54822 Federal Register / Vol. 73, No. 185 / Tuesday, September 23, 2008 / Notices 

the defaulted issue, which brings about 

a heightened risk of being sued. In 

addition, the administrative demands in 

such a situation can result in the 

incurrence of significant expenses and 

the distraction of managerial time and 

attention from other areas of the trust 

department. Thus, to monitor and better 

understand the risk profile of trust 

institutions serving as an indenture 

trustee for debt securities and changes 

therein, the agencies are proposing to 

require trust institutions to report the 

number of such issues that are in 

substantive default and the principal 

amount outstanding for these issues. 

In addition, the agencies are 

proposing to revise the instructions for 

reporting on corporate trust accounts to 

state that issues of trust preferred stock 

for which the institution is trustee 

should be included in the amounts 

reported for corporate and municipal 

trusteeships. 

F. Instructional Clarifications 

The instructions for reporting the 

managed and non-managed assets and 

number of managed and non-managed 

accounts for defined contribution plans 

and defined benefit plans in items 5.a 

and 5.b of Schedule RC–T, respectively, 

would be revised to indicate that 

employee benefit accounts for which the 

trust institution serves as a directed 

trustee should be reported as nonmanaged accounts. 

The instructions for reporting on the 

number of and market value of assets 

held in collective investment funds and 

common trust funds in Memorandum 

item 3 would be clarified by stating that 

the number of funds should be reported, 

not the number of assets held by these 

funds, the number of participants, or the 

number of accounts invested in the 

funds. 

V. Request for Comment 

Public comment is requested on all 

aspects of this joint notice. Comments 

are invited on: 

(a) Whether the proposed revisions to 

the Call Report collections of 

information are necessary for the proper 

performance of the agencies’ functions, 

including whether the information has 

practical utility; 

(b) The accuracy of the agencies’ 

estimates of the burden of the 

information collections as they are 

proposed to be revised, including the 

validity of the methodology and 

assumptions used; 

(c) Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; 

(d) Ways to minimize the burden of 

information collections on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology; and 

(e) Estimates of capital or start up 

costs and costs of operation, 

maintenance, and purchase of services 

to provide information. 

Comments submitted in response to 

this joint notice will be shared among 

the agencies and will be summarized or 

included in the agencies’ requests for 

OMB approval. All comments will 

become a matter of public record. 

Dated: September 17, 2008. 

Michele Meyer, 

Assistant Director, Legislative and Regulatory 

Activities Division, Office of the Comptroller 

of the Currency. 

Board of Governors of the Federal Reserve 

System, September 17, 2008. 

Jennifer J. Johnson, 

Secretary of the Board. 

Dated at Washington, DC, this 16th day of 

September 2008. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. E8–22258 Filed 9–22–08; 8:45 am] 

BILLING CODE 4810–33–P, 6210–01–P, 6714–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

Guidelines for Appeals of Material 

Supervisory Determinations 

AGENCY: Federal Deposit Insurance 

Corporation. 

ACTION: Notice of guidelines. 

SUMMARY: On September 16, 2008, the 

Federal Deposit Insurance Corporation 

(FDIC) Board of Directors (Board) 

adopted revised Guidelines for Appeals 

of Material Supervisory Determinations 

(Guidelines). The revisions to the 

Guidelines were adopted to better align 

the FDIC’s Supervisory Appeals Review 

Committee (SARC) process with the 

material supervisory determinations 

appeals procedures at the other Federal 

banking agencies. The amendments 

modify the supervisory determinations 

eligible for appeal to eliminate the 

ability of an FDIC-supervised institution 

to file an appeal with the SARC with 

respect to determinations or the facts 

and circumstances underlying a 

recommended or pending formal 

enforcement-related action or decision, 

including the initiation of an 

investigation and the referral to the 

Attorney General or a notice to the 

Secretary of Housing and Urban 

Development for apparent violations of 

the Equal Credit Opportunity Act or the 

Fair Housing Act. The amendments also 

include limited technical amendments. 

The revised Guidelines are effective 

upon adoption. 

DATES: The Guidelines became effective 

on September 16, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Frank Gray, Section Chief, FDIC, 550 

17th Street, NW., Washington, DC 20429 

[F–4054]; on detail; telephone: (678) 

916–2200; or electronic mail: 

fgray@fdic.gov; Patricia A. Colohan, 

Section Chief, FDIC, 550 17th Street, 

NW., Washington, DC 20429 [F–4080]; 

telephone: (202) 898–7283; or electronic 

mail: pcolohan@fdic.gov; or Richard 

Bogue, Counsel, FDIC, 550 17th Street, 

NW., Washington, DC 20429 [MB– 

3014]; telephone: (202) 898–3726; 

facsimile: (202) 898–3658; or electronic 

mail: rbogue@fdic.gov. 

