Home/Federal/Federal Register/2026-03086

Proposed Rule2026-03086

Bank Appeals Process

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

February 17, 2026

Issuing agencies

Treasury DepartmentComptroller of the Currency

Abstract

Full Text

<html>
<head>
<title>Federal Register, Volume 91 Issue 31 (Tuesday, February 17, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 31 (Tuesday, February 17, 2026)]
[Proposed Rules]
[Pages 7163-7180]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03086]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 4

[Docket ID OCC-2026-0001]
RIN 1557-AF48

Bank Appeals Process

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Office of the Comptroller of the Currency (OCC) is issuing
a notice of proposed rulemaking to establish revised procedures and
policies for appeals of material supervisory determinations by OCC
supervised entities. The proposed changes would reflect the OCC's
experience administering the bank appeals process and are intended to
enhance the independence and efficiency of the appeals function.

DATES: Comments must be received on or before April 20, 2026.

ADDRESSES: Comments should be directed to the agency as follows:
Commenters are encouraged to submit comments through the Federal
eRulemaking Portal. Please use the title ``Bank Appeals Process'' to
facilitate the organization and distribution of the comments. You may
submit comments by any of the following methods:
<bullet> Federal eRulemaking Portal--<a href="http://Regulations.gov">Regulations.gov</a>: Go to <a href="https://regulations.gov/">https://regulations.gov/</a>. Enter Docket ID ``OCC-2026-0001'' in the Search Box
and click ``Search.'' Public comments can be submitted via the
``Comment'' box below the displayed document information or by clicking
on the document title and then clicking the ``Comment'' box on the top-
left side of the screen. For help with submitting effective comments,
please click on ``Commenter's Checklist.'' For assistance with the
<a href="http://Regulations.gov">Regulations.gov</a> site, please call 1-866-498-2945 (toll free) Monday-
Friday, 9 a.m.-5 p.m. EST, or email <a href="/cdn-cgi/l/email-protection#70021517051c1104191f1e0318151c001415031b301703115e171f06"><span class="__cf_email__" data-cfemail="a7d5c2c0d2cbc6d3cec8c9d4cfc2cbd7c3c2d4cce7c0d4c689c0c8d1">[email&#160;protected]</span></a>.
<bullet> Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, Suite 1E-216, Washington, DC 20219.
<bullet> Hand Delivery/Courier: 400 7th Street SW, Suite 1E-216,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
Docket ID ``OCC-2026-0001'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the <a href="http://Regulations.gov">Regulations.gov</a> website without change, including any business or
personal information provided such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this action by the following method:
<bullet> Viewing Comments Electronically--<a href="http://Regulations.gov">Regulations.gov</a>: Go to
<a href="https://regulations.gov/">https://regulations.gov/</a>. Enter Docket ID ``OCC-2026-0001'' in the
Search Box and click ``Search.'' Click on the ``Documents'' tab and
then the document's title. After clicking the document's title, click
the ``Document Comments'' tab. Comments can be viewed and filtered by
clicking on the ``Sort By'' drop-down on the right side of the screen
or the ``Refine Results'' options on the left side of the screen.
Supporting materials can be viewed by clicking on the ``Documents''
tab. Click on the ``Sort By'' drop-down on the right side of the screen
or the ``Refine Documents Results'' options on the left side of the
screen checking the ``Supporting & Related Material'' checkbox. For
assistance with the <a href="http://Regulations.gov">Regulations.gov</a> site, please call 1-866-498-2945
(toll free) Monday-Friday, 9 a.m.-5 p.m. EST, or email
<a href="/cdn-cgi/l/email-protection#72001715071e13061b1d1c011a171e0216170119321501135c151d04"><span class="__cf_email__" data-cfemail="f1839496849d9085989e9f8299949d819594829ab1968290df969e87">[email&#160;protected]</span></a>.
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.

FOR FURTHER INFORMATION CONTACT: Joanne Phillips, Counsel, or Daniel
Prieve, Counsel, Chief Counsel's Office, (202) 649-5490, Office of the
Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.
If you are deaf, hard of hearing or have a speech disability, please
dial 7-1-1 to access telecommunications relay services.

