We, the undersigned banking trade associations, appreciate the FDIC soliciting further public comment on amendments to its Guidelines of Material Supervisory Determinations (“Guidelines”).In response to the initial feedback collected after the FDIC Board voted to reconstitute the Supervision Review Appeals Committee (“SARC”), the FDIC is proposing to amend its Guidelines of Material Supervisory Determinations (“Guidelines”) to (1) add the Ombudsman to the SARC as a non-voting member; (2) require the Ombudsman to monitor the supervision process following an institution’s submission of an appeal; (3) require materials considered by the SARC to be shared with both parties to the appeal; and (4) allow IDIs to request a stay of a material supervisory determination while an appeal is pending.
Unfortunately, notwithstanding the FDIC’s proposed modifications, many of the fundamental concerns we previously articulated remain. Once again, the Associations strongly recommend that the FDIC reinstate the Office of Supervisory Appeals (“OSA”) as the best way to achieve the FDIC’s stated goals for a more independent, fair and credible material supervisory determination appeals process. By abandoning the OSA after only five months of operation, the FDIC has prematurely given up on a process that holds extraordinary promise of providing FDIC-supervised banks a fair and impartial forum for appeal. Should the FDIC choose to retain the SARC, however, this letter identifies several opportunities for improvement that can help the FDIC better meet its objectives. These include:
▪ Setting minimum qualifications for voting members of the SARC who are not FDIC Board members and providing them the resources to conduct a de novo review;
▪ Providing banks the option to bring appeals directly to the SARC and bypass the first level of review by the appropriate FDIC Division Director.
We also offer recommendations in response to the most recent proposed modifications to the Guidelines relating to: (i) ex parte communications; (ii) stays of supervisory actions pending an appeal; and (iii) accountability and independence of the SARC. More specifically, our recommendations include:
▪ Prohibiting ex parte communications during an appeal;
▪ Providing for any ex parte communications that inadvertently occur to be memorialized in writing and made available to both the SARC and the appealing bank on a timely basis;
▪ Providing for the SARC – rather than the FDIC Division Director – to consider IDI requests for stays of material supervisory determinations pending appeal at the SARC; and
▪ Adopting reasonable standards that the decision-maker must apply in evaluating requested stays of material supervisory determinations.
Dear Mr. Sheesley:
We, the undersigned banking trade associations, appreciate the FDIC soliciting further public comment on amendments to its Guidelines of Material Supervisory Determinations (“Guidelines”).In response to the initial feedback collected after the FDIC Board voted to reconstitute the Supervision Review Appeals Committee (“SARC”), the FDIC is proposing to amend its Guidelines of Material Supervisory Determinations (“Guidelines”) to (1) add the Ombudsman to the SARC as a non-voting member; (2) require the Ombudsman to monitor the supervision process following an institution’s submission of an appeal; (3) require materials considered by the SARC to be shared with both parties to the appeal; and (4) allow IDIs to request a stay of a material supervisory determination while an appeal is pending.
Unfortunately, notwithstanding the FDIC’s proposed modifications, many of the fundamental concerns we previously articulated remain. Once again, the Associations strongly recommend that the FDIC reinstate the Office of Supervisory Appeals (“OSA”) as the best way to achieve the FDIC’s stated goals for a more independent, fair and credible material supervisory determination appeals process. By abandoning the OSA after only five months of operation, the FDIC has prematurely given up on a process that holds extraordinary promise of providing FDIC-supervised banks a fair and impartial forum for appeal. Should the FDIC choose to retain the SARC, however, this letter identifies several opportunities for improvement that can help the FDIC better meet its objectives. These include:
▪ Setting minimum qualifications for voting members of the SARC who are not FDIC Board members and providing them the resources to conduct a de novo review;
▪ Providing banks the option to bring appeals directly to the SARC and bypass the first level of review by the appropriate FDIC Division Director.
We also offer recommendations in response to the most recent proposed modifications to the Guidelines relating to: (i) ex parte communications; (ii) stays of supervisory actions pending an appeal; and (iii) accountability and independence of the SARC. More specifically, our recommendations include:
▪ Prohibiting ex parte communications during an appeal;
▪ Providing for any ex parte communications that inadvertently occur to be memorialized in writing and made available to both the SARC and the appealing bank on a timely basis;
▪ Providing for the SARC – rather than the FDIC Division Director – to consider IDI requests for stays of material supervisory determinations pending appeal at the SARC; and
▪ Adopting reasonable standards that the decision-maker must apply in evaluating requested stays of material supervisory determinations.
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