SUPPLEMENTARY INFORMATION: On May 

27, 2008, the FDIC published in the 

Federal Register, for a 60-day comment 

period, a notice and request for 

comments respecting the proposed 

revisions to the Guidelines for Appeals 

of Material Supervisory Determinations. 

(73 FR 30393). The comment period 

closed July 28, 2008. The FDIC 

considered it desirable in this instance 

to garner comments regarding the 

Guidelines, although notice and 

comment rulemaking was not required 

and need not be employed should the 

FDIC make future amendments. 

The FDIC received five comment 

letters in total from one depository 

institution, three banking associations, 

and one lawyer on behalf of interested 

clients, all of whom opposed the 

proposed revisions. The comments 

received, and FDIC’s responses, are 

summarized below. 

Background 

Section 309(a) of the Riegle 

Community Development and 

Regulatory Improvement Act of 1994 

(Pub. L. 103–325, 108 Stat. 2160) (Riegle 

Act), required the FDIC (as well as the 

other Federal banking agencies and the 

National Credit Union Administration 

Board (NCUA)) to establish an 

independent intra-agency appellate 

process to review material supervisory 

determinations. The Riegle Act defines 

the term ‘‘independent appellate 

process’’ to mean 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. In the 

appeals process, the FDIC is required to 

ensure that (1) an appeal of a material 

supervisory determination by an 

insured depository institution is heard 

and decided expeditiously; and (2) 

appropriate safeguards exist for 


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protecting appellants from retaliation by 

agency examiners. 

The term ‘‘material supervisory 

determinations’’ is defined in the Riegle 

Act to include determinations relating 

to: (1) Examination ratings; (2) the 

adequacy of loan loss reserve 

provisions; and (3) loan classifications 

on loans that are significant to an 

institution. The Riegle Act specifically 

excludes from the definition of 

‘‘material supervisory determinations’’ a 

decision to appoint a conservator or 

receiver for an insured depository 

institution or to take prompt corrective 

action pursuant to section 38 of the 

Federal Deposit Insurance Act (FDI Act), 

12 U.S.C. 1831o. Finally, section 309(g) 

(12 U.S.C. 4806(g)) expressly provides 

that the Riegle Act’s requirement to 

establish an appeals process shall not 

affect the authority of the Federal 

banking agencies to take enforcement or 

supervisory actions against an 

institution. 

On March 21, 1995, the FDIC’s Board 

of Directors adopted the original 

Guidelines for Appeals of Material 

Supervisory Determinations, which 

established and set forth procedures 

governing the SARC, whose purpose 

was to consider and decide appeals of 

material supervisory determinations as 

required by the Riegle Act. 

On March 18, 2004, the FDIC 

published in the Federal Register, for a 

30-day comment period, a notice and 

request for comments respecting 

proposed revisions to the Guidelines. 

(69 FR 12855). On July 9, 2004, the FDIC 

published in the Federal Register a 

notice of guidelines which, effective 

June 28, 2004, adopted the revised 

Guidelines changing the composition 

and procedures of the SARC. (69 FR 

41479). The revised Guidelines were 

disseminated to FDIC-supervised 

financial institutions through a 

Financial Institution Letter, FIL–113– 

2004, issued October 13, 2004. 

Comments Filed in Response to the May 

27, 2008 Federal Register Notice 

One comment was filed by a bank. 

That bank opposes the proposed 

amendments. Stating that there ‘‘needs 

to be an effective and non-biased 

appeals process for banks,’’ and 

concludes that the proposal ‘‘to further 

reduce the * * * ability, to appeal FDIC 

supervisory determinations is 

completely over-reaching, and should 

not be enacted into law.’’ 

One of the trade groups that oppose 

the proposed amendments believes that 

the FDIC’s original decision to allow 

appeals of underlying determinations 

was the correct interpretation of the 

Riegle Act and ‘‘helps assure banks of 

fundamental fairness and due process in 

connection with material supervisory 

determinations made by the FDIC.’’ The 

WBA asserts that ‘‘there is no 

requirement under the Riegle Act that 

the FDIC march in lock step with the 

other Federal Banking Agencies 

regarding the appeals process,’’ and that 

the proposed amendments are 

unnecessary and would ‘‘remove one of 

the few efficient opportunities available 

to banks for an independent review of 

those underlying facts and 

circumstances that exist at the time of 

an examination.’’ 

Another trade group opposes the 

proposed amendments while advocating 

an increased role for the FDIC 

Ombudsman in the appeals process. 

This group states that ‘‘independent 

review of the underlying facts, 

circumstances, and determinations is 

necessary to preserve the integrity of the 

regulatory system and perceived 

fairness of the process while 

maintaining a necessary level of 

accountability.’’ This group believes 

that ‘‘the proposed changes would 

reduce opportunities to resolve issues in 

a constructive manner at a time of 

increasing need for such opportunities.’’ 

