Banking and Finance Law Daily FDIC revises guidelines for appeals process
Wednesday, January 20, 2021

FDIC revises guidelines for appeals process

By Katalina Bianco, J.D.

The amended guidelines are intended to enhance the independence of appeals decisions and to clarify relevant procedures and timeframes.

The Federal Deposit Insurance Corporation has adopted amended Guidelines for Appeals of Material Supervisory Determinations. The revised guidelines are intended to boost the independence of supervisory appeals and clarify procedures and timeframes that apply to appeals when the FDIC takes a formal enforcement action. The amended guidelines generally replace the existing Supervision Appeals Review Committee (SARC) with an independent, standalone office within the FDIC, known as the Office of Supervisory Appeals. They will become effective when the office is operational. Until that time, the current guidelines remain in effect.

"The new Office will achieve several goals—most importantly, to promote an independent, consistent appeals process," FDIC Chair Jelena McWilliams said. "By limiting eligibility to former examiners and recruiting externally, the FDIC anticipates attracting impartial candidates who are less likely to have established relationships with individuals involved in the supervisory process."

However, calling the new guidelines "a vague, deeply flawed proposal," FDIC board member Martin J. Gruenberg noted, "The striking vagueness in the establishment of this Office makes it difficult to evaluate the proposal. Its purpose, according to the preamble, is ‘to establish an independent office that would replace the existing Supervision Appeals Review Committee.’ Yet, without more specifics, it is really not possible to assess that objective."

Revisions. As outlined in an FDIC staff memorandum, under the FDIC’s current supervisory appeals process, institutions are encouraged to make good-faith efforts to resolve disagreements with examiners or the appropriate FDIC Regional Office. If these efforts are not successful, the institution may submit a request for review with the appropriate division director, who issues a written decision. If the institution is not satisfied with the decision, it may appeal that decision to the SARC, a standing Board-level committee that is authorized to decide supervisory appeals.

The revised guidelines provide that appeals submitted to the office will be decided by a panel of reviewing officials who will have bank supervisory or examination experience and serve on term appointments. The division director will make an independent supervisory determination without deferring to the judgments of either party. Communications between the office and either members of the supervisory staff or the appealing institution will be shared with the other party to the appeal. The guidelines also will permit an institution to request expedited review of its appeal.

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