IB 

Union Calendar No. 684 

114TH CONGRESS 

2D SESSION H. R. 1941 

[Report No. 114–874] 

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 

DECEMBER 12, 2016 

Additional sponsors: Mrs. LUMMIS, Mr. POLIQUIN, Mr. KILMER, Mr. BLUM, 

Mr. OLSON, Mr. DUNCAN of Tennessee, Mrs. BUSTOS, Ms. DELBENE, 

Mr. LUETKEMEYER, Mr. BRAT, Mr. ROTHFUS, Mrs. BLACK, Mr. YOHO, 

Mr. NUGENT, Mr. JOLLY, Ms. JENKINS of Kansas, Mr. WOODALL, Ms. 

MOORE, Mr. HUIZENGA of Michigan, Mr. ROYCE, Mr. KLINE, Ms. GRAHAM, Mr. LOEBSACK, Mr. MILLER of Florida, Mr. STEWART, Mr. 

HULTGREN, Mr. BRIDENSTINE, Mr. QUIGLEY, Mr. BUCHANAN, Mr. 

ROSS, Mr. MICA, Mr. PEARCE, Mr. FRELINGHUYSEN, Mr. GRAVES of 

Missouri, Mr. WEBSTER of Florida, Mr. CRAWFORD, Mr. BOUSTANY, Mr. 

HUDSON, Mr. CONNOLLY, Mr. MCKINLEY, Mr. RUSH, Mr. WALZ, Mr. 

ASHFORD, Mr. YOUNG of Iowa, and Mr. YOUNG of Alaska 

DECEMBER 12, 2016 

Committed to the Committee of the Whole House on the State of the Union 

and ordered to be printed 


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A BILL 

To improve the examination of depository institutions, and 

for other purposes. 


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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’’. 

6 SEC. 2. TIMELINESS OF EXAMINATION REPORTS. 

7 The Federal Financial Institutions Examination 

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

9 by adding at the end the following: 

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

11 ‘‘(a) IN GENERAL.— 

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

13 financial institutions regulatory agency shall provide 

14 a final examination report to a financial institution 

15 not later than 60 days after the later of— 

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

17 of the institution; or 

18 ‘‘(B) the provision of additional informa19 tion by the institution relating to the examina20 tion. 

21 ‘‘(2) EXIT INTERVIEW.—If a financial institu22 tion is not subject to a resident examiner program, 

23 the exit interview shall occur not later than the end 

24 of the 9-month period beginning on the commence25 ment of the examination, except that such period 


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1 may be extended by the Federal financial institu2 tions regulatory agency by providing written notice 

3 to the institution and the Independent Examination 

4 Review Director describing with particularity the 

5 reasons that a longer period is needed to complete 

6 the examination. 

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

8 of a financial institution, the Federal financial institutions 

9 regulatory agency shall include with the final report an 

10 appendix listing all examination or other factual informa11 tion relied upon by the agency in support of a material 

12 supervisory determination.’’. 

13 SEC. 3. EXAMINATION STANDARDS. 

14 The Federal Financial Institutions Examination 

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

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

17 following: 

18 ‘‘SEC. 1013. EXAMINATION STANDARDS. 

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

20 institution— 

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

22 non-accrual status solely because the collateral for 

23 such loan has deteriorated in value; 

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

25 shall be removed from non-accrual status if the borVerDate Sep 11 2014 23:22 Dec 12, 2016 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1941.RH H1941

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1 rower demonstrates the ability to perform on such 

2 loan over a maximum period of 6 months, except 

3 that with respect to loans on a quarterly, semi4 annual, or longer repayment schedule such period 

5 shall be a maximum of 3 consecutive repayment pe6 riods; 

7 ‘‘(3) a new appraisal on a performing commer8 cial loan shall not be required unless an advance of 

9 new funds is involved; and 

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

11 there has been deterioration in collateral value, the 

12 amount to be classified shall be the portion of the 

13 deficiency relating to the decline in collateral value 

14 and repayment capacity of the borrower. 

15 ‘‘(b) WELL CAPITALIZED INSTITUTIONS.—The Fed16 eral financial institutions regulatory agencies may not re17 quire a financial institution that is well capitalized to raise 

18 additional capital in lieu of an action prohibited under 

19 subsection (a). 

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

21 Federal financial institutions regulatory agencies shall de22 velop and apply identical definitions and reporting require23 ments for non-accrual loans.’’. 