SUPPLEMENTARY INFORMATION:

I. Background and Policy Objectives

A. History of the OCC Appeals Process for Material Supervisory
Determinations

The OCC first created a process for the appeal of material
supervisory determinations in 1993 under Comptroller Eugene Ludwig.\1\
In 1994, Congress passed the Riegle Community Development and
Regulatory

[[Page 7164]]

Improvement Act of 1994 \2\ (the Riegle Community Act or the Act) which
codified the requirement for the OCC, the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board of Governors (Board), and
the National Credit Union Administration to have internal appeals
processes for appeals of material supervisory determinations.\3\ The
Riegle Community Act based its requirements on the OCC's 1993 process
for appeals, and thus the OCC only needed to make minor changes to
conform its process to the new requirements.\4\ The OCC issued proposed
guidance for public comment in 1994 and adopted its final guidance in
1996.\5\ The OCC has amended its appeals process three times since
then,\6\ but these amendments did not make significant structural
changes to the process.
---------------------------------------------------------------------------

\1\ OCC Banking Circular 272, ``National Bank Appeals Process''
(June 11, 1993).
\2\ Public Law 103-325, section 309, 108 Stat. 2160, 2218.
\3\ 12 U.S.C. 4806.
\4\ OCC, ``Independent Regulatory Appeals Process,'' 59 FR 66067
(December 22, 1994).
\5\ OCC, ``Independent Regulatory Appeals Process,'' 59 FR 66067
(December 22, 1994); OCC, ``Independent Regulatory Appeals
Process,'' 61 FR 7042 (1996).
\6\ OCC Bulletin 2002-9, ``National Bank Appeals Process''
(February 25, 2002); OCC Bulletin 2011-44, ``Bank Appeals Process''
(November 1, 2011); OCC Bulletin 2013-15, ``Bank Appeals Process:
Guidance for Bankers'' (June 7, 2013).
---------------------------------------------------------------------------

B. Statutory Requirements for Appeals Process

The Riegle Community Act requires that the OCC establish an
independent intra-agency appellate process to review material
supervisory determinations made with respect to insured depository
institutions that the agency supervises.\7\ It further requires that in
establishing this independent appellate process, the OCC must ensure
that ``any appeal of a material supervisory determination by an insured
depository institution or insured credit union is heard and decided
expeditiously'' and that ``appropriate safeguards exist for protecting
the appellant from retaliation by agency examiners.'' \8\ The Act
clarifies that independent appellate process means ``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.'' \9\ Finally, the Act requires that the OCC appoint an
ombudsman to act as a liaison between the OCC and any affected person
with respect to any problem such party may have in dealing with the
agency resulting from regulatory activities and to assure that
safeguards exist to encourage complainants to come forward and preserve
confidentiality.\10\
---------------------------------------------------------------------------

\7\ 12 U.S.C. 4806(a).
\8\ 12 U.S.C. 4806(b).
\9\ 12 U.S.C. 4806(f)(2).
\10\ 12 U.S.C. 4806(d).
---------------------------------------------------------------------------

