Notice2026-01433
Guidelines for Appeals of Material Supervisory Determinations
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 26, 2026
Issuing agencies
Federal Deposit Insurance Corporation
Abstract
The Federal Deposit Insurance Corporation (FDIC) is adopting revised Guidelines for Appeals of Material Supervisory Determinations to replace the existing Supervision Appeals Review Committee with an independent, standalone office to consider and decide supervisory appeals.
Full Text
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<title>Federal Register, Volume 91 Issue 16 (Monday, January 26, 2026)</title>
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[Federal Register Volume 91, Number 16 (Monday, January 26, 2026)]
[Notices]
[Pages 3184-3195]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-01433]
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FEDERAL DEPOSIT INSURANCE CORPORATION
RIN 3064-ZA50
Guidelines for Appeals of Material Supervisory Determinations
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Notice of guidelines.
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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is adopting
revised Guidelines for Appeals of Material Supervisory Determinations
to replace the existing Supervision Appeals Review Committee with an
independent, standalone office to consider and decide supervisory
appeals.
DATES: The revised Guidelines become effective once the Office of
Supervisory Appeals is fully operational.
FOR FURTHER INFORMATION CONTACT: James Watts, Counsel, 202-898-6678,
<a href="/cdn-cgi/l/email-protection#e58f9284919196a583818c86cb828a93"><span class="__cf_email__" data-cfemail="016b766075757241676568622f666e77">[email protected]</span></a>; Sarah Chung, Senior Attorney, 202-898-7376,
<a href="/cdn-cgi/l/email-protection#a7d4c4cfd2c9c0e7c1c3cec489c0c8d1"><span class="__cf_email__" data-cfemail="b6c5d5dec3d8d1f6d0d2dfd598d1d9c0">[email protected]</span></a>; Legal Division.
SUPPLEMENTARY INFORMATION: The FDIC's Guidelines for Appeals of
Material Supervisory Determinations (Guidelines) provide the process by
which insured depository institutions (IDIs) may appeal material
supervisory determinations made by the FDIC.\1\ Under these Guidelines,
the FDIC's Supervision Appeals Review Committee (SARC) has been the
final level of review of the FDIC's material supervisory
determinations. The FDIC is revising the Guidelines to replace the SARC
with an independent, standalone office within the FDIC, known as the
Office of Supervisory Appeals (Office). The Office will have delegated
authority to consider and resolve appeals of material supervisory
determinations.
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\1\ 87 FR 77112 (Dec. 16, 2022).
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I. Background
Section 309(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994 (Riegle Act) required the FDIC (as well as the
other Federal banking agencies and the National Credit Union
Administration) to establish an ``independent intra-agency appellate
process'' to review material supervisory determinations.\2\ 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.'' \3\ In the appeals process, the FDIC is required to
ensure that (1) an IDI's appeal of a material supervisory determination
is heard and decided expeditiously; and (2) appropriate safeguards
exist for protecting appellants from retaliation by agency
examiners.\4\
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\2\ 12 U.S.C. 4806(a).
\3\ 12 U.S.C. 4806(f)(2).
\4\ See 12 U.S.C. 4806(b).
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On March 21, 1995, the FDIC's Board of Directors (Board) adopted
the Guidelines to implement section 309(a) and established the SARC to
consider and decide appeals of material supervisory determinations.\5\
Since that time, the SARC has been composed of FDIC Board members and
other senior FDIC officials.
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\5\ See 60 FR 15923 (Mar. 28, 1995).
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In January 2021, the FDIC adopted Guidelines that replaced the SARC
with an independent, standalone office within the FDIC, known as the
Office of Supervisory Appeals.\6\ The Office was granted delegated
authority to consider and resolve appeals of material supervisory
determinations and was staffed by reviewing officials with bank
supervisory or examination experience. However, in May 2022, prior to
the Office considering any appeals, the FDIC adopted revised Guidelines
that restored the SARC as the final level of review of material
supervisory determinations made by the FDIC.\7\
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\6\ See 86 FR 6880 (Jan. 25, 2021).
\7\ See 87 FR 30942 (May 20, 2022).
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II. July 2025 Proposal
In July 2025, the FDIC proposed to re-establish an Office of
Supervisory Appeals as the final level of review of material
supervisory determinations made by the FDIC, replacing the SARC in the
appellate process.\8\ The FDIC noted that reinstating the Office would
[[Page 3185]]
promote and enhance the independence of the appeals process and ensure
requisite expertise of reviewing officials. The proposed structure of
the Office was largely consistent with that of the previous Office. The
FDIC also proposed certain other enhancements to the Guidelines to
reflect its experience administering the supervisory appeals process.
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\8\ See 90 FR 33942 (July 18, 2025).
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Structure of the Office and Reviewing Officials
Similar to the previous Office established in 2021, the FDIC
proposed to establish the Office as a standalone office independent of
the Divisions that make supervisory determinations. The proposed Office
would be staffed by reviewing officials with relevant experience,
serving on term appointments. The proposed Office would report directly
to the FDIC Chairperson's Office and would be granted delegated
authority from the Board to consider and resolve appeals.
In the proposal, the FDIC reiterated its commitment to hiring
individuals with bank supervisory or examination experience. The FDIC
recognized this experience can be achieved through both government and
industry experience. Therefore, the FDIC proposed to consider former
bankers and other former industry professionals with relevant
experience to serve as reviewing officials. Reviewing officials, as
employees of the FDIC, were proposed to be part-time, intermittent
employees who have been cleared for conflicts of interest and would be
subject to the FDIC's requirements for confidentiality. The FDIC also
proposed to consider employees with relevant experience from other
government agencies to serve as reviewing officials on a part-time
basis through interagency agreement(s). Under the proposal, current
FDIC employees would not be eligible to serve in these roles.
The proposal provided that a panel of three reviewing officials
would be assigned to consider each appeal submitted to the Office, with
at least one member of any panel required to have bank supervisory
experience.
Legal Support for the Office
The proposal provided that the Legal Division would provide counsel
to the Office and generally advise the Office on FDIC policies and
rules. To promote independence, the Office would be advised by legal
staff that were not involved in making the material supervisory
determinations under review.
The proposal stated that if an appeal seeks to change or modify
FDIC policies or rules, or raises a policy matter of first impression,
the Legal Division would provide notice, along with a written
explanation, to the Office. Afterwards, the Legal Division would refer
the matter to the Chairperson's Office.
In addition, the Legal Division would review decisions of the
Office for consistency with applicable laws, regulations, and policies
of the FDIC prior to their issuance. If the Legal Division determines
that an Office decision is contrary to a law, regulation, or FDIC
policy, the Legal Division would notify the Chairperson's Office of the
matter and the Office would be required to revise the decision to
conform with relevant laws, regulations, or policies. The Legal
Division would not exercise supervisory judgment or opine on the merits
of an appeal.
The FDIC proposed that if an appeal raises procedural questions,
including whether issues raised by the institution are eligible for
review, the appropriate Division Director or the Office would refer
such questions to the Legal Division. The Legal Division would
determine whether an appeal, or an issue raised in an appeal, is
eligible for review. The Legal Division would provide notice, with a
written explanation, to the Office if an appeal, or an issue raised in
an appeal, is deemed ineligible for review.