‘‘It will diminish the utility of appeals 

processes and force more disputes to be 

resolved through an adversarial 

enforcement process.’’ This group 

advocates changes to the appeals 

process ‘‘that vest the FDIC Ombudsman 

with more authority to resolve disputes 

through comparatively quick and 

inexpensive informal appeals.’’ 

A third trade group also opposes the 

proposed changes and argues for an 

increased role for the FDIC 

Ombudsman. This group supports an 

FDIC appeals process that is ‘‘generally 

unrestricted in scope,’’ so long as ‘‘the 

appellate process does not get 

overloaded or interfere with the FDIC’s 

ability to bring formal or informal 

enforcement actions.’’ This group 

believes that the FDIC has failed to 

justify the proposed changes and argues 

that the proposed changes would 

‘‘unnecessarily restrict and complicate 

the SARC process and further 

discourage bankers from filing appeals.’’ 

This group also recommends that the 

FDIC consider ways to further involve 

the FDIC Ombudsman in the SARC 

appeals process which ‘‘would make the 

process more impartial and user 

friendly, and could encourage banks to 

pursue appeals.’’ 

The lawyer opposes the proposed 

changes advocating that the current 

process works well and the industry 

needs more opportunities for informal 

review. 

The commenters uniformly expressed 

support for an independent review of 

underlying facts, circumstances, and 

determinations, and that there needs to 

be ‘‘an effective and non-biased appeals 

procedure for banks.’’ We believe that 

the numerous informal exchanges of 

views between banks and the FDIC in 

the supervisory process prior to pursuit 

of any enforcement action, plus the 

numerous reviews of proposed 

enforcement actions prior to their 

initiation ensure the independent and 

impartial review advocated by the 

commenters. In addition, the 

administrative hearing process and the 

right to court review of final 

enforcement orders have uniformly been 

found to provide all required due 

process. 

The bank comment states that 

‘‘making changes based on the anti-bank 

mentality of other agencies should never 

be grounds for the FDIC to further 

reduce the rights of the banks it 

supervises,’’ and one of the trade groups 

noted that the FDIC is not required to 

‘‘march in lock step’’ with the other 

banking agencies. The interpretation of 

the Riegle Act requirements by the other 

agencies is not being used to support a 

reduction in rights of FDIC-supervised 

banks, but rather supports the 

conclusion that the Riegle Act never 

required review of determinations 

underlying formal enforcement-related 

actions in the first instance. In the 

absence of such a requirement, 

substantial uniformity among the 

various banking agencies promoting 

equal treatment of all banks and thrifts 

appealing material supervisory 

determinations is a desirable goal which 

is served by the final amendments 

adopted herein. 

Proposals for an increased role for the 

FDIC Ombudsman in the supervisory 

appeals process have been advanced by 

several organizations, including trade 

association commenters here, for a 

number of years. These proposals have 

been considered and have been 

consistently rejected by the FDIC 

because a decisional role for the 

Ombudsman would potentially conflict 

with the Ombudsman’s statutory 

mandate as an independent liaison with 

aggrieved institutions. Given this, and 

that this portion of the comments in 

substance suggest an alternative to the 

SARC procedures, the recommended 

change is not warranted. 

Proposed Amendments 

I. Amendment of Determinations 

Eligible for Review 

Determinations underlying 

enforcement actions, such as the 


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1When the OCC determines that there is reason 

to believe an instance or pattern or practice of 

discrimination exists that will result in either a 

referral to the Department of Justice or notification 

to the Department of Housing and Urban 

Development, the appropriate senior deputy 

comptroller will provide written notice to the bank 

of this finding. National banks may file an appeal 

to the ombudsman for reconsideration of this 

decision within 15 calendar days of the date of this 

letter. 

citation of apparent violations of law or 

regulation, have been appealable under 

the FDIC’s Guidelines since their 

adoption in 1995. The final 

amendments to the Guidelines eliminate 

the ability of an FDIC-supervised 

institution to file an appeal with the 

SARC with respect to determinations or 

the facts and circumstances underlying 

a recommended or pending formal 

enforcement-related actions or 

decisions, including the initiation of a 

formal investigation and the referral to 

the Attorney General or a notice to the 

Secretary of Housing and Urban 

Development for apparent violations of 

the Equal Credit Opportunity Act or the 

Fair Housing Act. The final 

amendments to the Guidelines satisfy 

the requirements of the Riegle Act and 

better align the FDIC’s material 

supervisory determination appeals 

procedures with those of the other 

Federal banking agencies. 

A. Independent Review Requirement 

Section 309(a) of the Riegle Act 

required the FDIC to establish an 

appellate process to review material 

supervisory determinations. The SARC 

must make its decision based on ‘‘facts 

of record,’’ which are limited to the 

Report of Examination, the FDICsupervised institution’s appeal, an FDIC 

staff response, and, in some cases, a 

brief oral presentation before the SARC. 