C. Current Process

The OCC's current appeals process for supervisory decisions and
actions is articulated in OCC Bulletin 2013-15, ``Bank Appeals Process:
Guidance for Bankers'' (2013 Guidance). It provides that the Ombudsman
operates independently from the bank supervision process and reports
directly to the Comptroller of the Currency. The Ombudsman may report
weaknesses in OCC policy to the Comptroller and make recommendations
regarding changes in OCC policy. The 2013 Guidance emphasizes that the
OCC's ``core policy'' for dispute resolution is to resolve disputed
items in an informal, amicable manner outside of the formal appeals
process. However, the 2013 Guidance further notes that if a bank cannot
resolve a dispute through these means, the bank is encouraged to seek a
further review of the OCC decision in dispute through the formal
appeals process as described in the 2013 Guidance.
Under the 2013 Guidance, banks can appeal any agency supervisory
decision or action to the Ombudsman, with several specific exceptions.
Appealable matters include, but are not limited to:
[ssquf] Examination ratings.
[ssquf] Adequacy of the allowance for credit losses methodology.
[ssquf] Individual loan ratings.
[ssquf] Violations of law.
[ssquf] Shared National Credit (SNC) decisions.
[ssquf] Fair-lending-related decisions, including referrals to the
U.S. Department of Justice or U.S. Department of Housing and Urban
Development.
[ssquf] Licensing decisions.
[ssquf] Material supervisory determinations such as matters
requiring attention, compliance with enforcement actions, or other
conclusions in a report of examination (ROE).
The 2013 Guidance also provides specific exceptions from matters
that are appealable. Most of these matters have other appeals processes
for them (e.g., enforcement-related actions), are not final
conclusions, or are time sensitive and cannot be easily undone once
they are completed (e.g., the appointment of receivers or
conservators). These specific exemptions are:
[ssquf] Appointments of receivers and conservators.
[ssquf] Preliminary examination conclusions communicated to the
bank before a final ROE or before other written communication from the
OCC is issued.
[ssquf] Any formal enforcement-related actions, including, but not
limited to, decisions to (a) seek the issuance of a formal agreement or
a cease-and-desist order, or the assessment of a civil money penalty
pursuant to section 8 of the Federal Deposit Insurance Act, Public Law
81-797 (FDIA) (12 U.S.C. 1818); (b) take prompt corrective action
pursuant to section 38 of the FDIA (12 U.S.C. 1831(o)); (c) issue a
safety and soundness order pursuant to section 39 of the FDIA (12
U.S.C. 1831p-1); or (d) commence formal investigations pursuant to 12
U.S.C. 481, 1464(d), 1818(n), and 1820(c).
[ssquf] Formal and informal rulemakings pursuant to the
Administrative Procedure Act, Public Law 79-404 (APA) (5 U.S.C. 500 et
seq.).
[ssquf] Decisions or recommended decisions following formal and
informal adjudications conducted pursuant to the APA (5 U.S.C. 701 et
seq.).
[ssquf] Requests for agency records or information under the
Freedom of Information Act covered by 5 U.S.C. 552 or 12 CFR part 4 and
submission of information to the OCC that is governed by this statute
and this regulation.\11\
---------------------------------------------------------------------------

\11\ These issues already have separate appeals processes. See
12 CFR 4.15(d).
---------------------------------------------------------------------------

[ssquf] Decisions to disapprove directors and senior executive
officers pursuant to section 914 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, Public Law 101-73 (12 U.S.C.
1831i).\12\
---------------------------------------------------------------------------

\12\ The appeals process for such decisions is provided by 12
CFR 5.51(f).
---------------------------------------------------------------------------

[ssquf] Any other agency decisions that are subject to judicial
review other than those described in the appealable matters listed
above.
Under the 2013 Guidance, while banks may not appeal a decision by
the supervisory office to pursue a formal enforcement-related action,
banks may appeal any conclusion in an ROE. However, in such
circumstances, the appeal is limited to a consideration of whether the
examiners appropriately applied agency policies and standards. If a
bank disagrees with the agency decision to pursue a formal enforcement
action, the bank can contest the action through the administrative
process. Once a bank has entered into a formal enforcement action,
conclusions regarding the bank's level of compliance with the formal
enforcement action are an appealable matter. However, if the OCC
determines that the lack of compliance with an existing enforcement
action requires an

[[Page 7165]]

