Bank Supervision Appeals Improvement Act of 2024

Section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended by adding at the end the following:

The appropriate Federal banking agency shall complete any examination of an insured depository institution within 270 days of commencing the examination, except that such period may be extended by the appropriate Federal banking agency by providing written notice to the insured depository institution describing with particularity the reasons that a longer period is needed.

Within 30 days of completing an examination, the appropriate Federal banking agency shall conduct an exit interview with the insured depository institution’s senior management and board of directors.

With respect to an examination of an insured depository institution by an appropriate Federal banking agency, the appropriate Federal banking agency shall provide a final examination report to the insured depository institution not later than 60 days after the later of—

(i) the exit interview for the examination; or

(ii) the provision of additional information by the insured depository institution relating to the examination.

Upon the request of an insured depository institution, the appropriate Federal banking agency shall include with a final examination report an appendix listing all materials relied upon by the agency in support of all material supervisory determinations.

In this paragraph, the term material supervisory determination has the meaning given such term in section 309(i) of the Riegle Community Development and Regulatory Improvement Act of 1994.

Section 204 of the Federal Credit Union Act (12 U.S.C. 1784) is amended by adding at the end the following:

The Board shall complete any examination of an insured credit union within 270 days of commencing the examination, except that such period may be extended by the Board by providing written notice to the insured credit union describing with particularity the reasons that a longer period is needed.

Within 30 days of completing an examination, the Board shall conduct an exit interview with the insured credit union’s senior management and board of directors.

With respect to an examination of an insured credit union, the Board shall provide a final examination report to the insured credit union not later than 60 days after the later of—

(i) the exit interview for the examination; or

(ii) the provision of additional information by the insured credit union relating to the examination.

Upon the request of an insured credit union, the Board shall include with a final examination report an appendix listing all materials relied upon by the Board in support of all material supervisory determinations.

In this paragraph, the term material supervisory determination has the meaning given such term in section 309(i) of the Riegle Community Development and Regulatory Improvement Act of 1994.

Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) is amended by adding at the end the following:

An insured depository institution may request a written determination by the appropriate Federal banking agency of—

(A) the agency’s permission to take an action where permission is mandated by regulation;

(B) the agency’s interpretation of a law or regulation; and

(C) the agency’s interpretation of generally accepted accounting principles or accounting objectives, standards, and requirements under section 37.

A request made under paragraph (1) shall be in writing and contain—

(A) the nature of the request;

(B) applicable facts relating to the matter;

(C) applicable law, regulation, or generally accepted accounting principles relating to the matter; and

(D) a summary of the request.

A Federal banking agency receiving a request under paragraph (1) shall, not later than 30 days after receiving the request—

(A) provide the insured depository institution making the request with written notification that the agency received the request and stating whether the request contains the information required under paragraph (2); and

(B) if the request does not contain the information required under paragraph (2), provide the insured depository institution with an explanation of what information is missing.

If a Federal banking agency informs the insured depository institution under paragraph (3) that the request does not contain all the information required under paragraph (2), the insured depository institution may provide the missing information to the Federal banking agency during the 30-day period beginning on the date the insured depository institution receives the explanation of the missing information under paragraph (3).

A Federal banking agency receiving a request under paragraph (1) shall make a determination on the request and provide the insured depository institution with a written notice of such determination—

(A) if the initial request contains the information required under paragraph (2), not later than the end of the 60-day period beginning on the date the Federal banking agency notifies the insured depository institution of the receipt of the request under paragraph (3); or

(B) if the initial request does not contain the information required under paragraph (2)—

(i) not later than the end of the 60-day period beginning on the date that the insured depository institution provides the Federal banking agency with the missing information under paragraph (4); or

(ii) if the insured depository institution does not provide the Federal banking agency with the missing information within the 30-day period described under paragraph (4), not later than the end of the 60-day period beginning on the end of such 30-day period.

Each Federal banking agency shall, within 120 days after making a determination under paragraph (5), publish a summary of the determination. Each Federal banking agency shall redact any confidential supervisory information about the insured depository institution, any identifying facts about the institution, and any sensitive personally identifiable information.

Section 209 of the Federal Credit Union Act (12 U.S.C. 1789) is amended by adding at the end the following:

An insured credit union may request a written determination by the Board of—

(A) the Board’s permission to take an action where permission is mandated by regulation;

(B) the Board’s interpretation of a law or regulation; and

(C) the Board’s interpretation of generally accepted accounting principles or other accounting objectives, standards, and requirements.

A request made under paragraph (1) shall be in writing and contain—

(A) the nature of the request;

(B) applicable facts relating to the matter;

(C) applicable law, regulation, or generally accepted accounting principles relating to the matter; and

(D) a summary of the request.

