulting from the regulatory 

activities of the agency; and 

(B) assure that safeguards exist to encourage complainants to come forward and preserve confidentiality. 

(e) ALTERNATIVE DISPUTE RESOLUTION PILOT PROGRAM.— 

(1) IN GENERAL.—Not later than 18 months after the date of 

enactment of this Act, each Federal banking agency and the 

National Credit Union Administration Board shall develop and 

implement a pilot program for using alternative means of dispute resolution of issues in controversy (hereafter in this section referred to as the ‘‘alternative dispute resolution program’’) that is consistent with the requirements of subchapter 

IV of chapter 5 of title 5, United States Code, if the parties to 

the dispute, including the agency, agree to such proceeding. 

(2) STANDARDS.—An alternative dispute resolution pilot program developed under paragraph (1) shall— 

(A) be fair to all interested parties to a dispute; 

(B) resolve disputes expeditiously; øand¿ 

(C) be less costly than traditional means of dispute resolution, including litigationø.¿; and 

(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. 

(3) INDEPENDENT EVALUATION.—Not later than 18 months 

after the date on which a pilot program is implemented under 

paragraph (1), the Administrative Conference of the United 

States shall submit to the Congress a report containing— 

(A) an evaluation of that pilot program; 

(B) the extent to which the pilot programs meet the 

standards established under paragraph (2); 

(C) the extent to which parties to disputes were offered 

alternative means of dispute resolution and the frequency 

with which the parties, including the agencies, accepted or 

declined to use such means; and 

(D) any recommendations of the Conference to improve 

the alternative dispute resolution procedures of the Federal banking agencies and the National Credit Union Administration Board. 

(4) IMPLEMENTATION OF PROGRAM.—At any time after completion of the evaluation under paragraph (3)(A), any Federal 

banking agency and the National Credit Union Administration 

Board may implement an alternative dispute resolution program throughout the agency, taking into account the results of 

that evaluation. 

(5) COORDINATION WITH EXISTING AGENCY ADR PROGRAMS.— 

(A) EVALUATION REQUIRED.—If any Federal banking 

agency or the National Credit Union Administration maintains an alternative dispute resolution program as of the 

date of enactment of this Act under any other provision of 

law, the Administrative Conference of the United States 

shall include such program in the evaluation conducted 

under paragraph (3)(A). 

18 

(B) MULTIPLE ADR PROGRAMS.—No provision of this section shall be construed as precluding any Federal banking 

agency or the National Credit Union Administration Board 

from establishing more than 1 alternative means of dispute resolution. 

(f) DEFINITIONS.—For purposes of this section, the following definitions shall apply: 

(1) MATERIAL SUPERVISORY DETERMINATIONS.—The term 

‘‘material supervisory determinations’’— 

(A) includes determinations relating to— 

(i) examination ratings; 

(ii) the adequacy of loan loss reserve provisions; 

øand¿ 

(iii) loan classifications on loans that are significant 

to an institution; øand¿ 

(iv) any issue specifically listed in an exam report as 

a matter requiring attention by the institution’s management or board of directors; and 

(v) any suspension or removal of an institution’s status as eligible for expedited processing of applications, 

requests, notices, or filings on the grounds of a supervisory or compliance concern, regardless of whether 

that concern has been cited as a basis for another material supervisory determination or matter requiring attention in an examination report, provided that the 

conduct at issue did not involve violation of any criminal law; and 

(B) does not include a determination by a Federal banking agency or the National Credit Union Administration 

Board to appoint a conservator or receiver for an insured 

depository institution or a liquidating agent for an insured 

credit union, as the case may be, or a decision to take action pursuant to section 38 of the Federal Deposit Insurance Act or section 212 of the Federal Credit Union Act, 

as appropriate. 

(2) INDEPENDENT APPELLATE PROCESS.—The term ‘‘independent appellate process’’ means a review by an agency official who does not directly or indirectly report to the agency official who made the material supervisory determination under 

review. 

(3) ALTERNATIVE MEANS OF DISPUTE RESOLUTION.—The term 

‘‘alternative means of dispute resolution’’ has the meaning 

given to such term in section 571 of title 5, United States Code. 

(4) ISSUES IN CONTROVERSY.—The term ‘‘issues in controversy’’ means— 

(A) any final agency decision involving any claim against 

an insured depository institution or insured credit union 

for which the agency has been appointed conservator or receiver or for which a liquidating agent has been appointed, 

as the case may be; 

(B) any final action taken by an agency in the agency’s 

capacity as conservator or receiver for an insured depository institution or by the liquidating agent appointed for 

an insured credit union; and 

19 

(C) any other issue for which the appropriate Federal 

banking agency or the National Credit Union Administration Board determines that alternative means of dispute 

resolution would be appropriate. 