additional enforcement action, the proposed new enforcement action is
not appealable, as the bank can contest the action through
administrative adjudication.
Banks may seek review of appealable matters by filing a formal
appeal with either the appropriate Deputy Comptroller or the Ombudsman.
Banks requesting an appeal must file their appeal within 60 days of
receipt of the written agency decision in dispute. A formal appeal to
the Deputy Comptroller must be filed with the Deputy Comptroller
responsible for the division that issued the decision or action in
dispute.
Banks filing an appeal with the appropriate Deputy Comptroller must
submit information in writing fully describing the matter in dispute
and the basis for the bank's disagreement. The appeal must include the
supervisory standards that the bank deems were inappropriately applied
by OCC officials. To ensure that a bank's board of directors supports
the appeal, the bank's president or chief executive officer must submit
the appeal and include in the submission the board's approval of the
decision to appeal.
Upon receiving the appeal, the Deputy Comptroller is required to
contact the bank to discuss the appeals process and to ensure that the
Deputy Comptroller has all the information needed. Within seven days of
receiving a formal appeal, the Deputy Comptroller shall notify the bank
in writing whether the appeal has been accepted. If the Deputy
Comptroller directly or indirectly participated in making the decision
under review or directly or indirectly reports to the agency official
who made the decision under review, the Deputy Comptroller must
transfer the appeal to the Ombudsman after advising the appellant. If
the Deputy Comptroller accepts an appeal, that official contacts the
OCC management official(s) involved in the dispute to submit a written
response to the appeal. In the absence of any extenuating
circumstances, the Deputy Comptroller will issue an appeals decision
letter within 45 days. If a bank disagrees with the response from the
Deputy Comptroller, the bank may further appeal the matter to the
Ombudsman within 15 days of receiving the decision letter from the
Deputy Comptroller.
The Ombudsman can hear matters filed directly with the Ombudsman's
office, appealed from a decision of a Deputy Comptroller, or appealed
through an alternative decision making process such as the SNC process
or the fair lending referral process. Similar to an appeal filed with a
Deputy Comptroller, an appeal filed directly with the Ombudsman must
include information in writing fully describing the matter in dispute
and the basis for the bank's disagreement and the bank's president or
chief executive officer must submit the appeal and include in the
submission the bank board's approval of the action. The appeal must
include the supervisory standards that the bank deems were
inappropriately applied. Upon receiving the appeal, the Ombudsman will
contact the bank to discuss the appeals process and supervisory
standards related to the issue in dispute and to ensure that the
Ombudsman has all relevant materials. Within seven days of receiving a
formal appeal, the Ombudsman will notify the bank whether the appeal
has been accepted. If the Ombudsman accepts an appeal, he or she will
contact the OCC management officials involved in the dispute to submit
a written response to the appeal. In the absence of any extenuating
circumstances, the Ombudsman will issue a written response to the
appeal within 45 days.
For SNC decisions, banks may appeal to the Deputy Comptroller for
Large and Global Financial Institutions. The appeal must be filed
within 14 days of notification of the decision. Senior bank management
must explain why it disagrees with the SNC decision. The SNC appeals
letter must identify the credit, the commitment amount, the
disposition, the basis for the bank's disagreement, and any
documentation that supports management's position on the matters in
dispute. The Deputy Comptroller for Large and Global Financial
Institutions will forward a copy of the SNC appeal to the examiner in
charge of the agent bank, who must provide his or her formal comments
and opinions to the appropriate Deputy Comptroller for Large and Global
Financial Institutions within 10 days of receipt of the appeal. An
interagency panel consisting of senior credit examiners that are
independent of the original voting team will evaluate the appeal and
recommend a decision to senior management. Large and Global Financial
Institutions normally concludes the entire SNC appeals process within
30 days of receipt. If a bank disagrees with the decision rendered
through the SNC appeals process, it may further appeal the matter to
the Ombudsman within 30 days of receiving the decision letter.
For matters related to fair lending, when the OCC has made a
determination that there is reason to believe an instance or pattern or
practice of discrimination exists that will result in either a referral
to the U.S. Department of Justice or notification to the U.S.
Department of Housing and Urban Development, the relevant Senior Deputy
Comptroller will provide written notice to the bank of this finding.
Banks may file an appeal to the Ombudsman for reconsideration of this
decision within 15 days of the date of this notice.
Currently, as a general matter, decisions and actions in dispute
are not stayed during the pursuit of an appeal. In appropriate
circumstances, with the prior consent of the Comptroller, the Ombudsman
or the appropriate OCC official, upon written request of a bank, may
relieve the bank of the obligation to comply with a supervisory
decision or action while the supervisory appeal is pending.
After the appropriate OCC official renders a decision on a formal
appeal, the Ombudsman will contact the bank to ask whether the bank
believes OCC examiners have taken actions against the bank in
retaliation for its appeal. The Ombudsman will contact bank management
both 60 days after the date of the decision letter and 60 days after
completion of the first examination of the appellant bank following its
appeal. A bank may also contact the Ombudsman any time during or after
the appeal. The Ombudsman will investigate any complaints of
retaliation, and, in the absence of extenuating circumstances, the
Ombudsman will complete the investigation within 30 days. To prevent
future retaliation, the Ombudsman may recommend to the Comptroller that
the next examination of the bank exclude personnel involved in the
ruling appealed by the bank.