Burden of Proof and Standard of Review
Under the proposal, the burden of proof as to all matters at issue
in the appeal, including timeliness of the appeal if timeliness is at
issue, would rest with the institution.
The proposed Guidelines did not change the standard of review for
the Division Director. Consistent with the current Guidelines, the
Division Director would review the material supervisory determination
for consistency with applicable laws, regulations, and policy, and make
his or her own supervisory determination without deferring to the
judgments of either party.\9\ The Division Director would have
discretion to consider examination workpapers and other materials
developed by staff during an examination.
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\9\ The FDIC has previously noted that this may be considered a
de novo standard of review, but lays out with more specificity the
actual considerations to be applied. See 87 FR 64034, 64038 (Oct.
21, 2022).
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Under the proposal, the Office would review the appeal for
consistency with the policies (including regulations, guidance, policy
statements, examination manuals, and other written publications) of the
FDIC and the overall reasonableness of, and the support offered for,
the positions advanced. The proposed standard of review for the Office
aligned with the Division Director's standard of review, specifying
that the Office would make its determination without deferring to the
judgments of either party. This standard of review was intended to
underscore the independence of the Office's review, subject to the
reasonableness of the support for the positions advanced by both
parties.
The proposal also limited the scope of the Office's review 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 would be given to any facts or circumstances that
occur or corrective action taken after the determination was made. The
Office also would not consider aspects of an appeal that seek to change
or modify FDIC policy or rules. Therefore, under the proposal, the
Office could not overturn a material supervisory determination if the
result of such a decision would be inconsistent with the policies of
the FDIC.
Formal Enforcement-Related Actions
Section 309 of the Riegle Act, which required the establishment of
an appellate process, provides that ``[n]othing in this section shall
affect the authority of an appropriate Federal banking agency . . . to
take enforcement or supervisory action.'' \10\ To clarify how the
appellate and enforcement processes interact, the proposed Guidelines
included certain provisions specifically addressing the appealability
of formal enforcement actions and determinations underlying formal
enforcement actions. However, as explained in the proposal, the FDIC
has encountered issues in administering the enforcement provisions of
the current Guidelines.
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\10\ 12 U.S.C. 4806(g).
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First, as evidenced by comments, the current Guidelines'
enforcement-related provisions have been confusing to some
institutions, leading to some uncertainty as to which determinations
are subject to appeal. Second, the Guidelines provide for a piecemeal
appeal in some instances by allowing an institution to appeal certain
determinations within the standard timeframes established by the
Guidelines and others only after a decision is made on the enforcement
action. Third, in many instances, the facts underlying an enforcement
action are relevant factors to other material supervisory
determinations (such as ratings downgrades), but an institution that
seeks to appeal such determinations is unable to include such facts as
part
[[Page 3186]]
of the record in an appeal. In addition, the FDIC noted that because
many enforcement actions result in a stipulated order, an institution
may not receive an independent review of some supervisory
determinations. Given these concerns, the FDIC requested comment on the
provisions of the proposed Guidelines relating to formal enforcement-
related actions and decisions and how they might be addressed in the
context of material supervisory determinations that an institution
seeks to appeal.
Role of the Ombudsman
The Ombudsman serves as a non-voting member of the SARC. The
Ombudsman also serves as a neutral liaison between the FDIC and
institutions, as provided by section 309 of the Riegle Act.\11\ Because
the FDIC sees value in the Ombudsman's perspective, the proposal
allowed the Ombudsman to submit views to the panel for consideration.
In addition, the proposed Guidelines retained provisions regarding the
Office of the Ombudsman's neutral oversight of the process and its role
in monitoring the supervisory process for retaliation.
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\11\ See 12 U.S.C. 4806(d).
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Ex Parte Communications
The proposal included a provision on sharing of information,
requiring that information considered by the Office be timely shared
with both parties to the appeal, subject to applicable legal
limitations on disclosure. This proposed provision would apply to
materials submitted to the Office by either the relevant Division or
the appealing institution. The Ombudsman would also oversee the sharing
of information considered by the Office in connection with an appeal.
III. Discussion of Comments and Final Guidelines
The FDIC received a total of eight comment letters in response to
the proposal. Commenters included several trade organizations, a law
firm, a public interest group, and a financial holding company. Nearly
all commenters expressed support for the proposal but recommended
changes to specific aspects of the appellate process, as discussed in
greater detail below. A few commenters expressed support for
legislative proposals that would amend the statutory framework
underlying the appellate process. One such commenter noted that the
proposal would represent an appropriate step to strengthen the
appellate process until legislation is enacted.
The FDIC is adopting the Guidelines generally as proposed, with
certain changes discussed below to address commenters' feedback.
Reviewing Official Qualifications and Staffing
Commenters generally supported the FDIC's proposal to staff the
Office with reviewing officials that have bank supervisory or
examination experience, as well as former bankers and other industry
professionals. Multiple commenters agreed that each panel should
include at least one reviewing official with bank supervisory
experience. One commenter suggested that the FDIC exclude individuals
who lack bank supervisory or examination experience, stating that
specific training and experience is necessary to make supervisory
decisions.
A few commenters recommended requiring each panel to include at
least one reviewing official with industry experience, and one
commenter recommended requiring community bank experience in
particular. These commenters suggested that ensuring a diversity of
perspectives on panels would promote fairness and instill confidence in
the Office's independence. The FDIC generally agrees that a diversity
of perspectives on panels is valuable. Furthermore, one motivation
behind the establishment of the Office is to ensure that reviewing
officials have relevant experience with the supervisory process, and
industry experience, along with supervisory or examination experience,
can provide valuable experience with the supervisory process.
Accordingly, the final Guidelines provide that each three-member panel
will include at least one reviewing official with bank supervisory or
examination experience and at least one reviewing official with
industry experience, generally defined as having worked at a bank or
for a company that provides services to banks or banking-related
services.
In the event that (A) there are one or more vacancies among
reviewing officials or (B) one or more reviewing officials are
unavailable (such as due to a health event), resulting in an inability
to form a three-member panel, the FDIC Chairperson may (1) authorize
the Office to conduct business temporarily with fewer than three
members or (2) appoint one or more officials to serve as reviewing
officials on a temporary basis, for a time period not to exceed 120
days. In such a scenario, the FDIC expects to fill any vacancy as
expeditiously as possible.
The FDIC appreciates the suggestion to require community bank
experience specifically but is sensitive to the need to balance
relevant experience with permitting a broad pool of potential
applicants. Nonetheless, given that historically the vast majority of
banks that have filed appeals have been community banks, the FDIC will
view community bank experience favorably in considering applicants with
industry experience.
One commenter suggested that the appealing institution should be
provided with information about the panel members to allow the
institution to raise any concerns about the independence of panel
members. The FDIC generally agrees that transparency with respect to
the backgrounds of reviewing officials has value. Accordingly, the
final Guidelines state that background information on the Office's
reviewing officials will be published on the FDIC's website. The FDIC
expects that this information will include a summary of the panelists'
qualifications and employment experience.
