I 

114TH CONGRESS 

1ST SESSION H. R. 1941 

To improve the examination of depository institutions, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 22, 2015 

Mr. WESTMORELAND (for himself, Mrs. CAROLYN B. MALONEY of New York, 

Mr. HECK of Washington, Mr. FLEISCHMANN, Mr. COOPER, Mr. BARR, 

Mr. STIVERS, Mr. PITTENGER, Mr. DUFFY, Mr. COFFMAN, Mr. 

FINCHER, Mr. MESSER, Mr. MULVANEY, Mr. GOSAR, Mr. HILL, Mr. 

MURPHY of Florida, Mr. FITZPATRICK, Mr. LUCAS, Mrs. WAGNER, Mr. 

POSEY, Mr. DAVID SCOTT of Georgia, Mr. DESJARLAIS, Mr. WILLIAMS, 

Mr. DUNCAN of South Carolina, Mr. TIPTON, Mr. GARRETT, Mr. 

MCHENRY, Mrs. LOVE, Mr. HURT of Virginia, and Mr. KING of New 

York) introduced the following bill; which was referred to the Committee 

on Financial Services 

A BILL 

To improve the examination of depository institutions, and 

for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Financial Institutions 

5 Examination Fairness and Reform Act’’. 


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1 SEC. 2. TIMELINESS OF EXAMINATION REPORTS. 

2 The Federal Financial Institutions Examination 

3 Council Act of 1978 (12 U.S.C. 3301 et seq.) is amended 

4 by adding at the end the following: 

5 ‘‘SEC. 1012. TIMELINESS OF EXAMINATION REPORTS. 

6 ‘‘(a) IN GENERAL.— 

7 ‘‘(1) FINAL EXAMINATION REPORT.—A Federal 

8 financial institutions regulatory agency shall provide 

9 a final examination report to a financial institution 

10 not later than 60 days after the later of— 

11 ‘‘(A) the exit interview for an examination 

12 of the institution; or 

13 ‘‘(B) the provision of additional informa14 tion by the institution relating to the examina15 tion. 

16 ‘‘(2) EXIT INTERVIEW.—If a financial institu17 tion is not subject to a resident examiner program, 

18 the exit interview shall occur not later than the end 

19 of the 9-month period beginning on the commence20 ment of the examination, except that such period 

21 may be extended by the Federal financial institu22 tions regulatory agency by providing written notice 

23 to the institution and the Independent Examination 

24 Review Director describing with particularity the 

25 reasons that a longer period is needed to complete 

26 the examination. 


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1 ‘‘(b) EXAMINATION MATERIALS.—Upon the request 

2 of a financial institution, the Federal financial institutions 

3 regulatory agency shall include with the final report an 

4 appendix listing all examination or other factual informa5 tion relied upon by the agency in support of a material 

6 supervisory determination.’’. 

7 SEC. 3. EXAMINATION STANDARDS. 

8 The Federal Financial Institutions Examination 

9 Council Act of 1978 (12 U.S.C. 3301 et seq.), as amended 

10 by section 2, is further amended by adding at the end the 

11 following: 

12 ‘‘SEC. 1013. EXAMINATION STANDARDS. 

13 ‘‘(a) IN GENERAL.—In the examination of a financial 

14 institution— 

15 ‘‘(1) a commercial loan shall not be placed in 

16 non-accrual status solely because the collateral for 

17 such loan has deteriorated in value; 

18 ‘‘(2) a modified or restructured commercial loan 

19 shall be removed from non-accrual status if the bor20 rower demonstrates the ability to perform on such 

21 loan over a maximum period of 6 months, except 

22 that with respect to loans on a quarterly, semi23 annual, or longer repayment schedule such period 

24 shall be a maximum of 3 consecutive repayment pe25 riods; 


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1 ‘‘(3) a new appraisal on a performing commer2 cial loan shall not be required unless an advance of 

3 new funds is involved; and 

4 ‘‘(4) in classifying a commercial loan in which 

5 there has been deterioration in collateral value, the 

6 amount to be classified shall be the portion of the 

7 deficiency relating to the decline in collateral value 

8 and repayment capacity of the borrower. 