(g) EFFECT ON OTHER AUTHORITY.—Nothing in this section shall 

affect the authority of an appropriate Federal banking agency or 

the National Credit Union Administration Board to take enforcement or supervisory action. 

* * * * * * * 

FEDERAL CREDIT UNION ACT 

* * * * * * * 

TITLE II—SHARE INSURANCE 

* * * * * * * 

REQUIREMENTS GOVERNING INSURED CREDIT UNIONS

SEC. 205. (a) INSURANCE LOGO.— (1) INSURED CREDIT UNIONS.— (A) IN GENERAL.—Each insured credit union shall display at each place of business maintained by that credit 

union a sign or signs relating to the insurance of the share 

accounts of the institution, in accordance with regulations 

to be prescribed by the Board. 

(B) STATEMENT TO BE INCLUDED.—Each sign required 

under subparagraph (A) shall include a statement that insured share accounts are backed by the full faith and credit of the United States Government. 

(2) REGULATIONS.—The Board shall prescribe regulations to 

carry out this subsection, including regulations governing the 

substance of signs required by paragraph (1) and the manner 

of display or use of such signs. 

(3) PENALTIES.—For each day that an insured credit union 

continues to violate this subsection or any regulation issued 

under this subsection, it shall be subject to a penalty of not 

more than $100, which the Board may recover for its use. 

(b)(1) Except as provided in paragraph (2), no insured credit 

union shall, without the prior approval of the Board— 

(A) merge or consolidate with any noninsured credit union or 

institution; 

(B) assume liability to pay any member accounts in, or similar liabilities of, any noninsured credit union or institution; 

(C) transfer assets to any noninsured credit union or institution in consideration of the assumption of liabilities for any 

portion of the member accounts in such insured credit union; 

or 

(D) convert into a noninsured credit union or institution. 

(2) CONVERSION OF INSURED CREDIT UNIONS TO MUTUAL SAVINGS BANKS.— 

(A) IN GENERAL.—Notwithstanding paragraph (1), an insured credit union may convert to a mutual savings bank 

or savings association (if the savings association is in muVerDate Sep 11 2014 07:25 Mar 07, 2018 Jkt 079006 PO 00000 Frm 00019 Fmt 6659 Sfmt 6601 E:\HR\OC\HR589.XXX HR589
20 

tual form), as those terms are defined in section 3 of the 

Federal Deposit Insurance Act, without the prior approval 

of the Board, subject to the requirements and procedures 

set forth in the laws and regulations governing mutual 

savings banks and savings associations. 

(B) CONVERSION PROPOSAL.—A proposal for a conversion 

described in subparagraph (A) shall first be approved, and 

a date set for a vote thereon by the members (either at a 

meeting to be held on that date or by written ballot to be 

filed on or before that date), by a majority of the directors 

of the insured credit union. Approval of the proposal for 

conversion shall be by the affirmative vote of a majority of 

the members of the insured credit union who vote on the 

proposal. 

(C) NOTICE OF PROPOSAL TO MEMBERS.—An insured credit union that proposes to convert to a mutual savings bank 

or savings association under subparagraph (A) shall submit notice to each of its members who is eligible to vote 

on the matter of its intent to convert— 

(i) 90 days before the date of the member vote on 

the conversion; 

(ii) 60 days before the date of the member vote on 

the conversion; and 

(iii) 30 days before the date of the member vote on 

the conversion. 

(D) NOTICE OF PROPOSAL TO BOARD.—The Board may require an insured credit union that proposes to convert to 

a mutual savings bank or savings association under subparagraph (A) to submit a notice to the Board of its intent 

to convert during the 90-day period preceding the date of 

the completion of the conversion. 

(E) INAPPLICABILITY OF ACT UPON CONVERSION.—Upon 

completion of a conversion described in subparagraph (A), 

the credit union shall no longer be subject to any of the 

provisions of this Act. 

(F) LIMIT ON COMPENSATION OF OFFICIALS.— 

(i) IN GENERAL.—No director or senior management 

official of an insured credit union may receive any economic benefit in connection with a conversion of the 

credit union as described in subparagraph (A), other 

than— 

(I) director fees; and 

(II) compensation and other benefits paid to directors or senior management officials of the converted institution in the ordinary course of business. 

