RELEASE: REP. HILL INTRODUCES LEGISLATION PROVIDE FAIRNESS, ACCOUNTABILITY, AND TRANSPARENCY TO THE BANK EXAM PROCESS

WASHINGTON, D.C., April 18, 2024
WASHINGTON, D.C. - Rep. French Hill (R-AR) and Rep. David Scott (D-GA) today introduced bipartisan legislation that provides greater transparency in bank exams by establishing a new appeals process to resolve disagreements between banks and regulators. U.S. Senators Jerry Moran (R-Kan.) and Joe Manchin (D-W.V.) sponsored the companion bill in the Senate.
 
“Banks deserve to experience a fair and efficient supervisory examination process," said Rep. Hill. "The Fair Exams Act will allow any bank - including our community and rural banks in Arkansas - to appeal a supervisory determination through a third-party, independent director for review. My legislation is a win for the banking industry and greatly increases the transparency and fairness in the bank examination process.”
 
“The bank examination process is the first line of defense against threats to bank safety and soundness. Unfortunately, in the event of a bank having deficiencies in their examinations, poor responsiveness can result in smaller community banks running the risk of going out of business,” said Rep. Scott. “The bipartisan FAIR Exams Act will ensure fairness, accountability, and efficiency to the supervisory examination process. Establishing a stronger appeals process, specifically one to better support community banks, is critical to the stability of our banking system.”
 
Further Background:
 
Fair Audits and Inspections for Regulators’ (FAIR) Exams Act: Specifically, the bill would amend the FFIEC Act to:
 
  • Authorize Financial Institutions (FI) to seek a prompt, independent review of a “Material Supervisory Determination” (MSDs) from a regulatory examination. At the FI’s request, this appeal can be referred to the U.S. Court of Appeals.
  • Require bank examiners to conduct and complete examinations no later than 60 days of the exam exit interview and share with banks the materials relied on in making the MSD.
  • Establish a new Office of Independent Examination Review to adjudicate MSD appeals. This office is led by an independent director appointed by the FFIEC and will report annually to Congress on the actions taken under this bill.
  • Prohibit federal financial regulators from retaliating against an FI for exercising their appellate rights under this bill.
  • Applies to: Federal Reserve, Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), National Credit Union Administration (NCUA), Consumer Financial Protection Bureau (CFPB).
  • A previous version of this bill passed the House in 2018.
 
Supporting Organizations: American Bankers Association, Independent Community Bankers of America, American Fintech Council.

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