59–006 

114TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 114–280 

SMALL BANK EXAM CYCLE REFORM ACT OF 2015 

OCTOBER 6, 2015.—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 

[To accompany H.R. 1553] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 1553) to amend the Federal Deposit Insurance Act to 

specify which smaller institutions may qualify for an 18-month examination cycle, having considered the same, report favorably 

thereon without amendment and recommend that the bill do pass. 

PURPOSE AND SUMMARY

Introduced by Representative Tipton, H.R. 1553, the ‘‘Small 

Bank Exam Cycle Reform Act of 2015,’’ amends the Federal Deposit Insurance Act (FDIA) to increase the qualifying asset threshold for insured depository institutions eligible for 18-month on-site 

examination cycles from $500 million to $1 billion. 

BACKGROUND AND NEED FOR LEGISLATION

Section 10(d) of the FDIA generally provides that federal banking 

agencies must conduct a full-scope, on-site examination of each insured depository institution at least once during every 12-month 

period. As part of the examination process, federal financial regulators rate financial institutions on several criteria, including safety and soundness and their compliance with legal and regulatory 

requirements. Regulators also calculate capital ratios and classify 

financial institutions according to the adequacy of their capitalization. If an examination reveals that an institution is not complying 

with the law or that it is undercapitalized, the regulator will assign 

the institution unsatisfactory ratings or classifications in the institution’s examination report. The institution is then subject to penVerDate Sep 11 2014 05:29 Oct 08, 2015 Jkt 059006 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\HR280.XXX HR280

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alties that are authorized or required by law, including restrictions 

on asset growth, expansion, and other activities. 

Community financial institutions argue that their compliance 

costs have increased as they attempt to keep up with new regulations and more intrusive examinations. New regulations and higher 

compliance costs have forced small banks and credit unions to cut 

back on the services they offer to their customers. As a result, local 

banks are increasingly unable to provide consumers with the products and services that they need and want. The higher threshold 

cost of compliance programs has also accelerated the pace of industry consolidation as efficiency concerns drive financial institutions 

to merge. 

However, paragraph (4) of Section 10(d) of the FDIA provides 

that certain insured depository institutions may be examined every 

18 months. To qualify for this longer examination cycle: 

• The institution must be found, at its most recent examination, to be well managed and must earn a 1 (outstanding) or 

2 (good) rating under the Uniform Financial Institutions Rating System, commonly referred to as CAMELS; 

• The institution must have total assets of less than $500 

million; 

• The institution must not be currently subject to a formal 

enforcement proceeding; and 

• The institution must not have undergone a change in control during the previous 12-month period. 

On February 6, 2015, the Office of the Comptroller of the Currency (OCC) sent a letter to the Financial Services Committee proposing several legislative measures to reduce the regulatory burden 

on banks, including a proposal that would increase to $750 million 

the asset size threshold for community banks to qualify for an onsite examination every l8 months. 

Congress last raised the threshold for CAMELS 1-rated institutions from $250 million to $500 million in 2006, and granted agencies discretion to increase the threshold for 2-rated institutions in 

2007. In a 2007 rulemaking raising the 2-rated threshold to $500 

million, the federal banking agencies estimated that a total of 

6,670 insured depository institutions qualified for the 18-month 

exam cycle. H.R. 1553 would continue the reasoned approach taken 

by Congress in incrementally raising the asset eligibility threshold 

for smaller, well-rated financial institutions—those which pose little risk—to qualify for extended exam cycles. 

HEARINGS

The Committee on Financial Services’ Subcommittee on Financial Institutions held a hearing examining matters relating to H.R. 

1553 on June 11, 2015. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

July 28, 2015 and July 29, 2015, and ordered H.R. 1553 to be reported favorably to the House without amendment by a recorded 

vote of 58 yeas to 0 nays (Record vote no. FC–48), a quorum being 

present. 


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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 sole record vote 

in committee was 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 58 yeas to 0 nays (Record vote no. 

FC–48), a quorum being present. 


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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. 1553 will reduce regulatory burden on well managed smaller depository institutions by permitting a greater number of such institutions to be 

examined by federal financial regulators once every 18 months instead of once every 12 months. 

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. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own 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, September 10, 2015. 

Hon. JEB HENSARLING, Chairman, Committee on Financial Services, 

U.S. House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1553, the Small Bank 

Exam Cycle Reform Act of 2015. 