(ii) SENIOR MANAGEMENT OFFICIAL.—For purposes of 

this subparagraph, the term ‘‘senior management official’’ means a chief executive officer, an assistant chief 

executive officer, a chief financial officer, and any 

other senior executive officer (as defined by the appropriate Federal banking agency pursuant to section 32 

(f) of the Federal Deposit Insurance Act). 

(G) CONSISTENT RULES.— 

21 

(i) IN GENERAL.—Not later than 6 months after the 

date of enactment of the Credit Union Membership Access Act, the Administration shall promulgate final 

rules applicable to charter conversions described in 

this paragraph that are consistent with rules promulgated by other financial regulators, including the Office of the Comptroller of the Currency. The rules required by this clause shall provide that charter conversion by an insured credit union shall be subject to 

regulation that is no more or less restrictive than that 

applicable to charter conversions by other financial institutions. 

(ii) OVERSIGHT OF MEMBER VOTE.—The member vote 

concerning charter conversion under this paragraph 

shall be administered by the Administration, and shall 

be verified by the Federal or State regulatory agency 

that would have jurisdiction over the institution after 

the conversion. If either the Administration or that 

regulatory agency disapproves of the methods by 

which the member vote was taken or procedures applicable to the member vote, the member vote shall be 

taken again, as directed by the Administration or the 

agency. 

(3) Except with the prior written approval of the Board, no insured credit union shall merge or consolidate with any other insured credit union or, either directly or indirectly, acquire the assets of, or assume liability to pay any member accounts in, any 

other insured credit union. 

(c) In granting or withholding approval or consent under subsection (b) of this section, the Board shall consider— 

(1) the history, financial condition, and management policies 

of the credit union; 

(2) the adequacy of the credit union’s reserves; 

(3) the economic advisability of the transaction; 

(4) the general character and fitness of the credit union’s 

management; 

(5) the convenience and needs of the members to be served 

by the credit union; and 

(6) whether the credit union is a cooperative association organized for the purpose of promoting thrift among its members 

and creating a source of credit for provident or productive purposes. 

(d) PROHIBITION.— 

(1) IN GENERAL.—Except with prior written consent of the 

Board— 

(A) any person who has been convicted of any criminal 

offense involving dishonesty or a breach of trust, or has 

agreed to enter into a pretrial diversion or similar program 

in connection with a prosecution for such offense, may 

not— 

(i) become, or continue as, an institution-affiliated 

party with respect to any insured credit union; or 

(ii) otherwise participate, directly or indirectly, in 

the conduct of the affairs of any insured credit union; 

and 

22 

(B) any insured credit union may not permit any person 

referred to in subparagraph (A) to engage in any conduct 

or continue any relationship prohibited under such subparagraph. 

(2) MINIMUM 10-YEAR PROHIBITION PERIOD FOR CERTAIN OF- FENSES.— 

(A) IN GENERAL.—If the offense referred to in paragraph 

(1)(A) in connection with any person referred to in such 

paragraph is— 

(i) an offense under— 

(I) section 215, 656, 657, 1005, 1006, 1007, 1008, 

1014, 1032, 1344, 1517, 1956, or 1957 of title 18, 

United States Code; or 

(II) section 1341 or 1343 of such title which affects any financial institution (as defined in section 20 of such title); or 

(ii) the offense of conspiring to commit any such offense, 

the Board may not consent to any exception to the application of paragraph (1) to such person during the 10-year period beginning on the date the conviction or the agreement 

of the person becomes final. 

(B) EXCEPTION BY ORDER OF SENTENCING COURT.— (i) IN GENERAL.—On motion of the Board, the court 

in which the conviction or the agreement of a person 

referred to in subparagraph (A) has been entered may 

grant an exception to the application of paragraph (1) 

to such person if granting the exception is in the interest of justice. 

(ii) PERIOD FOR FILING.—A motion may be filed 

under clause (i) at any time during the 10-year period 

described in subparagraph (A) with regard to the person on whose behalf such motion is made. 

(3) PENALTY.—Whoever knowingly violates paragraph (1) or 

(2) shall be fined not more than $1,000,000 for each day such 

prohibition is violated or imprisoned for not more than 5 years, 

or both. 

(e)(1) The Board shall promulgate rules establishing minimum 

standards with which each insured credit union must comply with 

respect to the installation, maintenance, and operation of security 

devices and procedures, reasonable in cost, to discourage robberies, 

burglaries, and larcenies and to assist in the identification and apprehension of persons who commit such acts. 