9 ‘‘(b) WELL CAPITALIZED INSTITUTIONS.—The Fed10 eral financial institutions regulatory agencies may not re11 quire a financial institution that is well capitalized to raise 

12 additional capital in lieu of an action prohibited under 

13 subsection (a). 

14 ‘‘(c) CONSISTENT LOAN CLASSIFICATIONS.—The 

15 Federal financial institutions regulatory agencies shall de16 velop and apply identical definitions and reporting require17 ments for non-accrual loans.’’. 

18 SEC. 4. INDEPENDENT EXAMINATION REVIEW DIRECTOR. 

19 The Federal Financial Institutions Examination 

20 Council Act of 1978 (12 U.S.C. 3301 et seq.), as amended 

21 by section 3, is further amended by adding at the end the 

22 following: 


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1 ‘‘SEC. 1014. OFFICE OF INDEPENDENT EXAMINATION RE2 VIEW. 

3 ‘‘(a) ESTABLISHMENT.—There is established in the 

4 Council an Office of Independent Examination Review 

5 (the ‘Office’). 

6 ‘‘(b) HEAD OF OFFICE.—There is established the po7 sition of the Independent Examination Review Director 

8 (the ‘Director’), as the head of the Office. The Director 

9 shall be appointed by the Council and shall be independent 

10 from any member agency of the Council. 

11 ‘‘(c) STAFFING.—The Director is authorized to hire 

12 staff to support the activities of the Office. 

13 ‘‘(d) DUTIES.—The Director shall— 

14 ‘‘(1) receive and, at the Director’s discretion, 

15 investigate complaints from financial institutions, 

16 their representatives, or another entity acting on be17 half of such institutions, concerning examinations, 

18 examination practices, or examination reports; 

19 ‘‘(2) hold meetings, at least once every three 

20 months and in locations designed to encourage par21 ticipation from all sections of the United States, 

22 with financial institutions, their representatives, or 

23 another entity acting on behalf of such institutions, 

24 to discuss examination procedures, examination 

25 practices, or examination policies; 


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1 ‘‘(3) review examination procedures of the Fed2 eral financial institutions regulatory agencies to en3 sure that the written examination policies of those 

4 agencies are being followed in practice and adhere to 

5 the standards for consistency established by the 

6 Council; 

7 ‘‘(4) conduct a continuing and regular review of 

8 examination quality assurance for all examination 

9 types conducted by the Federal financial institutions 

10 regulatory agencies; 

11 ‘‘(5) adjudicate any supervisory appeal initiated 

12 under section 1015; and 

13 ‘‘(6) report annually to the Committee on Fi14 nancial Services of the House of Representatives, the 

15 Committee on Banking, Housing, and Urban Affairs 

16 of the Senate, and the Council, on the reviews car17 ried out pursuant to paragraphs (3) and (4), includ18 ing compliance with the requirements set forth in 

19 section 1012 regarding timeliness of examination re20 ports, and the Council’s recommendations for im21 provements in examination procedures, practices, 

22 and policies. 

23 ‘‘(e) CONFIDENTIALITY.—The Director shall keep 

24 confidential all meetings with, discussions with, and infor25 mation provided by financial institutions.’’. 


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1 SEC. 5. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SU2 PERVISORY DETERMINATIONS. 

3 The Federal Financial Institutions Examination 

4 Council Act of 1978 (12 U.S.C. 3301 et seq.), as amended 

5 by section 4, is further amended by adding at the end the 

6 following: 

7 ‘‘SEC. 1015. RIGHT TO INDEPENDENT REVIEW OF MATERIAL 

8 SUPERVISORY DETERMINATIONS. 

9 ‘‘(a) IN GENERAL.—A financial institution shall have 

10 the right to obtain an independent review of a material 

11 supervisory determination contained in a final report of 

12 examination. 