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

to provide them. The CBO staff contact is Sarah Puro. 

Sincerely, 

KEITH HALL. 

Enclosure. 

H.R. 1553—Small Bank Exam Cycle Reform Act of 2015 

H.R. 1553 would amend the Federal Deposit Insurance Act to increase the maximum size of certain financial institutions that are 


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eligible to have on-site bank examinations once every 18 months 

instead of once every 12 months. Enacting H.R. 1553 could affect 

direct spending and collections by federal agencies that regulate financial institutions; therefore, pay-as-you-go procedures apply. 

However, CBO estimates that the net effects would be insignificant 

for each year. Enacting the bill would not affect revenues. 

Recent information on bank assets indicates that there are between 500 and 600 institutions that could be eligible for a reduction in the frequency of their on-site bank examinations under the 

bill, although not all of those institutions would ultimately qualify. 

Based on information from the federal banking regulators, CBO estimates that staff who would have conducted on-site exams would 

now generally examine affected banks remotely. In addition, CBO 

expects that enacting H.R. 1553 would not affect future costs to resolve failed financial institutions because federal regulators would 

continue prudential oversight of all institutions and could impose 

more frequent exams of any institution when they deem more oversight is necessary. As a result, CBO estimates that the net effects 

of enacting H.R. 1553 would be insignificant. 

H.R. 1553 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

impose no costs on state, local, or tribal governments. 

The CBO staff contact for this estimate is Sarah Puro. The estimate was approved by H. Samuel Papenfuss, Deputy Assistant Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates reform Act. 

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

H.R. 1553 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

DUPLICATION OF FEDERAL PROGRAMS

Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), the 

Committee states that no provision of H.R. 1553 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included 

in any report from the Government Accountability Office to Congress pursuant to section 21 of Public Law 111–139, or a program 


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related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015), the 

Committee states that H.R. 1553 does not require any directed 

rulemakings. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section cites H.R. 1553 as the ‘‘Small Bank Exam Cycle Reform Act of 2015.’’ 

Section 2. Smaller institutions qualifying for 18-month examination 

cycle 

This section amends the Federal Deposit Insurance Act to increase the asset threshold at which certain institutions qualify for 

an 18-month examination cycle. 

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 italics, 

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

roman): 

FEDERAL DEPOSIT INSURANCE ACT 

* * * * * * * 

SEC. 10. (a) The Board of Directors shall administer the affairs 

of the Corporation fairly and impartially and without discrimination. The Board of Directors of the Corporation shall determine and 

prescribe the manner in which its obligations shall be incurred and 

its expenses allowed and paid. The Corporation shall be entitled to 

the free use of the United States mails in the same manner as the 

executive departments of the Government. The Corporation with 

the consent of any Federal Reserve bank or of any board, commission, independent establishment, or executive department of the 

Government, including any field service thereof, may avail itself of 

the use of information, services, and facilities thereof in carrying 

out the provisions of this Act. 

(b) EXAMINATIONS.— 

(1) APPOINTMENT OF EXAMINERS AND CLAIMS AGENTS.—The 

Board of Directors shall appoint examiners and claims agents. 

(2) REGULAR EXAMINATIONS.—Any examiner appointed under 

paragraph (1) shall have power, on behalf of the Corporation, 

to examine— 

(A) any insured State nonmember bank or insured State 

branch of any foreign bank; 

(B) any depository institution which files an application 

with the Corporation to become an insured depository institution; and 

(C) any insured depository institution in default, 


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whenever the Board of Directors determines an examination of 

any such depository institution is necessary. 

(3) SPECIAL EXAMINATION OF ANY INSURED DEPOSITORY INSTITUTION.— 

(A) IN GENERAL.—In addition to the examinations authorized under paragraph (2), any examiner appointed 

under paragraph (1) shall have power, on behalf of the 

Corporation, to make any special examination of any insured depository institution or nonbank financial company 

supervised by the Board of Governors or a bank holding 

company described in section 165(a) of the Financial Stability Act of 2010, whenever the Board of Directors determines that a special examination of any such depository 

institution is necessary to determine the condition of such 

depository institution for insurance purposes, or of such 

nonbank financial company supervised by the Board of 

Governors or bank holding company described in section 

165(a) of the Financial Stability Act of 2010, for the purpose of implementing its authority to provide for orderly 

liquidation of any such company under title II of that Act, 

provided that such authority may not be used with respect 

to any such company that is in a generally sound condition. 