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1 SEC. 4. INDEPENDENT EXAMINATION REVIEW DIRECTOR. 

2 The Federal Financial Institutions Examination 

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

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

5 following: 

6 ‘‘SEC. 1014. OFFICE OF INDEPENDENT EXAMINATION RE7 VIEW. 

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

9 Council an Office of Independent Examination Review 

10 (the ‘Office’). 

11 ‘‘(b) HEAD OF OFFICE.—There is established the po12 sition of the Independent Examination Review Director 

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

14 shall be appointed by the Council and shall be independent 

15 from any member agency of the Council. 

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

17 staff to support the activities of the Office. 

18 ‘‘(d) DUTIES.—The Director shall— 

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

20 investigate complaints from financial institutions, 

21 their representatives, or another entity acting on be22 half of such institutions, concerning examinations, 

23 examination practices, or examination reports; 

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

25 months and in locations designed to encourage par26 ticipation from all sections of the United States, 


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1 with financial institutions, their representatives, or 

2 another entity acting on behalf of such institutions, 

3 to discuss examination procedures, examination 

4 practices, or examination policies; 

5 ‘‘(3) review examination procedures of the Fed6 eral financial institutions regulatory agencies to en7 sure that the written examination policies of those 

8 agencies are being followed in practice and adhere to 

9 the standards for consistency established by the 

10 Council; 

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

12 examination quality assurance for all examination 

13 types conducted by the Federal financial institutions 

14 regulatory agencies; 

15 ‘‘(5) adjudicate any supervisory appeal initiated 

16 under section 1015; and 

17 ‘‘(6) report annually to the Committee on Fi18 nancial Services of the House of Representatives, the 

19 Committee on Banking, Housing, and Urban Affairs 

20 of the Senate, and the Council, on the reviews car21 ried out pursuant to paragraphs (3) and (4), includ22 ing compliance with the requirements set forth in 

23 section 1012 regarding timeliness of examination re24 ports, and the Council’s recommendations for imVerDate Sep 11 2014 23:22 Dec 12, 2016 Jkt 069200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1941.RH H1941

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1 provements in examination procedures, practices, 

2 and policies. 

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

4 confidential all meetings with, discussions with, and infor5 mation provided by financial institutions.’’. 

6 SEC. 5. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SU7 PERVISORY DETERMINATIONS. 

8 The Federal Financial Institutions Examination 

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

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

11 following: 

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

13 SUPERVISORY DETERMINATIONS. 

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

15 the right to obtain an independent review of a material 

16 supervisory determination contained in a final report of 

17 examination. 

18 ‘‘(b) NOTICE.— 

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

20 review of a material supervisory determination under 

21 this section shall file a written notice with the Inde22 pendent Examination Review Director (the ‘Direc23 tor’) within 60 days after receiving the final report 

24 of examination that is the subject of such review. 


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1 ‘‘(2) IDENTIFICATION OF DETERMINATION.— 

2 The written notice shall identify the material super3 visory determination that is the subject of the inde4 pendent examination review, and a statement of the 

5 reasons why the institution believes that the deter6 mination is incorrect or should otherwise be modi7 fied. 

8 ‘‘(3) INFORMATION TO BE PROVIDED TO INSTI9 TUTION.—Any information relied upon by the agen10 cy in the final report that is not in the possession 

11 of the financial institution may be requested by the 

12 financial institution and shall be delivered promptly 

13 by the agency to the financial institution. 

14 ‘‘(c) RIGHT TO HEARING.— 

15 ‘‘(1) IN GENERAL.—The Director shall deter16 mine the merits of the appeal on the record or, at 

17 the financial institution’s election, shall refer the ap18 peal to an Administrative Law Judge to conduct a 

19 confidential hearing pursuant to the procedures set 

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

21 States Code, which hearing shall take place not later 

22 than 60 days after the petition for review was re23 ceived by the Director, and to issue a proposed deci24 sion to the Director based upon the record estab25 lished at such hearing. 


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

2 determination or recommendation under this sub3 section, neither the Administrative Law Judge nor 

4 the Director shall defer to the opinions of the exam5 iner or agency, but shall conduct a de novo review 

6 to independently determine the appropriateness of 

7 the agency’s decision based upon the relevant stat8 utes, regulations, and other appropriate guidance, as 

9 well as evidence adduced at any hearing. 

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

11 on an independent review under this section shall— 

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

13 record has been closed; and 

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

15 bind the agency whose supervisory determination 

16 was the subject of the review and the financial insti17 tution requesting the review. 

