Fair Audits and Inspections for Regulators’ Exams Act

Bill: 118-s-3541
Sponsor: full_name: Sen. Moran, Jerry [R-KS]
Introduced: 2023-12-14
Policy area: Finance and Financial Sector
Subjects: Administrative remedies

Advisory bodies

Banking and financial institutions regulation

Consumer Financial Protection Bureau

Government information and archives

Judicial review and appeals
Latest action: action_date: 2023-12-14
text: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

Summaries:
action_date: 2023-12-14
action_desc: Introduced in Senate
text: <p><strong>Fair Audits and Inspections for Regulators’ Exams Act</strong></p><p>This bill establishes new requirements for entities responsible for the federal examination of financial intuitions. Specifically, the bill sets deadlines for federal financial regulatory agencies to provide final examination reports and to perform exit interviews of a financial institution. In addition, the agency must list all materials relied upon in support of a material supervisory determination upon the request of the financial institution.</p><p>The bill also establishes the Office of Independent Examination Review to adjudicate appeals and investigate complaints from financial institutions concerning examination reports. Under the bill, financial institutions have the right to obtain an independent review of a material supervisory determination contained in a final report of examination. The bill sets forth provisions regarding hearings and final decisions.</p><p>The bill also requires the establishment of an independent internal agency appellate process at the Consumer Financial Protection Bureau (CFPB) for the review of supervisory determinations made at institutions supervised by the CFPB.</p>

tv_txt: II 118th CONGRESS 1st Session S. 3541 IN THE SENATE OF THE UNITED STATES December 14, 2023 Mr. Moran (for himself, Mr. Manchin , Mr. Hagerty , and Mr. Tillis ) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Federal Financial Institutions Examination Council Act of 1978 to improve the examination of depository institutions, and for other purposes.