(B) LIMITATION.—Before conducting a special examination of a nonbank financial company supervised by the 

Board of Governors or a bank holding company described 

in section 165(a) of the Financial Stability Act of 2010, the 

Corporation shall review any available and acceptable resolution plan that the company has submitted in accordance with section 165(d) of that Act, consistent with the 

nonbinding effect of such plan, and available reports of examination, and shall coordinate to the maximum extent 

practicable with the Board of Governors, in order to minimize duplicative or conflicting examinations. 

(4) EXAMINATION OF AFFILIATES.— 

(A) IN GENERAL.—In making any examination under 

paragraph (2) or (3), any examiner appointed under paragraph (1) shall have power, on behalf of the Corporation, 

to make such examinations of the affairs of any affiliate of 

any depository institution as may be necessary to disclose 

fully— 

(i) the relationship between such depository institution and any such affiliate; and 

(ii) the effect of such relationship on the depository 

institution. 

(B) COMMITMENT BY FOREIGN BANKS TO ALLOW EXAMINATIONS OF AFFILIATES.—No branch or depository institution 

subsidiary of a foreign bank may become an insured depository institution unless such foreign bank submits a written binding commitment to the Board of Directors to permit any examination of any affiliate of such branch or depository institution subsidiary pursuant to subparagraph 

(A) to the extent determined by the Board of Directors to 

be necessary to carry out the purposes of this Act. 


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(5) EXAMINATION OF INSURED STATE BRANCHES.—The Board 

of Directors shall— 

(A) coordinate examinations of insured State branches of 

foreign banks with examinations conducted by the Board 

of Governors of the Federal Reserve System under section 

7(c)(1) of the International Banking Act of 1978; and 

(B) to the extent possible, participate in any simultaneous examination of the United States operations of a foreign bank requested by the Board under such section. 

(6) POWER AND DUTY OF EXAMINERS.—Each examiner appointed under paragraph (1) shall— 

(A) have power to make a thorough examination of any 

insured depository institution or affiliate under paragraph 

(2), (3), (4), or (5); and 

(B) shall make a full and detailed report of condition of 

any insured depository institution or affiliate examined to 

the Corporation. 

(7) POWER OF CLAIM AGENTS.—Each claim agent appointed 

under paragraph (1) shall have power to investigate and examine all claims for insured deposits. 

(c) In connection with examinations of insured depository institutions and any State nonmember bank, savings association, or other 

institution making application to become insured depository institutions, and affiliates thereof, or with other types of investigations 

to determine compliance with applicable law and regulations, the 

appropriate Federal banking agency, or its designated representatives, are authorized to administer oaths and affirmations, and to 

examine and and to take and preserve testimony under oath as to 

any matter in respect to the affairs or ownership of any such bank 

or institution or affiliate thereof, and to exercise such other powers 

as are set forth in section 8(n) of this Act. 

(d) ANNUAL ON-SITE EXAMINATIONS OF ALL INSURED DEPOSITORY

INSTITUTIONS REQUIRED.— (1) IN GENERAL.—The appropriate Federal banking agency 

shall, not less than once during each 12-month period, conduct 

a full-scope, on-site examination of each insured depository institution. 

(2) EXAMINATIONS BY CORPORATION.—Paragraph (1) shall not 

apply during any 12-month period in which the Corporation 

has conducted a full-scope, on-site examination of the insured 

depository institution. 

(3) STATE EXAMINATIONS ACCEPTABLE.—The examinations required by paragraph (1) may be conducted in alternate 12- 

month periods, as appropriate, if the appropriate Federal banking agency determines that an examination of the insured depository institution conducted by the State during the intervening 12-month period carries out the purpose of this subsection. 

(4) 18-MONTH RULE FOR CERTAIN SMALL INSTITUTIONS.—Paragraphs (1), (2), and (3) shall apply with ‘‘18-month’’ substituted 

for ‘‘12-month’’ if— 

(A) the insured depository institution has total assets of 

less than ø$500,000,000¿ $1,000,000,000; 

(B) the institution is well capitalized, as defined in section 38; 


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(C) when the institution was most recently examined, it 

was found to be well managed, and its composite condition— 

(i) was found to be outstanding; or 

(ii) was found to be outstanding or good, in the case 

of an insured depository institution that has total assets of not more than ø$100,000,000¿ $200,000,000; 

(D) the insured institution is not currently subject to a 

formal enforcement proceeding or order by the Corporation 

or the appropriate Federal banking agency; and 

(E) no person acquired control of the institution during 

the 12-month period in which a full-scope, on-site examination would be required but for this paragraph. 