The Board, upon receiving a request under paragraph (1) shall, not later than 30 days after receiving the request—

(A) provide the insured credit union making the request with written notification that the Board received the request and stating whether the request contains the information required under paragraph (2); and

(B) if the request does not contain the information required under paragraph (2), provide the insured credit union with an explanation of what information is missing.

If the Board informs the insured credit union under paragraph (3) that the request does not contain all the information required under paragraph (2), the insured credit union may provide the missing information to the Board during the 30-day period beginning on the date the insured credit union receives the explanation of the missing information under paragraph (3).

The Board shall make a determination on a request made under paragraph (1) and provide the insured credit union with a written notice of such determination—

(A) if the initial request contains the information required under paragraph (2), not later than the end of the 60-day period beginning on the date the Board notifies the insured credit union of the receipt of the request under paragraph (3); or

(B) if the initial request does not contain the information required under paragraph (2)—

(i) not later than the end of the 60-day period beginning on the date that the insured credit union provides the Board with the missing information under paragraph (4); or

(ii) if the insured credit union does not provide the Board with the missing information within the 30-day period described under paragraph (4), not later than the end of the 60-day period beginning on the end of such 30-day period.

The Board shall, within 120 days after making a determination under paragraph (5), publish a summary of the determination. The Board shall redact any confidential supervisory information about the insured credit union, any identifying facts about the credit union, and any sensitive personally identifiable information.

Not later than 180 days after the date of enactment of this Act, the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Federal Deposit Insurance Corporation Board, and the National Credit Union Administration Board shall revise the independent intra-agency appellate process required under section 309(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4806(a)).

Section 309 of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4806) is amended—

(1) by redesignating subsection (f) as subsection (i); and

(2) by inserting after subsection (e) the following:

The Federal banking agencies and the National Credit Union Administration shall each establish an Office of Supervisory Appeals to carry out the independent intra-agency appellate process required under this section.

The head of each of the Federal banking agencies and the National Credit Union Administration shall appoint appeals officials, in a number sufficient to fully staff the panels described under subsection (h), from among the following classes of individuals:

(A) Individuals who have financial institutions regulatory agency experience.

(B) Individuals who—

(i) are a licensed attorney or a certified public accountant authorized to practice under the laws of a State, the District of Columbia, or a territory of the United States;

(ii) have either academic or private sector experience;

(iii) have relevant subject matter knowledge or work-related experience in the financial services sector, as determined by the agency making the appointment; and

(iv) are not, and were not during the previous 10-year period, employed by a Federal banking agency, a Federal reserve bank, or the National Credit Union Administration.

(C) Individuals—

(i) with at least 10 years private sector financial services senior management-level experience; and

(ii) recommended by—

(I) an insured depository institution;

(II) an insured credit union; or

(III) a trade association for such institutions or credit unions.

Each appeals official appointed under paragraph (1) shall serve for a term of 3 years.

No individual may be appointed under paragraph (1) to serve more than 2 full terms.

An appeals official appointed under paragraph (1) may be removed at any time by the appointing agency.

An institution seeking an appeal of a material supervisory determination shall—

(i) file a written appeal to the head of supervision for the agency not later than 30 days after receiving the material supervisory determination from the agency; and

(ii) include in the appeal—

(I) a clear and complete statement of all relevant facts and issues;

(II) all arguments that the institution wishes to present; and

(III) all relevant and material documents that the institution wishes to be considered.

The institution may file a written request with the head of supervision for an extension of the 30-day time period described under subparagraph (A)(i), which shall state good cause for granting the extension. Such request shall be granted in the sole discretion of the head of supervision.

An institution seeking an appeal of a material supervisory determination may, not later than 7 days after receiving the material supervisory determination, request that the agency provide the institution with any information relied upon by the agency in making the material supervisory determination. The agency shall provide that information to the institution not later than 14 days after receiving the request.

A head of supervision receiving an appeal under paragraph (1) shall, after reviewing the information provided by the institution in such appeal—

(i) grant the appeal;

(ii) refer the appeal to a panel appointed under paragraph (3); or

(iii) deny the appeal.

A head of supervision shall promptly inform the institution and the head of the agency after granting, referring, or denying an appeal under subparagraph (A).

An institution that has an appeal denied by the head of supervision under subparagraph (A) may appeal such denial to a panel appointed under paragraph (3).

With respect to each appeal referred by a head of supervision under paragraph (2)(A)(ii) or appealed by an institution after a denial under paragraph (2)(A)(iii), the agency shall appoint a panel of 3 appeals officials to provide a recommendation on such appeal, with 1 of the 3 appeals officials being appointed to the panel from individuals in each of the classes described under subparagraphs (A), (B), and (C) of subsection (g)(1).

An appeals official may not be appointed to a panel under subparagraph (A) if the appeals official is reporting, or has reported, directly or indirectly, to the agency official who made the material supervisory determination under review.