The commenter also recommended that the FDIC use best efforts to
exclude current federal banking agency employees who serve in
supervisory or enforcement functions, assuming this does not narrow the
pool of applicants to a degree that the Office cannot be adequately
staffed. The FDIC plans to primarily staff the Office by recruiting
externally, and believes this will best promote the independence of the
Office's review, but retains the ability to employ current employees of
federal banking agencies who are not current FDIC employees.
Conflicts of Interest
One commenter suggested the FDIC clearly articulate the specific
criteria and conflicts of interests that would disqualify an individual
from serving on a panel. The commenter also recommended a three-year
prohibition of any individual who was a former FDIC examiner and a
prohibition on any individual from serving on a panel if they have
worked as an examiner for or at the appealing institution.
FDIC employees are generally prohibited by statute and regulation
from participating in matters that will have a direct and predictable
effect on their financial interests or financial interests imputed to
the employee.\12\ In addition, subject to a determination by the
agency, employees are prohibited from participating in any matter
involving specific parties which affects the financial interests of a
household member or where a person with whom
[[Page 3187]]
the employee has a business or close personal relationship is, or
represents, a party.\13\ These same conflict of interest restrictions
will apply to the Office's reviewing officials. The FDIC also
anticipates that reviewing officials may need to recuse themselves from
particular cases where an apparent conflict of interest would undermine
the perceived independence of the review, and FDIC ethics officials
will be available to aid in those decisions.
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\12\ See 18 U.S.C. 208; 5 CFR 2635.402.
\13\ See 5 CFR 2635.502.
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The FDIC declines to impose a three-year prohibition on serving in
the Office for former FDIC examiners and a permanent prohibition from
serving on a panel if the individual has worked as an examiner for or
at the appealing institution. Although these measures could enhance
independence to some degree, they also would constrain staffing of the
Office and its panels, and the Office's panels are expected to reflect
a variety of views and perspectives. In some cases, however, the
circumstances of an individual's prior relationship with an appealing
institution may warrant recusal.
Authority of the Office
One commenter suggested that the Office may not be able to provide
meaningful relief to institutions because it must decide matters in a
manner consistent with FDIC policy, which could be outdated or
inconsistently applied. The commenter stated that this reinforces the
perception that the appeals process is not truly independent. The
supervisory appeals process has long played a role in enhancing the
consistency of bank supervision, for example, across the FDIC's
Regional Offices. The Office will have a clear role in addressing
inconsistent application of FDIC policies, as the Office will be
specifically tasked under the final Guidelines with reviewing
determinations for ``consistency with the policies . . . of the FDIC.''
Thus, if an institution believes that supervisory staff has
inconsistently applied examination or other standards, it may seek
review of the matter through the supervisory appeals process. By
contrast, the Office's role will not be to address instances where an
FDIC policy should be updated. Formulation of policy on behalf of the
FDIC is the role of the Board of Directors and, as appropriate,
individuals acting under the Board's delegated authority. Appeals
seeking to change or modify FDIC policies or rules should be referred
to the FDIC Chairperson's office for further consideration, and the
final Guidelines retain this requirement.
Material Supervisory Determinations Eligible for Appeal
One commenter suggested the FDIC should permit appeals of
determinations relating to resolution plans, compliance with
commitments and conditions imposed through supervision or application
processes, and compliance with or remediation of issues covered in an
informal enforcement action. In addition, the commenter recommended
including procedural matters in the definition of ``material
supervisory determination'' so that the Office may review matters for
procedural fairness in the examination process.
The FDIC agrees with the suggestion to include, in the definition
of ``material supervisory determination,'' determinations as to
compliance with informal enforcement actions. The final Guidelines
clarify that such determinations are appealable. For example, if
examiners are evaluating whether an institution has complied with an
outstanding Memorandum of Understanding, those determinations as to
compliance will be appealable under the Guidelines.
The FDIC also agrees that ``material supervisory determination''
should expressly include determinations as to compliance with
conditions imposed through the supervision or application processes.
Examiners' evaluation of compliance with such conditions may have
important consequences for an institution and is likely material. The
final Guidelines clarify that such determinations are appealable.
However, if the FDIC determines that an institution's failure to comply
with such conditions warrants formal enforcement action, the provisions
of the Guidelines relating to enforcement actions apply and may
preclude a supervisory appeal in some cases.
Decisions relating to resolution plans are not supervisory in
nature and require different areas of expertise, and therefore, those
decisions are not being included in the list of determinations that are
eligible for review. In addition, there are fewer determinations
regularly being made in the resolution context for open institutions,
which may prove challenging with respect to ensuring that the panel
includes officials with the necessary expertise.\14\
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\14\ The commenter specifically mentioned determinations made as
to a resolution plan's credibility under 12 CFR 360.10. As described
in frequently asked questions issued in April 2025, the FDIC does
not expect to make credibility determinations regarding plan
submissions under this regulation.
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With respect to the suggestion to include procedural fairness of
examinations in the definition of ``material supervisory
determinations'' subject to appeal under the Guidelines, the FDIC notes
that it already provides multiple avenues to raise such concerns.
Institutions are encouraged to raise concerns of procedural fairness
with the Division Director through the informal review process
described in FIL-51-2016, the FDIC's Office of the Ombudsman, or the
appropriate FDIC Regional Ombudsman.
The list of material supervisory determinations eligible for review
under the final Guidelines includes a conforming update to address a
change in supervisory terminology recently proposed by the FDIC. The
Guidelines have historically permitted appeals of ``matters requiring
board attention,'' which are used to inform an institution about the
FDIC's views concerning changes needed in the institution's practices,
operations, or financial condition. In a recent proposal relating to
bank supervision, the FDIC proposed, among other things, to use the
term ``matters requiring attention'' and discontinue using the term
``matters requiring board attention.'' \15\ The final Guidelines
expressly permit appeals of ``matters requiring board attention'' and
``matters requiring attention'' to accommodate both current supervisory
terminology as well as the proposed terminology.
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\15\ 90 FR 48835, 48840 (Oct. 30, 2025).
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Formal Enforcement-Related Provisions--Comments
The FDIC received a number of comments on the provisions of the
Guidelines relating to formal enforcement actions and their underlying
facts and circumstances. As discussed below, most of these comments
recommended different ways the FDIC should expand institutions'
opportunities to appeal supervisory determinations when there is a
related enforcement action.
One commenter suggested that when an institution receives notice
that the FDIC is considering an enforcement action, the FDIC should
provide a four-week window for the institution to challenge relevant
supervisory determinations through the appeals process and pause the
enforcement action until the Office has issued a decision. The
commenter argued that the FDIC's strong interest in exercising its
enforcement powers should be weighed against an institution's interest
in an independent review of supervisory determinations.
[[Page 3188]]
Two commenters recommended that supervisory appeals should be
permitted to proceed even while a formal enforcement action is being
considered or pending. One of these commenters stated that formal
enforcement actions cannot serve as a substitute for the supervisory
appeals process because administrative law judges defer to examiners'
conclusions. This commenter also stated that this approach would ensure
banks have the right to meaningful reviews of material supervisory
determinations as intended by the Riegle Act and allow for due process.