(5) CERTAIN GOVERNMENT-CONTROLLED INSTITUTIONS EXEMPTED.—Paragraph (1) does not apply to— 

(A) any institution for which the Corporation is conservator; or 

(B) any bridge depository institution, none of the voting 

securities of which are owned by a person or agency other 

than the Corporation. 

(6) COORDINATED EXAMINATIONS.—To minimize the disruptive effects of examinations on the operations of insured depository institutions— 

(A) each appropriate Federal banking agency shall, to 

the extent practicable and consistent with principles of 

safety and soundness and the public interest— 

(i) coordinate examinations to be conducted by that 

agency at an insured depository institution and its affiliates; 

(ii) coordinate with the other appropriate Federal 

banking agencies in the conduct of such examinations; 

(iii) work to coordinate with the appropriate State 

bank supervisor— 

(I) the conduct of all examinations made pursuant to this subsection; and 

(II) the number, types, and frequency of reports 

required to be submitted to such agencies and supervisors by insured depository institutions, and 

the type and amount of information required to be 

included in such reports; and 

(iv) use copies of reports of examinations of insured 

depository institutions made by any other Federal 

banking agency or appropriate State bank supervisor 

to eliminate duplicative requests for information; and 

(B) not later than 2 years after the date of enactment of 

the Riegle Community Development and Regulatory Improvement Act of 1994, the Federal banking agencies shall 

jointly establish and implement a system for determining 

which one of the Federal banking agencies or State bank 

supervisors shall be the lead agency responsible for managing a unified examination of each insured depository institution and its affiliates, as required by this subsection. 

(7) SEPARATE EXAMINATIONS PERMITTED.—Notwithstanding 

paragraph (6), each appropriate Federal banking agency may 

conduct a separate examination in an emergency or under 


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other exigent circumstances, or when the agency believes that 

a violation of law may have occurred. 

(8) REPORT.—At the time the system provided for in paragraph (6) is established, the Federal banking agencies shall 

submit a joint report describing the system to the Committee 

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

Committee on Banking, Finance and Urban Affairs of the 

House of Representatives. Thereafter, the Federal banking 

agencies shall annually submit a joint report to the Committee 

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

Committee on Banking, Finance and Urban Affairs of the 

House of Representatives regarding the progress of the agencies in implementing the system and indicating areas in which 

enhancements to the system, including legislature improvements, would be appropriate. 

(9) STANDARDS FOR DETERMINING ADEQUACY OF STATE EXAMINATIONS.—The Federal Financial Institutions Examination 

Council shall issue guidelines establishing standards to be 

used at the discretion of the appropriate Federal banking agency for purposes of making a determination under paragraph 

(3). 

(10) AGENCIES AUTHORIZED TO INCREASE MAXIMUM ASSET

AMOUNT OF INSTITUTIONS FOR CERTAIN PURPOSES.—At any time 

after the end of the 2-year period beginning on the date of enactment of the Riegle Community Development and Regulatory 

Improvement Act of 1994, the appropriate Federal banking 

agency, in the agency’s discretion, may increase the maximum 

amount limitation contained in paragraph (4)(C)(ii), by regulation, from ø$100,000,000¿ $200,000,000 to an amount not to 

exceed ø$500,000,000¿ $1,000,000,000 for purposes of such 

paragraph, if the agency determines that the greater amount 

would be consistent with the principles of safety and soundness 

for insured depository institutions. 

(e) EXAMINATION FEES.— 

(1) REGULAR AND SPECIAL EXAMINATIONS OF DEPOSITORY IN- STITUTIONS.—The cost of conducting any regular examination 

or special examination of any depository institution under subsection (b)(2), (b)(3), or (d) or of any entity described in section 

3(q)(2) may be assessed by the Corporation against the institution or entity to meet the expenses of the Corporation in carrying out such examinations. 