The SARC appeals process does not 

involve any further factual development 

through discovery. 

Decisions to proceed with a formal 

enforcement action, on the other hand, 

must be supported by facts 

demonstrating both the existence of the 

violation at issue as well as facts that 

satisfy all of the required elements of 

the enforcement action to be pursued. 

All FDIC formal enforcement actions are 

reviewed by a number of high-level 

FDIC officials both prior and subsequent 

to their initiation. Ultimately, the FDIC 

Board of Directors (the Board) decides 

the outcome of any contested 

enforcement action and that decision is 

fully supported by a factual record 

compiled through investigation, 

discovery, and an administrative 

hearing held before an impartial 

administrative law judge who makes 

findings of facts, conclusions of law and 

recommends a decision to the Board. 

The FDIC’s current procedures for 

initiating formal enforcement actions 

ensure review of material supervisory 

determinations that underlie those 

enforcement actions by impartial, highlevel FDIC officials. Thus, there is no 

legal requirement or other need for 

determinations underlying formal 

enforcement-related actions to be 

separately reviewable by the SARC. 

B. Parity With Other Federal Agencies 

As previously noted, the Riegle Act 

required all of the Federal banking 

agencies and the NCUA to establish 

appellate processes to review material 

supervisory determinations. While the 

various appellate processes adopted by 

the Federal banking agencies differ in 

substance and procedure, no Federal 

banking agency, other than the FDIC, 

expressly allows review of 

determinations that underlie formal 

enforcement actions. 

OCC Bulletin 2002–9, National Bank 

Appeals Procedures (February 25, 2002) 

(OCC Guidelines), exempts from its 

definition of appealable matters ‘‘any 

formal enforcement-related actions or 

decisions, including decisions to: (a) 

Seek the issuance of a formal agreement 

or cease and desist order, or the 

assessment of a civil money penalty 

pursuant to Section 8 of the [FDI Act] 

* * * and (d) commence formal 

investigations pursuant to 12 U.S.C. 

481, 1818(n) and 1820(c)[.]’’ 

Additionally, the OCC Guidelines 

define the term ‘‘formal enforcementrelated actions or decisions’’ as 

including ‘‘the underlying facts that 

form the basis of a recommended or 

pending formal enforcement action, the 

acts or practices that are subject of a 

pending formal enforcement act, and 

OCC determinations regarding 

compliance with an existing formal 

enforcement action.’’ 

The supervisory determinations that 

may be reviewed on appeal by the OTS, 

as defined by Thrift Bulletin TB 68a 

(June 10, 2004), do not include 

decisions relating to ‘‘formal 

enforcement-related action’’ such as 

‘‘[i]nitiating a formal investigation[,]’’ 

‘‘[f]iling a notice of charges[,]’’ and 

‘‘[a]ssessing civil money penalties.’’ 

During the adoption of its internal 

appeals process, the Board of Governors 

of the Federal Reserve System (Federal 

Reserve) specifically rejected a 

suggestion received through comment 

that institutions consenting to the 

issuance of a formal enforcement action, 

such as a cease and desist order, be 

allowed to use the internal appeals 

process to challenge the material 

supervisory determinations that led to 

the enforcement action. The Federal 

Reserve found this suggestion to be 

inconsistent with the intent of the 

Riegle Act, which was to ‘‘provide an 

avenue for the review of material 

supervisory determinations and not 

contest enforcement actions for which 

an alternative appeals mechanism 

exits.’’ (60 FR 16472, March 30, 1995). 

The National Credit Union 

Association (NCUA) limits the type of 

determinations eligible for review under 

its appeals process to the specific 

determinations expressly stated in the 

Riegle Act. (60 FR 14795, March 20, 

1995). 

C. Notice of Enforcement-Related Action 

or Decision 

At present, only the OCC’s Guidelines 

explicitly provide that a decision to 

pursue a formal enforcement action will 

cut off rights to file a material 

supervisory determination appeal. In 

this regard, OCC Bulletin 2002–9 states 

that a formal enforcement-related action 

or decision ‘‘commences when a 

Supervision Review Committee 

determines that the OCC will pursue a 

formal action,’’ at which time the matter 

becomes unappealable. The OCC has 

Supervision Review Committees at both 

the Regional and Washington offices 

with delegations of authority to initiate 

different types of formal enforcement 

actions. The FDIC structure of 

enforcement matter decision-making is 

different, generally vesting authority to 

initiate formal enforcement actions in 

designated DSC officials, and in some 

cases following oversight by the Case 

Review Committee in Washington. 