(2) The rules shall establish the time limits within which insured 

credit unions shall comply with the standards and shall require the 

submission of periodic reports with respect to the installation, 

maintenance, and operation of security devices and procedures. 

(3) An insured credit union which violates a rule promulgated 

pursuant to this subsection shall be subject to a civil penalty which 

shall not exceed $100 for each day of the violation. 

(f)(1) Every insured credit union is authorized to maintain, and 

make loans with respect to, share draft accounts in accordance 

with rules and regulations prescribed by the Board. Except as provided in paragraph (2), an insured credit union may pay dividends 

on share draft accounts and may permit the owners of such share 

23 

draft accounts to make withdrawals by negotiable or transferable 

instruments or other orders for the purpose of making transfers to 

third parties. 

(2) Paragraph (1) shall apply only with respect to share draft accounts in which the entire beneficial interest is held by one or more 

individuals or members or by an organization which is operated 

primarily for religious, philanthropic, charitable, educational, or 

other similar purposes and which is not operated for profit, and 

with respect to deposits of public funds by an officer, employee, or 

agent of the United States, any State, county, municipality, or political subdivision thereof, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, any territory or 

possession of the United States, or any political subdivision thereof. 

(g)(1) If the applicable rate prescribed in this subsection exceeds 

the rate an insured credit union would be permitted to charge in 

the absence of this subsection, such credit union may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this subsection, take, receive, reserve, 

and charge on any loan, interest at a rate of not more than 1 per 

centum in excess of the discount rate on ninety-day commercial 

paper in effect at the Federal Reserve bank in the Federal Reserve 

district where such insured credit union is located or at the rate 

allowed by the laws of the State, territory, or district where such 

credit union is located, whichever may be greater. 

(2) If the rate prescribed in paragraph (1) exceeds the rate such 

credit union would be permitted to charge in the absence of this 

subsection, and such State fixed rate is thereby preempted by the 

rate described in paragraph (1), the taking, receiving, reserving, or 

charging a greater rate than is allowed by paragraph (1), when 

knowingly done, shall be deemed a forfeiture of the entire interest 

which the loan carries with it, or which has been agreed to be paid 

thereon. If such greater rate of interest has been paid, the person 

who paid it may recover, in a civil action commenced in a court of 

appropriate jurisdiction not later than two years after the date of 

such payment, an amount equal to twice the amount of interest 

paid from the credit union taking or receiving such interest. 

(h) Notwithstanding any other provision of law, the Board may 

authorize a merger or consolidation of an insured credit union 

which is insolvent or is in danger of insolvency with any other insured credit union or may authorize an insured credit union to purchase any of the assets of, or assume any of the liabilities of, any 

other insured credit union which is insolvent or in danger of insolvency if the Board is satisfied that— 

(1) an emergency requiring expeditious action exists with respect to such other insured credit union; 

(2) other alternatives are not reasonably available; and 

(3) the public interest would best be served by approval of 

such merger, consolidation, purchase, or assumption. 

(i)(1) Notwithstanding any other provision of this Act or of State 

law, the Board may authorize an institution whose deposits or accounts are insured by the Federal Deposit Insurance Corporation 

to purchase any of the assets of or assume any of the liabilities of 

an insured credit union which is insolvent or in danger of insolvency, except that prior to exercising this authority the Board must 

attempt to effect the merger or consolidation of an insured credit 

24 

union which is insolvent or in danger of insolvency with another 

insured credit union, as provided in subsection (h). 

(2) For purposes of the authority contained in paragraph (1), insured accounts of the credit union may upon consummation of the 

purchase and assumption be converted to insured deposits or other 

comparable accounts in the acquiring institution, and the Board 

and the National Credit Union Share Insurance Fund shall be absolved of any liability to the credit union’s members with respect 

to those accounts. 

(j) PRIVILEGES NOT AFFECTED BY DISCLOSURE TO BANKING AGEN- CY OR SUPERVISOR.— (1) IN GENERAL.—The submission by any person of any information to the Bureau of Consumer Financial Protection, the 

Administration, any State credit union supervisor, or foreign 

banking authority for any purpose in the course of any supervisory or regulatory process of such Board, supervisor, or authority shall not be construed as waiving, destroying, or otherwise affecting any privilege such person may claim with respect to such information under Federal or State law as to any 

person or entity other than such Board, supervisor, or authority. 