(2) EXAMINATION OF AFFILIATES.—The cost of conducting any 

examination of any affiliate of any insured depository institution under subsection (b)(4) may be assessed by the Corporation against each affiliate which is examined to meet the Corporation’s expenses in carrying out such examination. 

(3) ASSESSMENT AGAINST DEPOSITORY INSTITUTION IN CASE OF

AFFILIATE’S REFUSAL TO PAY.— 

(A) IN GENERAL.—Subject to subparagraph (B), if any affiliate of any insured depository institution— 

(i) refuses to pay any assessment under paragraph 

(2); or 

(ii) fails to pay any such assessment before the end 

of the 60-day period beginning on the date the affiliate 

receives notice of the assessment, 


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the Corporation may assess such cost against, and collect 

such cost from, the depository institution. 

(B) AFFILIATE OF MORE THAN 1 DEPOSITORY INSTITU- TION.—If any affiliate referred to in subparagraph (A) is 

an affiliate of more than 1 insured depository institution, 

the assessment under subparagraph (A) may be assessed 

against the depository institutions in such proportions as 

the Corporation determines to be appropriate. 

(4) CIVIL MONEY PENALTY FOR AFFILIATE’S REFUSAL TO CO- OPERATE.— 

(A) PENALTY IMPOSED.—If any affiliate of any insured 

depository institution— 

(i) refuses to permit an examiner appointed by the 

Board of Directors under subsection (b)(1) to conduct 

an examination; or 

(ii) refuses to provide any information required to be 

disclosed in the course of any examination, 

the depository institution shall forfeit and pay a penalty of 

not more than $5,000 for each day that any such refusal 

continues. 

(B) ASSESSMENT AND COLLECTION.—Any penalty imposed 

under subparagraph (A) shall be assessed and collected by 

the Corporation in the manner provided in section 8(i)(2). 

(5) DEPOSITS OF EXAMINATION ASSESSMENT.—Amounts received by the Corporation under this subsection (other than 

paragraph (4)) may be deposited in the manner provided in 

section 13. 

(f) PRESERVATION OF AGENCY RECORDS.— (1) IN GENERAL.—A Federal banking agency may cause any 

and all records, papers, or documents kept by the agency or in 

the possession or custody of the agency to be— 

(A) photographed or microphotographed or otherwise reproduced upon film; or 

(B) preserved in any electronic medium or format which 

is capable of— 

(i) being read or scanned by computer; and 

(ii) being reproduced from such electronic medium or 

format by printing any other form of reproduction of 

electronically stored data. 

(2) TREATMENT AS ORIGINAL RECORDS.—Any photographs, 

microphotographs, or photographic film or copies thereof described in paragraph (1)(A) or reproduction of electronically 

stored data described in paragraph (1)(B) shall be deemed to 

be an original record for all purposes, including introduction in 

evidence in all State and Federal courts or administrative 

agencies, and shall be admissible to prove any act, transaction, 

occurrence, or event therein recorded. 

(3) AUTHORITY OF THE FEDERAL BANKING AGENCIES.—Any 

photographs, microphotographs, or photographic film or copies 

thereof described in paragraph (1)(A) or reproduction of electronically stored data described in paragraph (1)(B) shall be 

preserved in such manner as the Federal banking agency shall 

prescribe, and the original records, papers, or documents may 

be destroyed or otherwise disposed of as the Federal banking 

agency may direct. 


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(g) AUTHORITY TO PRESCRIBE REGULATIONS AND DEFINITIONS.— Except to the extent that authority under this Act is conferred on 

any of the Federal banking agencies other than the Corporation, 

the Corporation may— 

(1) prescribe regulations to carry out this Act; and 

(2) by regulation define terms as necessary to carry out this 

Act. 

(h) COORDINATION OF EXAMINATION AUTHORITY.— (1) STATE BANK SUPERVISORS OF HOME AND HOST STATES.— (A) HOME STATE OF BANK.—The appropriate State bank 

supervisor of the home State of an insured State bank has 

authority to examine and supervise the bank. 

(B) HOST STATE BRANCHES.—The State bank supervisor 

of the home State of an insured State bank and any State 

bank supervisor of an appropriate host State shall exercise 

its respective authority to supervise and examine the 

branches of the bank in a host State in accordance with 

the terms of any applicable cooperative agreement between 

the home State bank supervisor and the State bank supervisor of the relevant host State. 