An institution may request a hearing with the panel on the institution’s appeal by—

(i) making such request not later than 7 days after the date on which the institution is informed the head of supervision referred an appeal to a panel under paragraph (2); or

(ii) making such request in the institution’s appeal of a denial of the institution’s appeal under paragraph (2).

If an institution requests a hearing, as described under subparagraph (A), the panel shall provide the institution with a hearing on the institution’s appeal not later than 30 days after the date the hearing is requested, except the panel may, in the discretion of the panel or upon good cause shown, extend such deadline by up to 15 days.

The Federal banking agencies and the National Credit Union Administration shall each issue rules to establish procedures for panel hearings described under this paragraph, including that—

(i) the institution may appear at the hearing personally or through counsel;

(ii) the institution may provide an oral and written presentation at the hearing;

(iii) the panel may ask questions of any person participating in the hearing;

(iv) the hearing may not involve—

(I) taking testimony;

(II) a cross-examination; and

(III) discovery;

(v) the hearing shall not governed by formal rules of evidence; and

(vi) the panel shall have a verbatim transcript of the hearing prepared.

A panel making a recommendation on an appeal under this subsection shall make the recommendation not later than—

(i) 90 days after the date on which the appeal was referred by a head of supervision under paragraph (2)(A)(ii) or appealed by an institution after a denial under paragraph (2)(A); or

(ii) if the institution requested a hearing under paragraph (4), 60 days after the date on which the hearing concluded.

The panel may recommend—

(i) that the material supervisory determination be continued, terminated, or otherwise modified; or

(ii) that the material supervisory determination be remanded to the examiners to allow the examiners to consider additional information presented in connection with the appeal.

After a recommendation is made under subparagraph (A), the panel shall promptly notify the institution, the head of supervision of the agency, and the head of the agency of the recommendation, which shall contain a statement of the basis for the panel’s recommendation and identify the information on which the panel relied in reaching the recommendation.

A copy of each panel recommendation shall be posted on the agency’s public website as soon as practicable, with exempt information redacted. If the panel determines that redaction is insufficient to prevent improper disclosure, the recommendation may be presented in summary form.

A panel’s review of a material supervisory determination being appealed under this subsection shall be de novo.

A panel shall have no authority to delay or stay the implementation of any formal order from the applicable agency.

Not later than 15 days after receiving a notice of a recommendation under paragraph (5)(C), the institution may submit to the head of the agency written exceptions to the recommended decision.

Not later than 45 days after receiving a notice of a recommendation under paragraph (5)(C), the head of an agency shall review such decision and either ratify or reject the panel’s decision.

A review by the head of an agency under this paragraph may not be delegated to any other employee of the agency and, in the case of an agency that is headed by a body made up of multiple individuals, all such individuals shall participate in the review.

The Federal banking agencies and the National Credit Union Administration shall each, not later than 90 days after the end of each calendar year, issue a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate describing the actions taken by the agency under this paragraph during such calendar year, including information on each of the panel decisions reviewed, after redacting any confidential supervisory information.

A copy of each decision by the head of the agency under this paragraph shall be posted on the agency’s public website as soon as practicable, with exempt information redacted. If the head of the agency determinates that redaction is insufficient to prevent improper disclosure, the decision may be presented in summary form.

An institution shall have the right to petition for review of an agency head’s decision under paragraph (6) by filing a petition for review not later than 60 days after the date on which the decision was made in the United States Court of Appeals for the District of Columbia Circuit or the circuit in which the institution is located.

The Federal banking agencies and the National Credit Union Administration may not—

(A) retaliate against an insured depository institution or insured credit union, or a service provider or institution-affiliated party of an insured depository institution or insured credit union, for exercising rights under this subsection; or

(B) delay or deny any agency action that would benefit an insured depository institution or insured credit union, or a service provider or institution-affiliated party of an insured depository institution or insured credit union, on the basis that a matter under this section is pending under this section.

With respect to the appeal of a material supervisory determination under this subsection:

The term agency means the Federal agency, either a Federal banking agency or the National Credit Union Administration, that made the material supervisory determination.

The term institution means the company, either an insured depository institution or an insured credit union, with respect to which the material supervisory determination was made.

If the Deposit Insurance Fund incurs a material loss with respect to an insured depository institution, the inspector general of the Corporation shall—

(i) review the Corporation’s resolution of the institution to determine whether the material loss to the Deposit Insurance Fund could have been avoided by the Corporation when resolving the institution; and

(ii) make a written report to the Corporation and the Congress containing the results of such review and any recommendations for preventing a material loss to the Deposit Insurance Fund in the future when resolving an institution.

If the inspector general of the Corporation determines, in a review carried out under subparagraph (A) that the Corporation’s resolution of an institution caused a material loss to the Deposit Insurance Fund, but such resolution could have been carried out in a manner to avoid such a material loss, the Chairperson of the Corporation shall testify before the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate to explain why the material loss occurred.