Appeals of Material Supervisory Determinations:
Guidelines & Decisions
SARC-98-03 (June 2, 1998)
On May 28, 1998, the Supervisory Appeals Review Committee
(“Committee”) of the Federal Deposit Insurance Corporation considered the
appeal by [Bank] (“Bank”) of the Community Reinvestment Act (“CRA”) rating
assigned at the examination conducted as of December 9, 1996.
The Committee first considered the Bank’s request to
appear before the Committee for purposes of presenting evidence in support
of its appeal. Based upon the comprehensive nature of the Bank’s April 8,
1998, submission to Carmen J. Sullivan, Director, Division of Compliance and
Consumer Affairs, the Committee concluded that the record relating to the
Bank’s appeal was sufficiently complete and that an oral presentation would
not be productive.
The Committee then gave careful consideration to the
issues you raised in your appeal letter of April 8, 1998, and concluded that
the “Needs to Improve” CRA rating should be affirmed. The Committee based
its determination on
12 C.F.R. § 345.28 (c),
which discloses the effect of
evidence of discriminatory or other illegal credit practices on a bank’s CRA
“Evidence of discriminatory or other illegal credit
practices adversely affects the FDIC’s evaluation of a bank’s performance.
In determining the effect on the bank’s assigned rating, the FDIC considers
the nature and extent of the evidence, the policies and procedures that the
bank has in place to prevent discriminatory or other illegal credit
practices, any corrective action that the bank has taken or has committed to
take, particularly voluntary corrective action resulting from self-
assessment, and other relevant information.”
The Committee determined that the nature and extent of the
evidence, described in the Report of Examination, supports findings of
substantive violations of the Fair Housing Act and the Equal Credit
Opportunity Act constituting a pattern and practice of disparate treatment
involving “overages”. The policies and procedures in place during the
examination period from August 1995 to December 1996 were insufficient to
prevent these substantive violations. The Bank did not implement adequate
corrective action until entering into a remediation agreement with the New
York State Banking Department on February 17, 1998, more than one year after
the period of the examination as of December 9, 1996, for which the CRA
rating of “Needs to Improve” is assigned. Based on consideration of these
facts, the Committee concludes that the assignment of a “Needs to Improve”
rating for performance as of December 9, 1996, is appropriate.
The effect of the recent corrective action resulting from
the remediation agreement on current CRA performance will more appropriately
be considered at the next examination and during consideration of any
application. In this regard, the Committee noted the otherwise satisfactory
evaluation of the Bank in the other CRA performance categories and was
encouraged to learn of the positive developments in performance outlined in
the appeal letter.
This determination is considered the Federal Deposit
Insurance Corporation’s final supervisory decision.
By Direction of the Supervisory Appeals Review Committee
of the Federal Deposit Insurance Corporation.