(C) SUPERVISORY FEES.—Except as expressly provided in 

a cooperative agreement between the State bank supervisors of the home State and any host State of an insured 

State bank, only the State bank supervisor of the home 

State of an insured State bank may levy or charge State 

supervisory fees on the bank. 

(2) HOST STATE EXAMINATION.— (A) IN GENERAL.—With respect to a branch operated in 

a host State by an out-of-State insured State bank that resulted from an interstate merger transaction approved 

under section 44, or that was established in such State 

pursuant to section 5155(g) of the Revised Statutes of the 

United States, the third undesignated paragraph of section 

9 of the Federal Reserve Act or section 18(d)(4) of this Act, 

the appropriate State bank supervisor of such host State 

may— 

(i) with written notice to the State bank supervisor 

of the bank’s home State and subject to the terms of 

any applicable cooperative agreement with the State 

bank supervisor of such home State, examine such 

branch for the purpose of determining compliance with 

host State laws that are applicable pursuant to section 

24(j), including those that govern community reinvestment, fair lending, and consumer protection; and 

(ii) if expressly permitted under and subject to the 

terms of a cooperative agreement with the State bank 

supervisor of the bank’s home State or if such out-ofState insured State bank has been determined to be in 

a troubled condition by either the State bank supervisor of the bank’s home State or the bank’s appropriate Federal banking agency, participate in the examination of the bank by the State bank supervisor of 

the bank’s home State to ascertain that the activities 

of the branch in such host State are not conducted in 

an unsafe or unsound manner. 


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(B) NOTICE OF DETERMINATION.— (i) IN GENERAL.—The State bank supervisor of the 

home State of an insured State bank shall notify the 

State bank supervisor of each host State of the bank 

if there has been a final determination that the bank 

is in a troubled condition. 

(ii) TIMING OF NOTICE.—The State bank supervisor 

of the home State of an insured State bank shall provide notice under clause (i) as soon as is reasonably 

possible, but in all cases not later than 15 business 

days after the date on which the State bank supervisor has made such final determination or has received written notification of such final determination. 

(3) HOST STATE ENFORCEMENT.—If the State bank supervisor 

of a host State determines that a branch of an out-of-State insured State bank is violating any law of the host State that is 

applicable to such branch pursuant to section 24(j), including 

a law that governs community reinvestment, fair lending, or 

consumer protection, the State bank supervisor of the host 

State or, to the extent authorized by the law of the host State, 

a host State law enforcement officer may, with written notice 

to the State bank supervisor of the bank’s home State and subject to the terms of any applicable cooperative agreement with 

the State bank supervisor of the bank’s home State, undertake 

such enforcement actions and proceedings as would be permitted under the law of the host State as if the branch were 

a bank chartered by that host State. 

(4) COOPERATIVE AGREEMENT.— (A) IN GENERAL.—The State bank supervisors from 2 or 

more States may enter into cooperative agreements to facilitate State regulatory supervision of State banks, including cooperative agreements relating to the coordination of 

examinations and joint participation in examinations. 

(B) DEFINITION.—For purposes of this subsection, the 

term ‘‘cooperative agreement’’ means a written agreement 

that is signed by the home State bank supervisor and the 

host State bank supervisor to facilitate State regulatory 

supervision of State banks, and includes nationwide or 

multi-State cooperative agreements and cooperative agreements solely between the home State and host State. 

(C) RULE OF CONSTRUCTION.—Except for State bank supervisors, no provision of this subsection relating to such 

cooperative agreements shall be construed as limiting in 

any way the authority of home State and host State law 

enforcement officers, regulatory supervisors, or other officials that have not signed such cooperative agreements to 

enforce host State laws that are applicable to a branch of 

an out-of-State insured State bank located in the host 

State pursuant to section 24(j). 

(5) FEDERAL REGULATORY AUTHORITY.—No provision of this 

subsection shall be construed as limiting in any way the authority of any Federal banking agency. 

(6) STATE TAXATION AUTHORITY NOT AFFECTED.—No provision 

of this subsection shall be construed as affecting the authority 

of any State or political subdivision of any State to adopt, 


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apply, or administer any tax or method of taxation to any 

bank, bank holding company, or foreign bank, or any affiliate 

of any bank, bank holding company, or foreign bank, to the extent that such tax or tax method is otherwise permissible by 

or under the Constitution of the United States or other Federal 

law. 