Another commenter suggested that the Guidelines' definition of
``material supervisory determination'' should continue to exclude
formal enforcement-related actions and decisions, but not the
underlying facts and circumstances.
Two commenters stated that the FDIC should not exclude
determinations or the underlying facts and circumstances that form the
basis of a recommended or pending formal enforcement action from
appeal.
Two commenters suggested that the FDIC adopt a process for
expedited review of determinations when appropriate, such as
consequential matters or determinations that result in an institution
becoming critically undercapitalized for Prompt Corrective Action
purposes. One of these commenters suggested that expedited review could
take the form of a ``special petition'' that banks could submit
directly to the Office, and that the Office would have discretion to
review on an expedited basis. The commenter explained that this would
protect institutions from enforcement actions based on findings that
would have been overturned by an independent panel. Another commenter
recommended allowing resolution of a supervisory appeal before any
enforcement action is taken.
Two other commenters addressed the provisions of the Guidelines
allowing an extension of the 120-day and 90-day timeframes where appeal
rights are suspended while the FDIC is pursuing a formal enforcement
action. The commenters stated that extensions of these time periods
should only be permitted with the institution's consent, as matters
capable of waiting over 120 days to resolve may be good candidates for
the appeals process and do not justify special procedures to suspend
appeal rights.
Formal Enforcement-Related Provisions--Final Guidelines
The FDIC appreciates the commenters' recommendations and believes
there is value in expanding institutions' appellate rights to allow
appeals in certain cases where an enforcement action is proposed or
pending. The FDIC believes that this will benefit the Office's
evaluation of appeals of examination ratings in particular, as the
facts underlying formal enforcement actions are often relevant to
ratings decisions. As described below, the final Guidelines will permit
the facts and circumstances that form the basis for certain formal
enforcement actions to be in scope for consideration by the Office as
part of an appeal of a material supervisory determination. The formal
enforcement action itself will not be appealable under the Guidelines;
formal enforcement actions are contested through the administrative
enforcement process defined by section 8 of the Federal Deposit
Insurance Act.
When the FDIC provides an institution with material supervisory
determinations that form the basis of certain proposed formal
enforcement actions, the institution will have an opportunity to appeal
the determinations. Specifically, the FDIC will allow the facts and
circumstances underlying a proposed formal enforcement action to be in
scope for appeals to the Office if the proposed enforcement action is
not based, in whole or in part, on: (1) unsafe or unsound practices
under section 8 of the Federal Deposit Insurance Act, or (2) violations
of laws or regulations relating to an institution's anti-money
laundering and countering the financing of terrorism (AML/CFT) program
or the institution's sanctions compliance.\16\ Enforcement actions
brought under those authorities are more likely to raise concerns
related to safety and soundness or financial crimes that involve a
degree of urgency, whereas enforcement actions brought under other
authorities are less likely to involve concerns that need to be
addressed urgently. The FDIC also expects to issue a final rule in the
coming months that defines the term ``unsafe or unsound practice'' for
purposes of section 8 of the Federal Deposit Insurance Act in a manner
that ensures any such actions will satisfy a materiality threshold. The
FDIC seeks to balance deeming more appeals eligible through the
agency's appeal process with the practical challenges associated with
allowing the facts and circumstances underlying certain types of
enforcement actions to be appealed. The FDIC also seeks to establish
bright line criteria, focusing on the authorities under which appeals
are brought, rather than more subjective criteria that would result in
significant uncertainty regarding which appeals would be appealable.
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\16\ Facts and circumstances underlying enforcement actions that
are brought under multiple authorities will not be appealable if one
of those authorities is mentioned above.
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If an institution appeals a supervisory determination that forms
the basis for a proposed formal enforcement action, the appeal will be
considered on an expedited basis under a schedule determined by the
Office. As a general matter, the FDIC expects to delay the initiation
of the enforcement action until the conclusion of the appeal, but there
may be certain circumstances in which the FDIC will pursue a
simultaneous enforcement action.\17\ The FDIC will also require an
institution subject to a potential enforcement action to sign an
agreement to toll a relevant statute of limitations. If the institution
fails to do so upon a request by the FDIC, the facts and circumstances
underlying the enforcement action will no longer be eligible to be
considered as part of an appeal.
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\17\ A potential example of when the FDIC might pursue a
simultaneous enforcement action is if a bank appeals a ratings
downgrade, and the facts underlying the enforcement action play a
small role in the ratings downgrade.
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Consistent with the current SARC guidelines, if supervisory appeal
rights are suspended due to a notice of a formal enforcement action,
the FDIC must move forward with the formal enforcement action within
specified time frames or supervisory appeal rights will be reinstated.
These time frames will be consistent with the time frames that
currently apply to the suspension and reinstatement of appeal rights
under the Guidelines.
Burden of Proof and Standard of Review
Commenters generally supported the standards of review and burden
of proof in the proposal. One commenter was supportive of the proposed
standard of review that would underscore the independence of the
Office's review by specifying that the Office will not defer to the
judgment of either party. However, this commenter recommended the FDIC
clarify that appealing institutions be permitted to challenge an
examiner's view of reasonableness and that the FDIC set specific
parameters around ``reasonableness.'' The commenter further recommended
that the FDIC clarify that material supervisory determinations will not
be based on a bank's non-conformance with non-binding agency guidance
or supervisory expectations.
[[Page 3189]]
Commenters also asked for further clarification regarding the
burden of proof. One commenter stated that it was consistent with
appellate practice to place the burden of proof on the appealing
institution, but asked that the final Guidelines clarify that the
standard of proof is preponderance of evidence to align with generally
accepted administrative law principles and to avoid giving undue
deference to examiners' conclusions.
Two commenters believed the burden proof in appeals should be on
the FDIC. One commenter believed that placing the burden of proof on
the appealing institution means the appeal cannot succeed unless the
examiners are clearly wrong. The commenter suggested the initial burden
should be placed on the FDIC to show the FDIC has legal authority to
make the supervisory determination, the officials who made the
determination were acting within such authority, and their findings are
consistent with that authority, with an opportunity for bank rebuttal.
Another commenter stated that placing the burden of proof on the
appealing institution is not required by statute and is unnecessarily
prescriptive since the process is not governed by the Administrative
Procedure Act or other judicial review procedure. This commenter stated
that placing the burden of proof on the appealing institution
discourages appeals because it makes it more unlikely that institutions
obtain favorable decisions.
The FDIC appreciates the opportunity to clarify the standard of
review for the Office's decisions. The Office will review the appeal
for consistency with the policies (including regulations, guidance,
policy statements, examination manuals, and other written publications)
of the FDIC and the overall reasonableness of, and the support offered
for, the positions advanced. The Office will make an independent
supervisory determination and will not defer to the judgments of either
party.
The FDIC is not changing the burden of proof, which is consistent
with appellate proceedings and generally requires the appellant to
establish that the decision being appealed was in error. The FDIC is
not adopting a preponderance of the evidence standard in the
Guidelines, but the agency does view a preponderance of the evidence
standard as generally consistent with how the SARC has historically
decided appeals and the Guidelines.