13 ‘‘(b) NOTICE.— 

14 ‘‘(1) TIMING.—A financial institution seeking 

15 review of a material supervisory determination under 

16 this section shall file a written notice with the Inde17 pendent Examination Review Director (the ‘Direc18 tor’) within 60 days after receiving the final report 

19 of examination that is the subject of such review. 

20 ‘‘(2) IDENTIFICATION OF DETERMINATION.— 

21 The written notice shall identify the material super22 visory determination that is the subject of the inde23 pendent examination review, and a statement of the 

24 reasons why the institution believes that the deter25 mination is incorrect or should otherwise be modi26 fied. 


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1 ‘‘(3) INFORMATION TO BE PROVIDED TO INSTI2 TUTION.—Any information relied upon by the agen3 cy in the final report that is not in the possession 

4 of the financial institution may be requested by the 

5 financial institution and shall be delivered promptly 

6 by the agency to the financial institution. 

7 ‘‘(c) RIGHT TO HEARING.— 

8 ‘‘(1) IN GENERAL.—The Director shall deter9 mine the merits of the appeal on the record or, at 

10 the financial institution’s election, shall refer the ap11 peal to an Administrative Law Judge to conduct a 

12 confidential hearing pursuant to the procedures set 

13 forth under sections 556 and 557 of title 5, United 

14 States Code, which hearing shall take place not later 

15 than 60 days after the petition for review was re16 ceived by the Director, and to issue a proposed deci17 sion to the Director based upon the record estab18 lished at such hearing. 

19 ‘‘(2) STANDARD OF REVIEW.—In rendering a 

20 determination or recommendation under this sub21 section, neither the Administrative Law Judge nor 

22 the Director shall defer to the opinions of the exam23 iner or agency, but shall conduct a de novo review 

24 to independently determine the appropriateness of 

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1 utes, regulations, and other appropriate guidance, as 

2 well as evidence adduced at any hearing. 

3 ‘‘(d) FINAL DECISION.—A decision by the Director 

4 on an independent review under this section shall— 

5 ‘‘(1) be made not later than 60 days after the 

6 record has been closed; and 

7 ‘‘(2) be deemed final agency action and shall 

8 bind the agency whose supervisory determination 

9 was the subject of the review and the financial insti10 tution requesting the review. 

11 ‘‘(e) RIGHT TO JUDICIAL REVIEW.—A financial insti12 tution shall have the right to petition for review of final 

13 agency action under this section by filing a Petition for 

14 Review within 60 days of the Director’s decision in the 

15 United States Court of Appeals for the District of Colum16 bia Circuit or the Circuit in which the financial institution 

17 is located. 

18 ‘‘(f) REPORT.—The Director shall report annually to 

19 the Committee on Financial Services of the House of Rep20 resentatives and the Committee on Banking, Housing, and 

21 Urban Affairs of the Senate on actions taken under this 

22 section, including the types of issues that the Director has 

23 reviewed and the results of those reviews. In no case shall 

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1 cial institutions or any confidential or privileged informa2 tion shared by financial institutions. 

3 ‘‘(g) RETALIATION PROHIBITED.—A Federal finan4 cial institutions regulatory agency may not— 

5 ‘‘(1) retaliate against a financial institution, in6 cluding service providers, or any institution-affiliated 

7 party (as defined under section 3 of the Federal De8 posit Insurance Act), for exercising appellate rights 

9 under this section; or 

10 ‘‘(2) delay or deny any agency action that 

11 would benefit a financial institution or any institu12 tion-affiliated party on the basis that an appeal 

13 under this section is pending under this section. 

14 ‘‘(h) RULE OF CONSTRUCTION.—Nothing in this sec15 tion may be construed— 

16 ‘‘(1) to affect the right of a Federal financial 

17 institutions regulatory agency to take enforcement 

18 or other supervisory actions related to a material su19 pervisory determination under review under this sec20 tion; or 

21 ‘‘(2) to prohibit the review under this section of 

22 a material supervisory determination with respect to 

23 which there is an ongoing enforcement or other su24 pervisory action.’’. 