(7) DEFINITIONS.—For purpose of this section, the following 

definitions shall apply: 

(A) HOST STATE, HOME STATE, OUT-OF-STATE BANK.—The 

terms ‘‘host State’’, ‘‘home State’’, and ‘‘out-of-State bank’’ 

have the same meanings as in section 44(g). 

(B) STATE SUPERVISORY FEES.—The term ‘‘State supervisory fees’’ means assessments, examination fees, branch 

fees, license fees, and all other fees that are levied or 

charged by a State bank supervisor directly upon an insured State bank or upon branches of an insured State 

bank. 

(C) TROUBLED CONDITION.—Solely for purposes of paragraph (2)(B), an insured State bank has been determined 

to be in ‘‘troubled condition’’ if the bank— 

(i) has a composite rating, as determined in its most 

recent report of examination, of 4 or 5 under the Uniform Financial Institutions Ratings System; 

(ii) is subject to a proceeding initiated by the Corporation for termination or suspension of deposit insurance; or 

(iii) is subject to a proceeding initiated by the State 

bank supervisor of the bank’s home State to vacate, 

revoke, or terminate the charter of the bank, or to liquidate the bank, or to appoint a receiver for the bank. 

(D) FINAL DETERMINATION.—For purposes of paragraph 

(2)(B), the term ‘‘final determination’’ means the transmittal of a report of examination to the bank or transmittal of official notice of proceedings to the bank. 

(i) FLOOD INSURANCE COMPLIANCE BY INSURED DEPOSITORY IN- STITUTIONS.— (1) EXAMINATIONS.—The appropriate Federal banking agency 

shall, during each scheduled on-site examination required by 

this section, determine whether the insured depository institution is complying with the requirements of the national flood 

insurance program. 

(2) REPORT.— 

(A) REQUIREMENT.—Not later than 1 year after the date 

of enactment of the Riegle Community Development and 

Regulatory Improvement Act of 1994 and biennially thereafter for the next 4 years, each appropriate Federal banking agency shall submit a report to the Congress on compliance by insured depository institutions with the requirements of the national flood insurance program. 

(B) CONTENTS.—Each report submitted under this paragraph shall include a description of the methods used to 

determine compliance, the number of institutions examined during the reporting year, a listing and total number 

of institutions found not to be in compliance, actions taken 

to correct incidents of noncompliance, and an analysis of 


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compliance, including a discussion of any trends, patterns, 

and problems, and recommendations regarding reasonable 

actions to improve the efficiency of the examinations processes. 

(j) CONSULTATION AMONG EXAMINERS.— (1) IN GENERAL.—Each appropriate Federal banking agency 

shall take such action as may be necessary to ensure that examiners employed by the agency— 

(A) consult on examination activities with respect to any 

depository institution; and 

(B) achieve an agreement and resolve any inconsistencies in the recommendations to be given to such institution as a consequence of any examinations. 

(2) EXAMINER-IN-CHARGE.—Each appropriate Federal banking agency shall consider appointing an examiner-in-charge 

with respect to a depository institution to ensure consultation 

on examination activities among all of the examiners of that 

agency involved in examinations of the institution. 

(k) ONE-YEAR RESTRICTIONS ON FEDERAL EXAMINERS OF FINANCIAL INSTITUTIONS.— 

(1) IN GENERAL.—In addition to other applicable restrictions 

set forth in title 18, United States Code, the penalties set forth 

in paragraph (6) of this subsection shall apply to any person 

who— 

(A) was an officer or employee (including any special 

Government employee) of a Federal banking agency or a 

Federal reserve bank; 

(B) served 2 or more months during the final 12 months 

of his or her employment with such agency or entity as the 

senior examiner (or a functionally equivalent position) of a 

depository institution or depository institution holding 

company with continuing, broad responsibility for the examination (or inspection) of that depository institution or 

depository institution holding company on behalf of the 

relevant agency or Federal reserve bank; and 

(C) within 1 year after the termination date of his or her 

service or employment with such agency or entity, knowingly accepts compensation as an employee, officer, director, or consultant from— 

(i) such depository institution, any depository institution holding company that controls such depository 

institution, or any other company that controls such 

depository institution; or 

(ii) such depository institution holding company or 

any depository institution that is controlled by such 

depository institution holding company. 