Information Sharing Provisions
Commenters generally supported the information sharing provisions
in the proposal. However, commenters provided some suggestions to
enhance transparency. One commenter suggested the FDIC prohibit all ex
parte communications with the Office during an appeal and require any
such communications that inadvertently occur to be made available to
both parties in writing on a timely basis. The disclosure of such
communications is generally consistent with past practice, but the FDIC
agrees that it is useful for the Guidelines to explicitly address any
potential communication concerning an appeal that might occur. The
final Guidelines therefore require that any ex parte communications
concerning the substance of an appeal between the Office and
supervisory staff be shared in writing. If there are any redactions to
any communications shared with an appealing institution to avoid
improper disclosure, the reasons for the redactions will be provided to
the appealing institution.
The commenter also suggested the FDIC clarify the timing of when
information considered by the Office will be shared with both parties
and to ensure that both parties receive all information on a timely
basis prior to the issuance of the Office's decision, with the
opportunity to rebut any factually incorrect or misleading information.
The final Guidelines retain, without change, the requirement from the
proposal that materials concerning an appeal submitted to the Office
will be shared with the other party to the appeal on a timely basis.
The FDIC expects that materials will be shared with sufficient time to
allow the parties to prepare for an oral presentation to the Office
panel, if oral presentation is requested, or before the panel meets to
consider the appeal.
One commenter suggested that an appealing institution should
receive any information that a State regulatory authority provides the
FDIC. State regulators are not a party to the FDIC's appeals process
and their regulatory information may be governed by a variety of State
laws and rules. The FDIC does not have authority to commit to
disclosure of such information in all cases. However, if the relevant
Division provides information on the State regulator's views to the
Office as part of its submission, that information will be shared with
an appealing institution in the same manner as other appeal materials.
New Evidence
One commenter recommended the final Guidelines clarify that the
Office should review any relevant evidence, including evidence that was
not available at the time of the Division Director's consideration of
the appeal or evidence that formed the basis of the Division Director's
decision. The commenter believed this clarification is consistent with
fundamental principles of fairness and due process. Excluding new
evidence, subject to limited exceptions, is generally consistent with
appellate processes. The proposal, which provided that new evidence
could be submitted if approved by the reviewing panel and with a
reasonable time for the Division Director to review and respond,
strikes an appropriate balance. This promotes the Office's role as an
appellate body while allowing for the introduction of new evidence in
cases where it may be particularly critical to the outcome. The FDIC
therefore adopts this provision as proposed.
Supervisory Stays
One commenter supported allowing an institution to request a stay
of a supervisory decision or action while a supervisory appeal is
pending, but recommended that the Office, rather than the Division
Director, decide the request for a stay when an appeal is pending with
the Office. The commenter believed allowing the Office to decide stay
requests would enhance independence. While the FDIC is sympathetic to
the perspective that the Office would enhance independence, the FDIC is
leaving such decisions to the Division Director, as that decision to
grant a stay of a supervisory determination while an appeal is pending
is ultimately a matter of supervisory judgment.
The same commenter suggested the FDIC lay out the basis for
analyzing stay requests. While the FDIC is not laying out a formal
analytical framework, the FDIC is adding a provision to the Guidelines
providing that the analysis will include a weighing of potential harms.
For example, granting a stay of a supervisory decision while an
institution's appeal is pending may present safety and soundness
concerns if an important risk to the institution is not being
adequately addressed. However, leaving a supervisory determination in
place while an appeal is ongoing may have detrimental consequences for
the institution, such as potential negative market reactions in the
event of a restatement of a bank's Call Report or changes in deposit
classifications resulting from a downgrade to CAMELS ratings.
Legal Division's Role
Commenters expressed some concerns about the role of the FDIC Legal
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Division in the proposed Guidelines. One commenter suggested that the
proposal weakened the independence of the Office and made the Legal
Division the ultimate appellate authority by authorizing the Legal
Division to require the Office to revise its draft decisions and to
decide procedural questions without providing notice and opportunity to
be heard to an appealing institution. The commenter stated that the
Office should be the highest appellate authority and should itself
decide all procedural issues.
The FDIC does not believe the proposed role of the Legal Division
undermines the Office's independence. It is expected that the Office
will exercise independent judgment in deciding appeals, but will do so
within the bounds of applicable laws and regulations, as well as policy
established by the FDIC's Board of Directors. The Legal Division's role
is to ensure that the Office's decisions fall within those bounds, and
as explained in the proposal, the Legal Division will not exercise
supervisory judgment or opine on the merits of appeals. This aspect of
the Guidelines will be adopted as proposed.
The FDIC appreciates, however, that many procedural questions may
warrant collaboration with the Office. Thus, the final Guidelines state
that procedural questions will be referred to the Legal Division for
resolution, but also provide that the Legal Division will consult with
the Office on such matters.
In addition, the same commenter recommended that nothing should be
submitted to the Office by the Legal Division without notice to the
appealing institution and an opportunity for the institution to
respond. The FDIC is not adopting this suggestion. Where the Legal
Division advises the Office on the FDIC's policies and rules, such
advice will be covered by attorney-client privilege. Furthermore, the
FDIC's historic practice has been that the SARC is advised by Legal
staff who were not involved in making the determinations at issue, and
the agency plans to ensure the same with respect to the Office to
promote independence from those involved in the determinations. Where
the Legal Division decides a procedural request or concludes that an
issue raised in an appeal is ineligible for review under the
Guidelines, the decision will be provided to the institution.
Another commenter focused on Legal's role in determining that an
issue raised in an appeal is ineligible for review. The proposal
provided that, in such cases, the Legal Division would provide notice,
with a written explanation, to the Office. To increase transparency,
the commenter suggested that such action should be accompanied by a
written determination accessible to the appealing institution. The FDIC
agrees, and the final Guidelines provide that notice and a written
explanation will be provided to both the Office and the appealing
institution in such cases.
Publication of Decisions and Annual Reports
Commenters agreed with the proposal to publish the Office's
decisions in summary or redacted form. One commenter recommended that
the final Guidelines specify that the Office's final decision will
include the reasoning of the panel and, where applicable, an
opportunity for any dissenters on the panel to include a brief
statement of reasoning. This commenter also recommended the Office's
decision be provided to the appealing institution before publication
with a right to object to publication on grounds of inadequate
redaction. The commenter stated that the FDIC should never publish a
decision from the Office that cannot be sufficiently anonymized.
Consistent with past FDIC practice, appellate decisions will
include the rationale for the panel's decision. This could include a
dissenting view. The FDIC strives to ensure that decisions are redacted
sufficiently to ensure that the bank cannot be identified, given the
sensitive nature of the supervisory determinations they contain, and
agrees that it may be beneficial to consider an appealing institution's
feedback on suggested redactions before publishing the Office's
decisions. For this reason, the final Guidelines provide that
recommended redactions to the decision will be shared with the
appealing institution prior to publication to allow the institution to
raise any potential concern that the redactions are insufficient to
avoid its identification. If such concerns are raised, the Office and
supporting staff will work with the institution in an effort to address
any such concerns.