1. Short title This Act may be cited as the Fair Audits and Inspections for Regulators’ Exams Act . 2. Timeliness of examination reports The Federal Financial Institutions Examination Council Act of 1978 ( 12 U.S.C. 3301 et seq. ) is amended by adding at the end the following: 1012. Timeliness of examination reports (a) In general (1) Final examination report A Federal financial institutions regulatory agency shall provide a final examination report to a financial institution not later than 60 days after the later of— (A) the exit interview for an examination of the institution; or (B) the provision of additional material information by the institution relating to the examination. (2) Exit interview If a financial institution is not subject to a resident examiner program, the exit interview shall occur not later than the end of the 9-month period beginning on the commencement of the examination, except that such period may be extended by the Federal financial institutions regulatory agency by providing written notice to the institution and the Director describing with particularity the reasons that a longer period is needed to complete the examination. (b) Examination materials Upon the request of a financial institution, the Federal financial institutions regulatory agency shall include with the final report an appendix listing all examination or other factual information relied upon by the agency in support of a material supervisory determination. . 3. Independent examination review Director (a) In general The Federal Financial Institutions Examination Council Act of 1978 ( 12 U.S.C. 3301 et seq. ), as amended by section 2 of this Act, is further amended by adding at the end the following: 1013. Office of independent examination review (a) Establishment There is established in the Council an Office of Independent Examination Review. (b) Head of office There is established the position of the Independent Examination Review Director, as the head of the Office of Independent Examination Review. The Director shall be appointed by the Federal Financial Institutions Examination Council. (c) Staffing The Director is authorized to hire staff to support the activities of the Office of Independent Examination Review. One-fourth of the costs and expenses of the Office, including the salaries of its employees, shall be paid by each of the Federal financial institutions regulatory agencies. Annual assessments for such share shall be levied by the Council based upon its projected budget for the year, and additional assessments may be made during the year if necessary. (d) Duties The Director shall— (1) receive and, at the discretion of the Director, investigate complaints from financial institutions, their representatives, or another entity acting on behalf of such institutions, concerning examinations, examination practices, or examination reports; (2) hold meetings, at least once every three months and in locations designed to encourage participation from all sections of the United States, with financial institutions, their representatives, or another entity acting on behalf of such institutions, to discuss examination procedures, examination practices, or examination policies; (3) review examination procedures of the Federal financial institutions regulatory agencies to ensure that the written examination policies of those agencies are being followed in practice and adhere to the standards for consistency, which shall be established, after notice and opportunity for comment, by the Council not later than 90 days after the date of enactment of this section; (4) conduct a continuing and regular program of examination quality assurance for all examination types conducted by the Federal financial institutions regulatory agencies; (5) adjudicate any supervisory appeal initiated under section 1014; and (6) report annually to the Committee on Financial Services of the House of Representatives, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Council, on the reviews carried out pursuant to paragraphs (3) and (4), including compliance with the requirements set forth in section 1012 regarding timeliness of examination reports, and the Council’s recommendations for improvements in examination procedures, practices, and policies. (e) Confidentiality The Director shall keep confidential all meetings, discussions, and information provided by financial institutions. The Council shall keep confidential all information and communications exchanged by a financial institution and the Office of Independent Examination Review. . (b) Definition Section 1003 of the Federal Financial Institutions Examination Council Act of 1978 ( 12 U.S.C. 3302 ) is amended— (1) in paragraph (2), by striking and at the end; (2) in paragraph (3), by adding and at the end; and (3) by adding at the end the following: (4) the term Director means the Independent Examination Review Director established under section 1013(a) and (b). . 4. Right to independent review of material supervisory determinations The Federal Financial Institutions Examination Council Act of 1978, as amended by sections 2 and 3 of this Act, is further amended by adding at the end the following: 1014. Right to independent review of material supervisory determinations (a) In general A financial institution shall have the right to obtain an independent review of a material supervisory determination contained in a final report of examination. (b) Notice (1) Timing A financial institution seeking review of a material supervisory determination under this section shall file a written notice with the Director within 60 days after receiving the final report of examination that is the subject of such review. (2) Identification of determination The written notice shall identify the material supervisory determination that is the subject of the independent examination review, and a statement of the reasons why the institution believes that the determination is incorrect or should otherwise be modified. (3) Information to be provided to institution Any information relied upon by the agency in the final report that is not in the possession of the financial institution may be requested by the financial institution and shall be delivered promptly by the agency to the financial institution. (c) Right to hearing (1) In general The Director shall— (A) determine the merits of the appeal on the record; or (B) at the election of the financial institution, refer the appeal to an administrative law judge appointed by the Council to conduct a hearing pursuant to the procedures set forth under sections 556 and 557 of title 5, United States Code, which shall take place not later than 60 days after the petition for review is received by the Director. (2) Timing of decision An administrative law judge conducting a hearing under paragraph (1)(B) shall issue a proposed decision to the Director based upon the record established at the hearing. (3) Standard of review In any hearing under this subsection— (A) neither the administrative law judge nor the Director shall defer to the opinions of the examiner or agency, but shall independently determine the appropriateness of the agency’s decision based upon the relevant statutes, regulations, other appropriate guidance, and evidence presented at the hearing. (d) Final decision A decision by the Director on an independent review under this section shall— (1) be made not later than 60 days after the record has been closed; and (2) be deemed final agency action and shall bind the agency whose supervisory determination was the subject of the review and the financial institution requesting the review. (e) Right to judicial review A financial institution shall have the right to petition for review of the decision of the Director under this section by filing a petition for review not later than 60 days after the date on which the decision is made in the United States Court of Appeals for the District of Columbia Circuit or the Circuit in which the financial institution is located. (f) Report The Director shall report annually to the Committee on Financial Services of the House of Representatives, the Committee on Banking, Housing, and Urban Affairs of the Senate on actions taken under this section, including the types of issues that the Director has reviewed and the results of those reviews. In no case shall such a report contain information about individual financial institutions or any confidential or privileged information shared by financial institutions. (g) Retaliation prohibited A Federal financial institutions regulatory agency may not— (1) retaliate against a financial institution, including service providers, or any institution-affiliated party, for exercising appellate rights under this section; or (2) delay or deny any agency action that would benefit a financial institution or any institution-affiliated party on the basis that an appeal under this section is pending under this section. . 5. Additional amendments (a) Regulator appeals process, ombudsman, and alternative dispute resolution (1) In general Section 309 of the Riegle Community Development and Regulatory Improvement Act of 1994 ( 12 U.S.C. 4806 ) is amended— (A) in subsection (a), by inserting after appropriate Federal banking agency the following: , the Bureau of Consumer Financial Protection, ; (B) in subsection (b)— (i) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B) and indenting appropriately; (ii) in the matter preceding subparagraph (A) (as redesignated), by striking In establishing and inserting (1) In general .—In establishing ; (iii) in paragraph (1)(B) (as redesignated), by striking the appellant from retaliation by agency examiners and inserting the insured depository institution or insured credit union from retaliation by an agency referred to in subsection (a) ; and (iv) by adding at the end the following: (2) Retaliation For purposes of this subsection and subsection (e), retaliation includes delaying consideration of, or withholding approval of, any request, notice, or application that otherwise would have been approved, but for the exercise of the institution’s or credit union’s rights under this section. ; (C) in subsection (e)(2)— (i) in subparagraph (B), by striking and at the end; (ii) in subparagraph (C), by striking the period and inserting ; and ; and (iii) by adding at the end the following: (D) ensure that appropriate safeguards exist for protecting the insured depository institution or insured credit union from retaliation by any agency referred to in subsection (a) for exercising its rights under this subsection. ; and (D) in subsection (f)(1)(A)— (i) in clause (ii), by striking ; and and inserting a semicolon; (ii) in clause (iii), by striking ; and and inserting a semicolon; and (iii) by adding at the end the following: (iv) any issue specifically listed in an exam report as a matter requiring attention by the institution’s management or board of directors; and (v) any suspension or removal of an institution’s status as eligible for expedited processing of applications, requests, notices, or filings on the grounds of a supervisory or compliance concern, regardless of whether that concern has been cited as a basis for a material supervisory determination or matter requiring attention in an examination report, provided that the conduct at issue did not involve violation of any criminal law; and . (2) Effect Nothing in this subsection affects the authority of an appropriate Federal banking agency or the National Credit Union Administration Board to take enforcement or other supervisory action. (b) Federal Credit Union Act Section 205(j) of the Federal Credit Union Act ( 12 U.S.C. 1785(j) ) is amended by inserting the Bureau of Consumer Financial Protection, before the Administration each place that term appears. (c) Federal Financial Institutions Examination Council Act The Federal Financial Institutions Examination Council Act of 1978 ( 12 U.S.C. 3301 et seq. ), as amended by sections 2 through 4 of this Act, is further amended— (1) in section 1003 ( 12 U.S.C. 3302 ) by striking paragraph (1) and inserting the following: (1) the term Federal financial institutions regulatory agencies — (A) means the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration; and (B) includes the Bureau of Consumer Financial Protection for purposes of sections 1012 through 1014; ; and (2) in section 1005 ( 12 U.S.C. 3304 ), by striking One-fifth and inserting One-fourth .