(2) DEFINITIONS.—For purposes of this subsection— 

(A) the term ‘‘depository institution’’ includes an uninsured branch or agency of a foreign bank, if such branch 

or agency is located in any State; and 

(B) the term ‘‘depository institution holding company’’ includes any foreign bank or company described in section 

8(a) of the International Banking Act of 1978. 

(3) RULES OF CONSTRUCTION.—For purposes of this subsection, a foreign bank shall be deemed to control any branch 


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or agency of the foreign bank, and a person shall be deemed 

to act as a consultant for a depository institution, depository 

institution holding company, or other company, only if such 

person directly works on matters for, or on behalf of, such depository institution, depository institution holding company, or 

other company. 

(4) REGULATIONS.— (A) IN GENERAL.—Each Federal banking agency shall 

prescribe rules or regulations to administer and carry out 

this subsection, including rules, regulations, or guidelines 

to define the scope of persons referred to in paragraph 

(1)(B). 

(B) CONSULTATION REQUIRED.—The Federal banking 

agencies shall consult with each other for the purpose of 

assuring that the rules and regulations issued by the agencies under subparagraph (A) are, to the extent possible, 

consistent, comparable, and practicable, taking into account any differences in the supervisory programs utilized 

by the agencies for the supervision of depository institutions and depository institution holding companies. 

(5) WAIVER.— (A) AGENCY AUTHORITY.—A Federal banking agency may 

grant a waiver, on a case by case basis, of the restriction 

imposed by this subsection to any officer or employee (including any special Government employee) of that agency, 

and the Board of Governors of the Federal Reserve System 

may grant a waiver of the restriction imposed by this subsection to any officer or employee of a Federal reserve 

bank, if the head of such agency certifies in writing that 

granting the waiver would not affect the integrity of the 

supervisory program of the relevant Federal banking agency. 

(B) DEFINITION.—For purposes of this paragraph, the 

head of an agency is— 

(i) the Comptroller of the Currency, in the case of 

the Office of the Comptroller of the Currency; 

(ii) the Chairman of the Board of Governors of the 

Federal Reserve System, in the case of the Board of 

Governors of the Federal Reserve System; and 

(iii) the Chairperson of the Board of Directors, in the 

case of the Corporation. 

(6) PENALTIES.— 

(A) IN GENERAL.—In addition to any other administrative, civil, or criminal remedy or penalty that may otherwise apply, whenever a Federal banking agency determines that a person subject to paragraph (1) has become 

associated, in the manner described in paragraph (1)(C), 

with a depository institution, depository institution holding 

company, or other company for which such agency serves 

as the appropriate Federal banking agency, the agency 

shall impose upon such person one or more of the following 

penalties: 

(i) INDUSTRY-WIDE PROHIBITION ORDER.—The Federal banking agency shall serve a written notice or 

order in accordance with and subject to the provisions 


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of section 8(e)(4) for written notices or orders under 

paragraph (1) or (2) of section 8(e), upon such person 

of the intention of the agency— 

(I) to remove such person from office or to prohibit such person from further participation in the 

conduct of the affairs of the depository institution, 

depository institution holding company, or other 

company for a period of up to 5 years; and 

(II) to prohibit any further participation by such 

person, in any manner, in the conduct of the affairs of any insured depository institution for a period of up to 5 years. 

(ii) CIVIL MONETARY PENALTY.—The Federal banking 

agency may, in an administrative proceeding or civil 

action in an appropriate United States district court, 

impose on such person a civil monetary penalty of not 

more than $250,000. Any administrative proceeding 

under this clause shall be conducted in accordance 

with section 8(i). In lieu of an action by the Federal 

banking agency under this clause, the Attorney General of the United States may bring a civil action 

under this clause in the appropriate United States district court. 

(B) SCOPE OF PROHIBITION ORDER.—Any person subject 

to an order issued under subparagraph (A)(i) shall be subject to paragraphs (6) and (7) of section 8(e) in the same 

manner and to the same extent as a person subject to an 

order issued under such section. 

(C) DEFINITIONS.—Solely for purposes of this paragraph, 

the ‘‘appropriate Federal banking agency’’ for a company 

that is not a depository institution or depository institution 

holding company shall be the Federal banking agency on 

whose behalf the person described in paragraph (1) performed the functions described in paragraph (1)(B). 

* * * * * * * 

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