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1 SEC. 6. ADDITIONAL AMENDMENTS. 

2 (a) RIEGLE COMMUNITY DEVELOPMENT AND REGU3 LATORY IMPROVEMENT ACT OF 1994.—Section 309 of the 

4 Riegle Community Development and Regulatory Improve5 ment Act of 1994 (12 U.S.C. 4806) is amended— 

6 (1) in subsection (a), by inserting after ‘‘appro7 priate Federal banking agency’’ the following: ‘‘, the 

8 Bureau of Consumer Financial Protection,’’; 

9 (2) in subsection (b)— 

10 (A) in paragraph (2), by striking ‘‘the ap11 pellant from retaliation by agency examiners’’ 

12 and inserting ‘‘the insured depository institu13 tion or insured credit union from retaliation by 

14 the agencies referred to in subsection (a)’’; and 

15 (B) by adding at the end the following 

16 flush-left text: 

17 ‘‘For purposes of this subsection and subsection (e), retal18 iation includes delaying consideration of, or withholding 

19 approval of, any request, notice, or application that other20 wise would have been approved, but for the exercise of the 

21 institution’s or credit union’s rights under this section.’’; 

22 (3) in subsection (e)(2)— 

23 (A) in subparagraph (B), by striking 

24 ‘‘and’’ at the end; 

25 (B) in subparagraph (C), by striking the 

26 period and inserting ‘‘; and’’; and 


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1 (C) by adding at the end the following: 

2 ‘‘(D) ensure that appropriate safeguards 

3 exist for protecting the insured depository insti4 tution or insured credit union from retaliation 

5 by any agency referred to in subsection (a) for 

6 exercising its rights under this subsection.’’; 

7 and 

8 (4) in subsection (f)(1)(A)— 

9 (A) in clause (ii), by striking ‘‘and’’ at the 

10 end; 

11 (B) in clause (iii), by striking ‘‘and’’ at the 

12 end; and 

13 (C) by adding at the end the following: 

14 ‘‘(iv) any issue specifically listed in an 

15 exam report as a matter requiring atten16 tion by the institution’s management or 

17 board of directors; and 

18 ‘‘(v) any suspension or removal of an 

19 institution’s status as eligible for expedited 

20 processing of applications, requests, no21 tices, or filings on the grounds of a super22 visory or compliance concern, regardless of 

23 whether that concern has been cited as a 

24 basis for another material supervisory de25 termination or matter requiring attention 


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1 in an examination report, provided that the 

2 conduct at issue did not involve violation of 

3 any criminal law; and’’. 

4 (b) FEDERAL CREDIT UNION ACT.—Section 205(j) 

5 of the Federal Credit Union Act (12 U.S.C. 1785(j)) is 

6 amended by inserting ‘‘the Bureau of Consumer Financial 

7 Protection,’’ before ‘‘the Administration’’ each place such 

8 term appears. 

9 (c) FEDERAL FINANCIAL INSTITUTIONS EXAMINA10 TION COUNCIL ACT OF 1978.—The Federal Financial In11 stitutions Examination Council Act of 1978 (12 U.S.C. 

12 3301 et seq.) is amended— 

13 (1) in section 1003, by amending paragraph (1) 

14 to read as follows: 

15 ‘‘(1) the term ‘Federal financial institutions 

16 regulatory agencies’— 

17 ‘‘(A) means the Office of the Comptroller 

18 of the Currency, the Board of Governors of the 

19 Federal Reserve System, the Federal Deposit 

20 Insurance Corporation, and the National Credit 

21 Union Administration; and 

22 ‘‘(B) for purposes of sections 1012, 1013, 

23 1014, and 1015, includes the Bureau of Con24 sumer Financial Protection;’’; and 


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1 (2) in section 1005, by striking ‘‘One-fifth’’ and 

2 inserting ‘‘One-fourth’’. 

Æ 


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