In addition, one commenter suggested that the FDIC's annual reports
provide anonymized data regarding the number of appeals and the
outcomes, as well as the number of appeals involving matters requiring
board attention (by subject and Region). Another commenter recommended
the FDIC periodically review and publish summary data on the Office's
decisions with appropriate redactions in order to promote transparency
and learning. The FDIC values transparency and will consider this
feedback in defining a reporting process that promotes transparency. In
addition to continuing to publish redacted decisions, the FDIC will
explore additional transparency measures, including reporting of data
on the number of appeals decided and their outcomes.
Waiver Authority
The proposal provided that the Office, with the concurrence of the
Legal Division, would have discretion to waive any provision of the
Guidelines for good cause. The final Guidelines are tailoring this
waiver authority, reflecting the status of the Office as an independent
office. Specifically, the final Guidelines state that the Office, with
the Legal Division's concurrence, may waive for good cause deadlines or
procedural requirements concerning the administration of appeals. This
is intended to provide necessary flexibility to address unusual
circumstances that may arise in handling appeals. Waiver authority will
not, however, extend to provisions such as the qualifications of
reviewing officials, the standard of review, or the types of
determinations that may be appealed, which define the basic structure
of the appellate process.
Retaliation
One commenter appreciated the FDIC's affirmation of its policy
prohibiting examiner retaliation and encouraged the FDIC to continue
monitoring for retaliation and to provide clear guidance on how to
report concerns. Another commenter believed the FDIC should provide
further clarity on the prohibition against examination retaliation.
This commenter stated that the FDIC should clearly articulate
procedures for educating examination staff about the types of action
that constitute retaliation and the associated penalties. The commenter
also recommended that any disciplinary actions taken should be
communicated to supervisory and examination staff to serve as a
deterrent.
As discussed in the proposal, the Ombudsman will exercise neutral
oversight of the supervisory process and will monitor the process for
retaliation. The FDIC appreciates the suggestions made by commenters
and remains committed to its policy on the prohibition of examiner
retaliation. Institutions should continue to contact the Ombudsman with
any concerns regarding examination retaliation, as outlined in the
Guidelines. The FDIC is adopting the provisions regarding the
prohibition on examiner retaliation as proposed.
Confidential Supervisory Information
One commenter requested the FDIC allow an institution to disclose
[[Page 3191]]
confidential supervisory information to outside counsel or third-party
advisors when considering whether to appeal a material supervisory
determination. Disclosing supervisory information to an institution's
outside counsel regarding an appeal is part of the attorney-client
relationship and is consistent with part 309 of the FDIC's regulations.
With respect to consultants or other advisers, an institution should
follow existing processes for disclosing such information.
Inspector General Review
One commenter recommended that the FDIC's Office of Inspector
General (OIG) perform a regular, formal review of the Office to
substantiate its independence, and that such findings should be
reviewed and approved by the FDIC's Board annually and made available
to the public. The FDIC OIG is an independent office that conducts
audits, evaluations, investigations, and other reviews of FDIC programs
and operations. The FDIC's Board generally does not instruct the OIG to
initiate reviews or audits.
Transition
Commenters expressed a variety of views about how the FDIC should
transition appellate review from the SARC to the new Office. One
commenter recommended the FDIC establish the Office on an expedited
basis, while another commenter recommended the FDIC provide clear
communication to institutions about the transition and provide
opportunities for institutions to give feedback. The FDIC agrees that
FDIC-supervised institutions need clear communication regarding the
transition from the SARC to the Office to understand the entity that
will hear potential supervisory appeals, and thus the FDIC will notify
the public once the Office is operational.
Examination Process
Two commenters suggested the FDIC make certain changes to the
examination process to promote transparency and fairness and strengthen
communication. One commenter encouraged the FDIC to permit institutions
to respond to adverse findings before formal issuance. Another
commenter suggested the FDIC should provide regular interim updates
from on-site examiners and subject-matter experts during the course of
an examination, with an opportunity for the institution to respond to
adverse findings and correct factual errors, plus an opportunity for
review by an independent and disinterested decisionmaker (such as the
Ombudsman). In addition, this commenter believed the supervisory
process would benefit from a more thorough, transparent explanation of
findings so that institutions can make reasoned determinations whether
to appeal. Although examination procedures are generally outside the
scope of the proposal, which focused on the supervisory appeals
process, the FDIC will consider commenters' recommendations for future
enhancements to the examination process.
Regulatory Review
The Office of Information and Regulatory Affairs (OIRA) of the
Office of Management and Budget has reviewed this proposal and
determined that it does not constitute a ``significant regulatory
action'' for purposes of Executive Order 12866.
For the reasons set out in the preamble, the Federal Deposit
Insurance Corporation's Board of Directors adopts the Guidelines for
Appeals of Material Supervisory Determinations as set forth below.
Guidelines for Appeals of Material Supervisory Determinations
A. Introduction
Section 309(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994 (Pub. L. 103-325, 108 Stat. 2160) (Riegle Act)
requires 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 are considered
and decided.
B. Reviewing Officials
The Office of Supervisory Appeals (Office) is staffed with
reviewing officials, hired for fixed terms, who have bank supervisory
or examination experience or other relevant experience. Reviewing
officials consider and decide appeals submitted to the Office in panels
of three reviewing officials selected by the Office who have no
conflicts of interest with respect to the appeal or the parties to the
appeal. At least one reviewing official on a panel must have bank
supervisory or examination experience, and at least one must have
industry experience (generally defined as having worked at a bank or
for a company that provides services to banks or banking-related
services).
In the event a three-member panel cannot be formed, due to one or
more vacancies or due to the unavailability of one or more reviewing
officials, the FDIC Chairperson may (1) authorize the Office to conduct
business temporarily with fewer than three members or (2) appoint one
or more officials to serve as reviewing officials on a temporary basis,
for a time period not to exceed 120 days. In the latter case, a
temporary reviewing official may still participate in the final
decision of any appeal in which the appeal is received and a hearing is
held before the end of the 120-day period but the final decision is not
issued until after the 120-day period ends.
Background information on the Office's reviewing officials is
published on the FDIC's website. Current government employees with
relevant experience may serve on a part-time basis. However, current
FDIC employees are not eligible. Current employees of insured
depository institutions or their affiliates are also not eligible.
C. Institutions Eligible To Appeal
The Guidelines apply to the insured depository institutions that
the FDIC supervises (i.e., insured State nonmember banks, insured
branches of foreign banks, and state savings associations), and to
other insured depository institutions for 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.
