[Federal Register: September 23, 2008 (Volume 73, Number 185)]
[Notices]
[Page 54822-54827]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23se08-68]
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FEDERAL DEPOSIT INSURANCE CORPORATION
Guidelines for Appeals of Material Supervisory Determinations
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Notice of guidelines.
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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
[[Page 54823]]
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
[[Page 54824]]
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 FDIC-supervised 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, high-level 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 enforcement-
related 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
[[Page 54825]]
action. Such notice will render the underlying facts and circumstances
that form the basis of the enforcement action unappealable.
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\1\ When 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.
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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,
Sec. 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:
[[Page 54826]]
(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 enforcement-related
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
[[Page 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