The essence of the OCC’s cut-off point 

is that a decision has been made by 

appropriately authorized officials that a 

formal enforcement action will be 

pursued. In order to mirror the cut-off 

point as closely as possible, the final 

amendments establish the FDIC’s cut-off 

point as the date when ‘‘the FDIC 

initiates a formal investigation * * * or 

provides written notice to the bank 

indicating its intention to pursue 

available formal enforcement remedies 

* * *, including written notice of a 

referral to the Attorney General or a 

notice to the Secretary of Housing and 

Urban Development for apparent 

violations of the Equal Credit 

Opportunity Act or the Fair Housing 

Act.’’ 1 Operational procedures will be 

established that provide that when an 

FDIC official with authority to initiate a 

formal enforcement action decides that 

the facts and circumstances then known 

warrant initiation of such action, a letter 

to the bank will be sent notifying the 

bank of the decision to pursue formal 


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action. Such notice will render the 

underlying facts and circumstances that 

form the basis of the enforcement action 

unappealable. 

II. Additional Technical Amendments 

Paragraph C of the Guidelines 

(Institutions Eligible to Appeal) stated 

that the Guidelines apply to insured 

depository institutions that the FDIC 

supervises ‘‘(i.e., insured State 

nonmember banks (except District 

banks) and insured branches of foreign 

banks).’’ The 2004 District of Columbia 

Omnibus Authorization Act, Public Law 

No. 108–386, § 8, extended to the FDIC 

regulatory and supervisory authority 

over District of Columbia banks. 

Consequently, the parenthetical ‘‘except 

District banks’’ has been stricken from 

Paragraph C of the Guidelines. 

Paragraph D of the Guidelines 

(Determinations Subject to Appeal), at 

subsection (b), permitted the appeal of 

‘‘EDP ratings.’’ The current equivalent is 

‘‘IT ratings,’’ and the substitution is 

made in the Paragraph D. 

Paragraph G of the Guidelines 

(Appeal to the SARC) provided that the 

Director of the Division of Supervision 

and Consumer Protection may, with the 

approval of the SARC Chairperson, 

transfer a request for review directly to 

the SARC if the Director determines that 

the institution is entitled to relief that 

the Director lacks delegated authority to 

grant. This provision expedites the 

SARC process by eliminating the need 

for the Division Director to deny relief 

to an institution to enable it to file its 

appeal to the SARC. In order to further 

facilitate the prompt resolution of 

requests for review, a mechanism 

through which the Division Director 

may seek guidance from the SARC 

Chairperson has been added to 

Paragraph G. The addition to Paragraph 

G reads: ‘‘The Division Director may 

also request guidance from the SARC 

Chairperson as to procedural or other 

questions relating to any request for 

review.’’ 

Paragraph N of the Guidelines 

(Publication of Decisions) provided that 

SARC decisions will be published, and 

that published decisions will be 

redacted to avoid disclosure of exempt 

information. Because there are 

circumstances where no amount of 

redaction of the full-text SARC decision 

would be sufficient to prevent improper 

disclosure, while at the same time 

providing a meaningful statement of 

what the SARC decided, Paragraph N 

has been revised to state that: ‘‘In cases 

where redaction is deemed to be 

insufficient to prevent improper 

disclosure, published decisions may be 

presented in summary form.’’ 

* * * * * 

Proposed Amended Guidelines for 

Appeals of Material Supervisory 

Determinations 

A. Introduction 

Section 309(a) of the Riegle 

Community Development and 

Regulatory Improvement Act of 1994 

(Public Law 103–325, 108 Stat. 2160) 

(‘‘Riegle Act’’) required the Federal 

Deposit Insurance Corporation (‘‘FDIC’’) 

to establish an independent intra-agency 

appellate process to review material 

supervisory determinations made at 

insured depository institutions that it 

supervises. The Guidelines for Appeals 

of Material Supervisory Determinations 

(‘‘guidelines’’) describe the types of 

determinations that are eligible for 

review and the process by which 

appeals will be considered and decided. 

The procedures set forth in these 

guidelines establish an appeals process 

for the review of material supervisory 

determinations by the Supervision 

Appeals Review Committee (‘‘SARC’’). 

B. SARC Membership 

The following individuals comprise 

the three (3) voting members of the 

SARC: (1) One inside FDIC Board 

member, either the Chairperson, the 

Vice Chairperson, or the FDIC Director 

(Appointive), as designated by the FDIC 

Chairperson (this person would serve as 

the Chairperson of the SARC); and (2) 

one deputy or special assistant to each 

of the inside FDIC Board members who 

are not designated as the SARC 

Chairperson. The General Counsel is a 

non-voting member of the SARC. The 

FDIC Chairperson may designate 

alternate member(s) to the SARC if there 

are vacancies so long as the alternate 

member was not involved in making or 

affirming the material supervisory 

determination under review. A member 

of the SARC may designate and 

authorize the most senior member of his 

or her staff within the substantive area 

of responsibility related to cases before 

the SARC to act on his or her behalf. 

C. Institutions Eligible To Appeal 

The guidelines apply to the insured 

depository institutions that the FDIC 

supervises (i.e., insured State 

nonmember banks and insured branches 

of foreign banks) and also to other 

insured depository institutions with 

respect to which the FDIC makes 

material supervisory determinations. 