(1) Material supervisory determinations include:
(a) CAMELS ratings under the Uniform Financial Institutions Rating
System;
(b) IT ratings under the Uniform Rating System for Information
Technology;
(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;
[[Page 3192]]
(i) Determinations relating to the appropriateness of loan loss
reserve provisions;
(j) Classifications of loans and other assets in dispute the amount
of which, individually or in the aggregate, exceeds 10 percent of an
institution's total capital;
(k) Determinations relating to violations of a statute or
regulation, including the severity of a violation, that may affect 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 Act (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 Federal
Deposit Insurance Act (FDI Act), 12 U.S.C. 1829 (which are contained in
12 CFR part 308, subparts D, L, and M, respectively), if the filing was
originally denied by the Director, Deputy Director, or Associate
Director of the Division of Depositor and Consumer Protection (DCP),
the Division of Risk Management Supervision (RMS), or the Division of
Complex Institution Supervision and Resolution (CISR);
(n) Decisions to initiate informal enforcement actions (such as
memoranda of understanding) and determinations regarding an
institution's level of compliance with an informal enforcement action;
(o) Determinations regarding the institution's level of compliance
with a formal enforcement action; however, if the FDIC determines that
the lack of compliance with an existing formal enforcement action
requires an additional formal enforcement action, the proposed new
enforcement action is not appealable;
(p) Matters requiring board attention or matters requiring
attention;
(q) Determinations regarding an institution's compliance with
conditions imposed through the supervision or application processes;
and
(r) Any other supervisory determination (unless otherwise not
eligible for appeal) that may affect the capital, earnings, operating
flexibility, or capital category for prompt corrective action purposes
of an institution, or that otherwise affects the nature and level of
supervisory oversight accorded an institution.
(2) Material supervisory determinations do not include:
(a) Decisions to appoint a conservator or receiver for an insured
depository institution, and other decisions made in furtherance of the
resolution or receivership process, including but not limited to
determinations pursuant to 12 CFR parts 370, 371, and 381, and 12 CFR
360.10 of the FDIC's rules and regulations;
(b) Decisions to take prompt corrective action pursuant to section
38 of the FDI Act, 12 U.S.C. 1831o, although the determinations upon
which such actions are based (such as loan classifications) are
appealable, provided they otherwise qualify;
(c) Determinations for which other appeals procedures exist (such
as determinations of deposit insurance assessment risk classifications
and payment calculations);
(d) Formal enforcement actions and decisions, which for purposes of
these Guidelines include a referral to the Attorney General for
violations of the Equal Credit Opportunity Act (ECOA) or a notice to
the Secretary of Housing and Urban Development (HUD) for violations of
ECOA or the Fair Housing Act (FHA); and
(e) Facts and circumstances underlying pending or proposed formal
enforcement actions for which the institution has been provided written
notice that the action is based on: (1) unsafe or unsound practices for
purposes of section 8 of the Federal Deposit Insurance Act; (2)
violations of laws or regulations relating to the institution's anti-
money laundering and countering the financing of terrorism (AML/CFT)
program or the institution's sanctions compliance; or (3) violations
for which an institution fails to sign an agreement to toll a relevant
statute of limitations, if requested to do so by the FDIC. Notice under
this paragraph does not suspend or otherwise affect a pending request
for review or appeal that was previously submitted.
(3) Additional appeal rights:
(a) In the case of notice of an enforcement action under paragraph
(2)(e), the FDIC must issue an Order of Investigation, issue a Notice
of Charges, or provide the institution with a draft consent order
within 120 days of such a notice, or the most recent submission of
information from the institution, whichever is later, or appeal rights
will be made available pursuant to these Guidelines. If the FDIC timely
provides the institution with a draft consent order and the institution
rejects the draft consent order in writing, the FDIC must issue an
Order of Investigation or a Notice of Charges within 90 days from the
date on which the institution rejects the draft consent order in
writing or appeal rights will be made available pursuant to these
Guidelines. The FDIC may extend these periods, with the approval of the
FDIC Chairperson, after the FDIC notifies the institution that the
relevant Division Director is seeking formal authority to take an
enforcement action.
(b) Written notification will be provided to the institution within
10 days of a determination that appeal rights have been made available
under this section.
(c) The relevant FDIC Division and the institution may mutually
agree to extend the timeframes in paragraph (a) of this section if the
parties deem it appropriate.
(4) If the FDIC provides an institution written notice of a
proposed formal enforcement action other than an action under paragraph
(2)(e), any supervisory appeal involving the facts and circumstances
underlying the proposed formal enforcement action will be considered on
an expedited basis under a schedule determined by the Office.
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 the appropriate Regional Office is encouraged, but seeking
such a resolution is not a condition to filing a request for review
with the appropriate Division, either DCP, RMS, or CISR, or to filing a
subsequent appeal with the Office under these Guidelines. An
institution may also avail itself of the Ombudsman to attempt to reach
an agreeable outcome.
F. Filing a Request for Review With the Appropriate Division
(1) An institution may file a request for review of a material
supervisory determination with the Division that made the
determination, either the Director, DCP, the Director, RMS, or the
Director, CISR (Director or Division Director), 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. Requests for review also may be
submitted electronically. To ensure
[[Page 3193]]
confidentiality, requests should be submitted through
<a href="http://securemail.fdic.gov">securemail.fdic.gov</a>, directing the message to
<a href="/cdn-cgi/l/email-protection#bdf9d4cfd8dec9d2cfefd8cbd4d8caefd8ccc8d8cec9fddbd9d4de93dad2cb"><span class="__cf_email__" data-cfemail="cc88a5bea9afb8a3be9ea9baa5a9bb9ea9bdb9a9bfb88caaa8a5afe2aba3ba">[email protected]</span></a>. 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 or senior
management has considered the merits of the request and has authorized
that it be filed. Senior management is defined as the core group of
individuals directly accountable to the board of directors for the
sound and prudent day-to-day management of the institution. If an
institution's senior management files an appeal, it must inform the
board of directors of the substance of the appeal before filing and
keep the board of directors informed of the appeal's status.
(2) Within 45 calendar days after receiving a request for review
described in paragraph (1) of this section, the Division Director will:
(a) Review the appeal, considering whether the material supervisory
determination is consistent with applicable laws, regulations, and
policy, make his or her own supervisory determination without deferring
to the judgments of either party, and issue a written determination on
the request for review, setting forth the grounds for that
determination; or
(b) Refer the request for review to the Office for consideration as
an appeal under Section G and provide written notice to the institution
that the request for review has been referred to the Office.
(3) No appeal to the Office is allowed unless an institution has
first filed a timely request for review with the appropriate Division
Director.
(4) In any decision issued pursuant to paragraph (2)(a) of this
section, the Director will inform the institution of the 30-day time
period for filing with the Office and will provide the mailing and
email addresses for any appeal the institution may wish to file.
(5) The Division Director may request guidance from the Legal
Division as to procedural or other questions relating to any request
for review.
G. Appeal to the Office
An institution that does not agree with the written determination
rendered by the Division Director may appeal that determination to the
Office within 30 calendar days after the date of receipt of that
determination. Failure to file within the 30-day time limit may result
in denial of the appeal by the Office.
1. Filing With the Office
An appeal to the Office will be considered filed if the written
appeal is received by the FDIC within 30 calendar days after the date
of receipt of the Division Director's written determination or if the
written appeal is placed in the U.S. mail within that 30-day period. An
acknowledgment of the appeal will be provided to the institution, and
copies of the institution's appeal will be provided to the Office of
the Ombudsman and the appropriate Division Director. Copies of all
relevant materials related to an appeal will be provided to the Office
of the Ombudsman.