(2) RULE OF CONSTRUCTION.—No provision of paragraph (1) 

may be construed as implying or establishing that— 

(A) any person waives any privilege applicable to information that is submitted or transferred under any circumstance to which paragraph (1) does not apply; or 

(B) any person would waive any privilege applicable to 

any information by submitting the information to the Bureau of Consumer Financial Protection, the Administration, any State credit union supervisor, or foreign banking 

authority, but for this subsection. 

* * * * * * * 

(25) 

1See Press Release, ‘‘Waters: GAO Report is More Evidence That Regulators Need to Get 

Tougher on Megabanks,’’ (Dec. 6, 2017), available at: https://democratsfinancialservices.house.gov/news/documentsingle.aspx?DocumentID=401001. 

MINORITY VIEWS 

H.R. 4545 would enable any bank, regardless of size, to appeal 

and postpone material supervisory determinations by the bank’s 

regulator, which include adverse determinations such as a downgrade of a bank’s rating for capital, asset quality, management, 

earnings, liquidity, and sensitivity to market risks (CAMELS); significant deficiencies in the institution’s Bank Secrecy Act/AntiMoney Laundering (BSA/AML) program; findings related to violations of various regulations; or a downgrade of a bank’s Community 

Reinvestment Act (CRA) rating. The bill would create a new Office 

of Independent Examination Review within the Federal Financial 

Institutions Examination Council (‘‘FFIEC’’) and allow depository 

institutions that receive such a determination to be able to appeal 

the determination to the review office. This bill would make it more 

likely that megabanks would be able to escape or delay accountability for egregious violations of federal laws protecting consumers 

and the economy. 

Although proponents of this bill contend that it will provide regulatory relief to community banks and small lenders, the bill is not 

tailored for that goal. Rather, H.R. 4545 would allow any bank, as 

well as any nonbank under the Consumer Financial Protection Bureau’s (‘‘Consumer Bureau’’) supervisory authority, to appeal negative supervisory determinations made in the examination process. 

While targeted improvements to the exam process could be considered for the smallest banks, allowing megabanks, as this bill would 

do, to challenge any negative supervisory action taken against 

them is completely inappropriate, particularly given the light-touch 

oversight these large banks have been given. Even when receiving 

large enforcement penalties, with fines sometimes reaching billions 

of dollars, megabanks often view these fines as just a cost of doing 

business. Time and again, megabanks are fined for the same or 

similar offense without major consequence. Relatedly, in November 

2017, the Government Accountability Office (‘‘GAO’’) released a report that found the Federal Reserve needs to strengthen internal 

controls to more effectively mitigate the risks of regulatory capture 

and threats to supervisory independence across their large bank 

supervisory program.1 Congress should not advance a measure that 

exacerbates this issue. We believe it would be inappropriate to enable megabanks to circumvent longstanding, deliberative regulatory due processes by asking an independent office to repeal adverse supervisory determinations issued by the prudential regulators tasked with overseeing these entities. 

Furthermore, the independent review office created by this legislation is not responsible for the safety and soundness of the bankVerDate Sep 11 2014 07:25 Mar 07, 2018 Jkt 079006 PO 00000 Frm 00025 Fmt 6604 Sfmt 6604 E:\HR\OC\HR589.XXX HR589
26 

2https://financialservices.house.gov/uploadedfiles/crpt-115-hr4545-w000187-amdt-001.pdf. 

ing system as the prudential regulators are. For example, the Federal Deposit Insurance Corporation (‘‘FDIC’’) is charged with protecting the financial state of the Deposit Insurance Fund (‘‘DIF’’), 

but the review office’s decision in support of a bank’s appeal may 

result in a bank taking more risk, which could have a material impact on the soundness of the DIF. 

What’s more, the nonpartisan Congressional Budget Office 

(‘‘CBO’’) estimated that the bill would increase budget deficits by 

$123 million over a ten-year window. 

Many of the concerns identified here would be largely mitigated 

if H.R. 4545 was limited to small, community depository institutions. Democrats unanimously supported an amendment to limit 

the bill to community financial institutions with less that $10 billion in assets; 2 however, Committee Republicans rejected this approach, allowing megabanks like Wells Fargo to benefit from the 

bill. 

For these reasons, we strongly oppose H.R. 4545. 

MAXINE WATERS. 

DANIEL KILDEE. 

KEITH ELLISON. 

AL GREEN. 

NYDIA M. VELA ́ ZQUEZ. 

STEPHEN F. LYNCH. 

VICENTE GONZALEZ. 

JOYCE BEATTY. 

EMANUEL CLEAVER. 

WM. LACY CLAY. 

Æ