D. Determinations Subject to Appeal 

An institution may appeal any 

material supervisory determination 

pursuant to the procedures set forth in 

these guidelines. Material supervisory 

determinations include: 

(a) CAMELS ratings under the 

Uniform Financial Institutions Rating 

System; 

(b) IT ratings under the Uniform 

Interagency Rating System for Data 

Processing Operations; 

(c) Trust ratings under the Uniform 

Interagency Trust Rating System; 

(d) CRA ratings under the Revised 

Uniform Interagency Community 

Reinvestment Act Assessment Rating 

System; 

(e) Consumer compliance ratings 

under the Uniform Interagency 

Consumer Compliance Rating System; 

(f) Registered transfer agent 

examination ratings; 

(g) Government securities dealer 

examination ratings; 

(h) Municipal securities dealer 

examination ratings; 

(i) Determinations relating to the 

adequacy of loan loss reserve 

provisions; 

(j) Classifications of loans and other 

assets in dispute the amount of which, 

individually or in the aggregate, exceed 

10 percent of an institution’s total 

capital; 

(k) Determinations relating to 

violations of a statute or regulation that 

may impact the capital, earnings, or 

operating flexibility of an institution, or 

otherwise affect the nature and level of 

supervisory oversight accorded an 

institution; 

(l) Truth in Lending (Regulation Z) 

restitution; 

(m) Filings made pursuant to 12 CFR 

303.11(f), for which a Request for 

Reconsideration has been granted, other 

than denials of a change in bank control, 

change in senior executive officer or 

board of directors, or denial of an 

application pursuant to section 19 of the 

FDI Act (which are contained in 12 CFR 

308, subparts D, L, and M, respectively), 

if the filing was originally denied by the 

DSC Director, Deputy Director or 

Associate Director; and 

(n) Any other supervisory 

determination (unless otherwise not 

eligible for appeal) that may impact the 

capital, earnings, operating flexibility, 

or capital category for prompt corrective 

action purposes of an institution, or 

otherwise affect the nature and level of 

supervisory oversight accorded an 

institution. 

Material supervisory determinations 

do not include: 


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(a) Decisions to appoint a conservator 

or receiver for an insured depository 

institution; 

(b) Decisions to take prompt 

corrective action pursuant to section 38 

of the Federal Deposit Insurance Act, 12 

U.S.C. 1831o; 

(c) Determinations for which other 

appeals procedures exist (such as 

determinations of deposit insurance 

assessment risk classifications and 

payment calculations); 

(d) Decisions to initiate informal 

enforcement actions (such as 

memoranda of understanding); and 

(e) Formal enforcement-related 

actions and decisions, including 

determinations and the underlying facts 

and circumstances that form the basis of 

a recommended or pending formal 

enforcement action, and FDIC 

determinations regarding compliance 

with an existing formal enforcement 

action. 

A formal enforcement-related action 

or decision commences, and therefore 

becomes unappealable, when the FDIC 

initiates a formal investigation under 12 

U.S.C. 1820(c) or provides written 

notice to the bank indicating its 

intention to pursue available formal 

enforcement remedies under applicable 

statutes or published enforcementrelated policies of the FDIC, including 

written notice of a referral to the 

Attorney General or a notice to the 

Secretary of Housing and Urban 

Development for apparent violations of 

the Equal Credit Opportunity Act or the 

Fair Housing Act. For the purposes of 

these guidelines, remarks in a Report of 

Examination do not constitute written 

notice of intent to pursue formal 

enforcement remedies. 

E. Good Faith Resolution 

An institution should make a good 

faith effort to resolve any dispute 

concerning a material supervisory 

determination with the on-site examiner 

and/or the appropriate Regional Office. 

The on-site examiner and the Regional 

Office will promptly respond to any 

concerns raised by an institution 

regarding a material supervisory 

determination. Informal resolution of 

disputes with the on-site examiner and/ 

or the appropriate Regional Office is 

encouraged, but seeking such a 

resolution is not a condition to filing a 

request for review with the Division of 

Supervision and Consumer Protection 

or an appeal to the SARC under these 

guidelines. 

F. Filing a Request for Review With the 

FDIC Division of Supervision and 

Consumer Protection 

An institution may file a request for 

review of a material supervisory 

determination with the Director, 

Division of Supervision and Consumer 

Protection, 550 17th Street, NW., Room 

F–4076, Washington, DC 20429, within 

60 calendar days following the 

institution’s receipt of a report of 

examination containing a material 

supervisory determination or other 

written communication of a material 

supervisory determination. A request for 

review must be in writing and must 

include: 

(a) A detailed description of the issues 

in dispute, the surrounding 

circumstances, the institution’s position 

regarding the dispute and any 

arguments to support that position 

(including citation of any relevant 

statute, regulation, policy statement or 

other authority), how resolution of the 

dispute would materially affect the 

institution, and whether a good faith 

effort was made to resolve the dispute 

with the on-site examiner and the 

Regional Office; and 

(b) A statement that the institution’s 

board of directors has considered the 

merits of the request and authorized that 

it be filed. 