2. Contents of Appeal
The appeal should be labeled to indicate that it is an appeal to
the Office and should contain the name, address, and telephone number
of the institution and any representative, as well as a copy of the
Division Director's determination being appealed. If oral presentation
is sought, that request should be included in the appeal. If expedited
review is requested, the appeal should state the reason for the
request. Only matters submitted to the appropriate Division Director in
a request for review may be appealed to the Office. Evidence not
presented for review to the Division Director is generally not
permitted; such evidence may be submitted to the Office only if
approved by the reviewing panel and with a reasonable time for the
Division Director to review and respond. The institution should set
forth all of the reasons, legal and factual, why it disagrees with the
Division Director's determination. Nothing in this appellate process
shall create any discovery or other such rights.
3. 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.
4. Submission From the Division Director
The Ombudsman and the Division Director may submit views regarding
the appeal to the Office within 30 calendar days of the date on which
the appeal is received by the Office.
5. Oral Presentation
The Office will, if a request is made by the institution or by FDIC
staff, allow an oral presentation. The panel may hear oral
presentations in person, telephonically, electronically, or through
other means agreed upon by the parties. If an oral presentation is
held, the institution and FDIC staff will be allowed to present their
positions on the issues raised in the appeal and to respond to any
questions from the panel.
6. Consolidation, Dismissal, and Rejection
Appeals based upon similar facts and circumstances may be
consolidated for expediency. An appeal may be dismissed by the Office
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. The Office will decline to consider an appeal if the
institution's right to appeal is not yet available under section D(3),
above.
7. Scope of Review and Decision
The panel is an appellate body and makes independent supervisory
determinations. The panel reviews the appeal for consistency with the
policies (including regulations, guidance, policy statements,
examination manuals, and other written publications) of the FDIC and
the overall reasonableness of, and the support offered for, the
positions advanced. The panel makes its own supervisory determination
without deferring to the judgments of either party. The panel's review
is 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 is given to any facts or
circumstances that occur or corrective action taken after the
determination was made. The panel may not consider any aspect of an
appeal that seeks to change or modify existing FDIC rules or policy,
and may not overturn a material supervisory determination if the result
of such a ruling would be inconsistent with the policies of the FDIC.
The panel will notify the institution, in writing, of its decision
concerning the disputed material supervisory determination(s) within 45
days after the date the panel meets to consider the appeal, which
meeting will be held within 90 days after either the date of the filing
of the appeal or the date that the Division Director refers the appeal
to the Office.
[[Page 3194]]
8. Role of the Legal Division
The Legal Division provides counsel to the Office and generally
advises the Office on FDIC policies and rules. This function will not
include any staff involved in making any supervisory determinations
being appealed. If an appeal seeks to change or modify FDIC policies or
rules, or raises a policy matter of first impression, the Legal
Division will provide notice, along with a written explanation, to the
Office, and then, after such notice is provided, refer the matter to
the Chairperson's Office.
The Legal Division reviews decisions of the Office for consistency
with applicable laws, regulations, and policies of the FDIC prior to
their issuance. If the Legal Division determines that a decision is
contrary to a law, regulation, or policy of the FDIC, the Legal
Division will notify the Chairperson's Office of the matter, and the
Office will revise the decision to conform with relevant laws,
regulations, or policies.
If an appeal raises procedural questions, including whether issues
raised by the institution are eligible for review, the appropriate
Division Director or the Office will refer such matters to the Legal
Division for resolution, in consultation with the Office. The Legal
Division may determine whether an appeal, or an issue raised in an
appeal, is ineligible for review. The Legal Division will provide
notice, with a written explanation, to the Office and the appealing
institution of the resolution of the procedural request or if an
appeal, or an issue raised in an appeal, is deemed ineligible for
review.
9. Sharing of Appeal Materials
Materials concerning an appeal submitted to the Office by either
the relevant Division or an appealing institution, including any
communication concerning the substance of appeal between the Office and
supervisory staff, will be shared with the other party to the appeal,
subject to applicable legal limitations on disclosure, on a timely
basis. The Office will provide the reasons for any redactions to the
appealing institution. The Ombudsman will verify that both parties have
received these materials.
H. Publication of Decisions
Decisions of the Office are published as soon as practicable, and
the published decisions are redacted to avoid disclosure of the name of
the appealing institution and any information exempt from disclosure
under the Freedom of Information Act and the FDIC's document disclosure
regulations found in 12 CFR part 309. Proposed redactions to decisions
of the Office will be shared with the appealing institution prior to
publication to allow the institution to raise any potential concern
that the redactions are insufficient to avoid its identification.
Published SARC or Office decisions may be cited as precedent in appeals
to the Office. Annual reports on the Office's decisions and Division
Directors' decisions with respect to institutions' requests for review
of material supervisory determinations also will be published.
I. Appeal Guidelines Generally
Appeals to the Office are governed by these Guidelines. The Office,
with the concurrence of the Legal Division, retains discretion to waive
for good cause deadlines or procedural requirements concerning the
administration of appeals under these Guidelines. Supplemental rules
governing the Office's operations may be adopted.
Institutions may request extensions of the time period for
submitting appeals under these Guidelines from either the appropriate
Division Director or the Office, as appropriate. If a filing under
these Guidelines is due on a Saturday, Sunday, or a Federal holiday,
the filing may be made on the next business day.
Institutions may request a stay of a supervisory action or
determination from the Division Director while an appeal of that
determination is pending. The request must be in writing and include
the reason(s) for the stay. The Division Director has discretion to
grant a stay and will generally decide whether to grant a stay within
21 days of receiving the institution's request, providing the
institution with the reason(s) for his or her decision in writing,
which should include a weighing of potential harms. A stay may be
granted subject to conditions, including time limitations, where
appropriate.
J. Limitation on Agency Ombudsman
Except as otherwise provided by these Guidelines, the subject
matter of a material supervisory determination for which either an
appeal to the Office has been filed, or a final Office decision issued,
is not eligible for consideration by the Ombudsman.
K. 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, DCP; the Director, RMS; or the
Director, CISR, as appropriate, 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 Office, the
Office will notify the institution and the State regulatory authority
of its decision. Once the Office has issued its determination, any
other issues that may remain between the institution and the State
regulatory authority will be left to those parties to resolve.
L. Effect on Supervisory or Enforcement Actions
Except as provided in these Guidelines, 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 during the appeal or affect the FDIC's authority to
take any supervisory or enforcement action against that institution.
M. 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 that
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.
N. Prohibition on Examiner Retaliation
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. In light of this important principle, the Ombudsman will
monitor the supervision process following an institution's submission
of an appeal under these Guidelines. The Ombudsman will report to the
Board on these matters periodically.
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
[[Page 3195]]
retaliation may file a complaint with the Director, Office of the
Ombudsman, Federal Deposit Insurance Corporation, 3501 Fairfax Drive,
Suite E-2022, Arlington, Virginia 22226, 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
appropriate Division Director to resolve the allegation of retaliation.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, January 22, 2026.
Jennifer M. Jones,
Deputy Executive Secretary.
[FR Doc. 2026-01433 Filed 1-23-26; 8:45 am]
BILLING CODE 6714-01-P
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</html>Indexed from Federal Register on January 26, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.