FDIC PROPOSES NEW APPEALS PROCESS FOR SUPERVISORY DECISIONS
FOR IMMEDIATE RELEASE
The FDIC Board of Directors today proposed guidelines for a new
process institutions could use to appeal supervisory decisions
involving examination ratings, adverse classifications of significant
assets, and the adequacy of loan loss reserves.
An "independent" appeals process for "material supervisory
determinations" is required by Section 309 of the Riegle Community
Development and Regulatory Improvement Act of 1994 for the FDIC as
well as the other federal regulators of banks, thrifts and credit
unions. The law defines an independent appeals process as one where
the review is by an agency official who does not directly or
indirectly report to the person who made the supervisory determination
The new program would replace a less formal appeals process
adopted by the FDIC in February of 1992, although the agency always
has considered and responded to disagreements that institutions have
had with its supervisory determinations.
Under the FDIC's proposed guidelines, an institution first would
be encouraged to attempt to resolve the disputed matter with the
regional office of the FDIC division that made the supervisory
determination -- either the Division of Supervision (DOS) for safety
and soundness matters or the Division of Compliance and Consumer
Affairs (DCA) for fair lending, Community Reinvestment Act (CRA) and
other consumer protection matters. However, the institution could
file an appeal with the Washington-based director of the appropriate
division within 60 days after receiving written notification of the initial FDIC decision. That division director either would have
to grant the change requested by the institution or promptly refer the
matter to a special committee consisting of the FDIC's Vice Chairman,
General Counsel, an internal ombudsman and the two division directors.
This committee of senior FDIC officials would have to decide the
appeal and notify the institution of its decision. From the time the
FDIC receives an appeal, it would reach a final decision and notify
the institution within 60 days.
Certain types of determinations would not be subject to this
appeals process. The new law specifically exempts decisions to
appoint a conservator or receiver for a failing institution, and
"prompt corrective action" taken when an institution's capital falls
below specified levels. Additionally, the FDIC's proposed guidelines
would not cover formal enforcement actions and risk classifications
for assessing deposit insurance premiums because review of these
determinations is covered by other FDIC procedures.
The proposed guidelines also contain safeguards against possible
retaliation by FDIC examiners. Any alleged misconduct would be
promptly investigated and, if confirmed, subject to disciplinary or
The FDIC's appeals process is expected to be used primarily by
the state-chartered banks the agency supervises. However, it also
would be available to insured institutions supervised by the Office
of the Comptroller of the Currency, the Federal Reserve Board or the
Office of Thrift Supervision when subjected to the FDIC's "back-up"
Written comments on the FDIC proposal will be accepted for 30
days after it appears in the Federal Register.