The Director, Division of Supervision 

and Consumer Protection, will issue a 

written determination of the request for 

review, setting forth the grounds for that 

determination, within 30 days of receipt 

of the request. No appeal to the SARC 

will be allowed unless an institution has 

first filed a timely request for review 

with the Division of Supervision and 

Consumer Protection. 

G. Appeal to the SARC 

An institution that does not agree 

with the written determination rendered 

by the Director of the Division of 

Supervision and Consumer Protection 

must appeal that determination to the 

SARC within 30 calendar days from the 

date of that determination. The 

Director’s determination will inform the 

institution of the 30-day time period for 

filing with the SARC and will provide 

the mailing address for any appeal the 

institution may wish to file. Failure to 

file within the 30-day time limit may 

result in denial of the appeal by the 

SARC. If the Director of the Division of 

Supervision and Consumer Protection 

determines that an institution is entitled 

to relief that the Director lacks delegated 

authority to grant, the Director may, 

with the approval of the Chairperson of 

the SARC, transfer the matter directly to 

the SARC without issuing a 

determination. Notice of such a transfer 

will be provided to the institution. The 

Division Director may also request 

guidance from the SARC Chairperson as 

to procedural or other questions relating 

to any request for review. 

H. Filing With the SARC 

An appeal to the SARC will be 

considered filed if the written appeal is 

received by the FDIC within 30 calendar 

days from the date of the division 

director’s written determination or if the 

written appeal is placed in the U.S. mail 

within that 30-day period. If the 30th 

day after the date of the division 

director’s written determination is a 

Saturday, Sunday or Federal holiday, 

filing may be made on the next business 

day. The appeal should be sent to the 

address indicated on the determination 

being appealed. 

I. Contents of Appeal 

The appeal should be labeled to 

indicate that it is an appeal to the SARC 

and should contain the name, address, 

and telephone number of the institution 

and any representative, as well as a 

copy of the determination being 

appealed. If oral presentation is sought, 

that request should be included in the 

appeal. Only matters previously 

reviewed at the division level, resulting 

in a written determination or direct 

referral to the SARC, may be appealed 

to the SARC. Evidence not presented for 

review to the DSC Director may be 

submitted to the SARC only if 

authorized by the SARC Chairperson. 

The institution should set forth all of 

the reasons, legal and factual, why it 

disagrees with the determination. 

Nothing in the SARC administrative 

process shall create any discovery or 

other such rights. 

J. Burden of Proof 

The burden of proof as to all matters 

at issue in the appeal, including 

timeliness of the appeal if timeliness is 

at issue, rests with the institution. 

K. Oral Presentation 

The SARC may, in its discretion, 

whether or not a request is made, 

determine to allow an oral presentation. 

The SARC generally grants a request for 

oral presentation only if it determines 

that oral presentation is likely to be 

helpful or would otherwise be in the 

public interest. Notice of the SARC’s 

determination to grant or deny a request 

for oral presentation will be provided to 

the institution. If oral presentation is 

held, the institution will be allowed to 

present its positions on the issues raised 

in the appeal and to respond to any 

questions from the SARC. The SARC 


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Federal Register / Vol. 73, No. 185 / Tuesday, September 23, 2008 / Notices 54827 

may also require that FDIC staff 

participate as the SARC deems 

appropriate. 

L. Dismissal and Withdrawal 

An appeal may be dismissed by the 

SARC if it is not timely filed, if the basis 

for the appeal is not discernable from 

the appeal, or if the institution moves to 

withdraw the appeal. 

M. Scope of Review and Decision 

The SARC will review the appeal for 

consistency with the policies, practices 

and mission of the FDIC and the overall 

reasonableness of and the support 

offered for the positions advanced, and 

notify the institution, in writing, of its 

decision concerning the disputed 

material supervisory determination(s) 

within 60 days from the date the appeal 

is filed, or within 60 days from oral 

presentation, if held. SARC review will 

be limited to the facts and 

circumstances as they existed prior to or 

at the time the material supervisory 

determination was made, even if later 

discovered, and no consideration will 

be given to any facts or circumstances 

that occur or corrective action taken 

after the determination was made. The 

SARC may reconsider its decision only 

on a showing of an intervening change 

in the controlling law or the availability 

of material evidence not reasonably 

available when the decision was issued. 

N. Publication of Decisions 

SARC decisions will be published, 

and the published SARC decisions will 

be redacted to avoid disclosure of 

exempt information. In cases where 

redaction is deemed to be insufficient to 

prevent improper disclosure, published 

decisions may be presented in summary 

form. Published SARC decisions may be 

cited as precedent in appeals to the 

SARC. 