18 ‘‘(e) RIGHT TO JUDICIAL REVIEW.—A financial insti19 tution shall have the right to petition for review of final 

20 agency action under this section by filing a Petition for 

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

22 United States Court of Appeals for the District of Colum23 bia Circuit or the Circuit in which the financial institution 

24 is located. 


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

2 the Committee on Financial Services of the House of Rep3 resentatives and the Committee on Banking, Housing, and 

4 Urban Affairs of the Senate on actions taken under this 

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

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

7 such a report contain information about individual finan8 cial institutions or any confidential or privileged informa9 tion shared by financial institutions. 

10 ‘‘(g) RETALIATION PROHIBITED.—A Federal finan11 cial institutions regulatory agency may not— 

12 ‘‘(1) retaliate against a financial institution, in13 cluding service providers, or any institution-affiliated 

14 party (as defined under section 3 of the Federal De15 posit Insurance Act), for exercising appellate rights 

16 under this section; or 

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

18 would benefit a financial institution or any institu19 tion-affiliated party on the basis that an appeal 

20 under this section is pending under this section. 

21 ‘‘(h) RULE OF CONSTRUCTION.—Nothing in this sec22 tion may be construed— 

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

24 institutions regulatory agency to take enforcement 

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1 pervisory determination under review under this sec2 tion; or 

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

4 a material supervisory determination with respect to 

5 which there is an ongoing enforcement or other su6 pervisory action.’’. 

7 SEC. 6. ADDITIONAL AMENDMENTS. 

8 (a) RIEGLE COMMUNITY DEVELOPMENT AND REGU9 LATORY IMPROVEMENT ACT OF 1994.—Section 309 of the 

10 Riegle Community Development and Regulatory Improve11 ment Act of 1994 (12 U.S.C. 4806) is amended— 

12 (1) in subsection (a), by inserting after ‘‘appro13 priate Federal banking agency’’ the following: ‘‘, the 

14 Bureau of Consumer Financial Protection,’’; 

15 (2) in subsection (b)— 

16 (A) in paragraph (2), by striking ‘‘the ap17 pellant from retaliation by agency examiners’’ 

18 and inserting ‘‘the insured depository institu19 tion or insured credit union from retaliation by 

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

21 (B) by adding at the end the following 

22 flush-left text: 

23 ‘‘For purposes of this subsection and subsection (e), retal24 iation includes delaying consideration of, or withholding 

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1 wise would have been approved, but for the exercise of the 

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

3 (3) in subsection (e)(2)— 

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

5 ‘‘and’’ at the end; 

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

7 period and inserting ‘‘; and’’; and 

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

9 ‘‘(D) ensure that appropriate safeguards 

10 exist for protecting the insured depository insti11 tution or insured credit union from retaliation 

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

13 exercising its rights under this subsection.’’; 

14 and 

15 (4) in subsection (f)(1)(A)— 

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

17 end; 

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

19 end; and 

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

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

22 exam report as a matter requiring atten23 tion by the institution’s management or 

24 board of directors; and 


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

2 institution’s status as eligible for expedited 

3 processing of applications, requests, no4 tices, or filings on the grounds of a super5 visory or compliance concern, regardless of 

6 whether that concern has been cited as a 

7 basis for another material supervisory de8 termination or matter requiring attention 

9 in an examination report, provided that the 

10 conduct at issue did not involve violation of 

11 any criminal law; and’’. 

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

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

14 amended by inserting ‘‘the Bureau of Consumer Financial 

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

16 term appears. 

17 (c) FEDERAL FINANCIAL INSTITUTIONS EXAMINA18 TION COUNCIL ACT OF 1978.—The Federal Financial In19 stitutions Examination Council Act of 1978 (12 U.S.C. 

20 3301 et seq.) is amended— 

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

22 to read as follows: 

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

24 regulatory agencies’— 


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

2 of the Currency, the Board of Governors of the 

3 Federal Reserve System, the Federal Deposit 

4 Insurance Corporation, and the National Credit 

5 Union Administration; and 

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

7 1014, and 1015, includes the Bureau of Con8 sumer Financial Protection;’’; and 

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

10 inserting ‘‘One-fourth’’. 


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Union Calendar No. 684 

114TH CONGRESS 

2D SESSION H. R. 1941 

[Report No. 114–874] 

A BILL 

To improve the examination of depository 

institutions, and for other purposes. 

DECEMBER 12, 2016 

Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 


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