O. SARC Guidelines Generally 

Appeals to the SARC will be governed 

by these guidelines. The SARC will 

retain the discretion to waive any 

provision of the guidelines for good 

cause; the SARC may adopt 

supplemental rules governing SARC 

operations; the SARC may order that 

material be kept confidential; and the 

SARC may consolidate similar appeals. 

P. Limitation on Agency Ombudsman 

The subject matter of a material 

supervisory determination for which 

either an appeal to the SARC has been 

filed or a final SARC decision issued is 

not eligible for consideration by the 

Ombudsman. 

Q. Coordination With State Regulatory 

Authorities 

In the event that a material 

supervisory determination subject to a 

request for review is the joint product of 

the FDIC and a State regulatory 

authority, the Director, Division of 

Supervision and Consumer Protection, 

will promptly notify the appropriate 

State regulatory authority of the request, 

provide the regulatory authority with a 

copy of the institution’s request for 

review and any other related materials, 

and solicit the regulatory authority’s 

views regarding the merits of the request 

before making a determination. In the 

event that an appeal is subsequently 

filed with the SARC, the SARC will 

notify the institution and the State 

regulatory authority of its decision. 

Once the SARC has issued its 

determination, any other issues that 

may remain between the institution and 

the State authority will be left to those 

parties to resolve. 

R. Effect on Supervisory or Enforcement 

Actions 

The use of the procedures set forth in 

these guidelines by any institution will 

not affect, delay, or impede any formal 

or informal supervisory or enforcement 

action in progress or affect the FDIC’s 

authority to take any supervisory or 

enforcement action against that 

institution. 

S. Effect on Applications or Requests for 

Approval 

Any application or request for 

approval made to the FDIC by an 

institution that has appealed a material 

supervisory determination which relates 

to or could affect the approval of the 

application or request will not be 

considered until a final decision 

concerning the appeal is made unless 

otherwise requested by the institution. 

T. Prohibition on Examiner Retaliation 

The FDIC has an experienced 

examination workforce and is proud of 

its professionalism and dedication. 

FDIC policy prohibits any retaliation, 

abuse, or retribution by an agency 

examiner or any FDIC personnel against 

an institution. Such behavior against an 

institution that appeals a material 

supervisory determination constitutes 

unprofessional conduct and will subject 

the examiner or other personnel to 

appropriate disciplinary or remedial 

action. Institutions that believe they 

have been retaliated against are 

encouraged to contact the Regional 

Director for the appropriate FDIC region. 

Any institution that believes or has any 

evidence that it has been subject to 

retaliation may file a complaint with the 

Director, Office of the Ombudsman, 

Federal Deposit Insurance Corporation, 

550 17th Street, Washington, DC 20429, 

explaining the circumstances and the 

basis for such belief or evidence and 

requesting that the complaint be 

investigated and appropriate 

disciplinary or remedial action taken. 

The Office of the Ombudsman will work 

with the Division of Supervision and 

Consumer Protection to resolve the 

allegation of retaliation. 

For the reasons stated in the 

Preamble, the Board has adopted the 

Guidelines for Appeals of Material 

Supervisory Determinations as set forth 

above 

By Order of the Board of Directors. 

Dated at Washington, DC, the 17th day of 

September, 2008. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. E8–22148 Filed 9–22–08; 8:45 am] 

BILLING CODE 6714–01–P 

FEDERAL RESERVE SYSTEM 

Change in Bank Control Notices; 

Acquisition of Shares of Bank or Bank 

Holding Companies 

The notificants listed below have 

applied under the Change in Bank 

Control Act (12 U.S.C. 1817(j)) and 

§ 225.41 of the Board’s Regulation Y (12 

CFR 225.41) to acquire a bank or bank 

holding company. The factors that are 

considered in acting on the notices are 

set forth in paragraph 7 of the Act (12 

U.S.C. 1817(j)(7)). 

The notices are available for 

immediate inspection at the Federal 

Reserve Bank indicated. The notices 

also will be available for inspection at 

the office of the Board of Governors. 

Interested persons may express their 

views in writing to the Reserve Bank 

indicated for that notice or to the offices 

of the Board of Governors. Comments 

must be received not later than October 

7, 2008. 

A. Federal Reserve Bank of Chicago 

(Burl Thornton, Assistant Vice 

President) 230 South LaSalle Street, 

Chicago, Illinois 60690–1414: 

1. Nicholas J. Burns, Jr., Almond, 

Wisconsin, to acquire additional votings 

shares of River Cities Bancshares, Inc., 

and thereby indirectly acquire 

additional voting shares of River Cities 

Bank, both of Wisconsin Rapids, 

Wisconsin. 

B. Federal Reserve Bank of San 

Francisco (Kenneth Binning, Director, 

Regional and Community Bank Group) 


jlentini on PROD1PC65 with NOTICES