D. Criticism of Current Process

Though the OCC's appeals process was an innovative step toward fair
treatment of regulated institutions at the time of its adoption, over
the subsequent 30 years several potential shortcomings have been
identified in the process. First, few formal appeals are being brought.
Though this fact could indicate that the OCC's focus on informal
negotiation of grievances is resolving most issues, the OCC is
concerned that this low rate of appeals could be attributable to a
sense on the part of OCC supervised entities that the appeals process
is not structured to guarantee fair consideration of the matters
appealed or a fear that a formal appeal could damage the bank's
relationship with its regulator. Indeed, in 2024, the OCC supervised
1,040 institutions and only 11 appeals were filed with the Ombudsman,
suggesting that only approximately one percent of

[[Page 7166]]

OCC supervised institutions availed themselves of the OCC appeals
process. Of those appeals, 10 were upheld by the Ombudsman and one was
a split decision between the supervisory office and the bank.
An underlying reason for this perception could be that the OCC has
not clearly articulated a de novo standard of review for appeals. While
other Federal banking agencies such as the FDIC and the Board have
clearly articulated standards of review that provide for more even
deliberation,\13\ the OCC's guidance has remained silent on whether the
Ombudsman and Deputy Comptroller will apply a de novo standard of
review or whether it will defer to the judgment of the supervisory
office and only overruling findings where there is clear error. This
lack of a clear standard, coupled with the fact that the OCC appeals
process finds in favor of the supervisory office the majority of the
time, has led to a perception that filing a formal appeal is not worth
the resources and risk of retaliation because there is a low chance of
success. This is especially true in regard to certain types of
challenges, such as those regarding referrals to the Department of
Housing and Urban Development and the Department of Justice of
potential fair lending violations. For instance, between 2017 and 2024,
the OCC received 12 appeals of such fair lending referrals, and it
upheld the supervisory office's decision in every appeal under the
current silent standard of review. The silent standard of review also
appears to have influenced the outcomes of appeals of shared national
credit decisions. At the first appeal level for SNCs, which consists of
an interagency panel of three senior credit examiners, between 2021 and
2024 there were 30 appeals of SNC decisions. Of these appeals,
approximately 80 percent were upheld by the interagency panel of three
senior credit examiners.
---------------------------------------------------------------------------

\13\ FDIC, ``Guidelines for Appeals of Material Supervisory
Determinations,'' 90 FR 33944 (July 18, 2025), stating that ``The
FDIC has previously noted that this may be considered a de novo
standard of review.'' Federal Reserve System, ``Internal Appeals
Process for Material Supervisory Determinations and Policy Statement
Regarding the Ombudsman for the Federal Reserve System,'' 85 FR
15177 (March 17, 2020), explaining that the first appeals panel
would apply a de novo standard of review and the final review panel
will consider whether the decision of the initial review panel is
reasonable, though it will not apply a de novo standard of review.
---------------------------------------------------------------------------

While it is difficult to create a clear statistic for appeals that
combine multiple questions of law and policy into one appeal because
the Ombudsman often issues split decisions on such appeals, finding
partially in favor of the bank and partially in favor of the OCC, there
has been a public perception regarding these appeals as well that the
OCC wins the majority of the time because the standard of review does
not give appellants a fair chance to challenge the OCC's original
supervisory decision.
Thus, there is evidence that the current appeals process's lack of
a clearly articulated standard of review and the consequently high
percentage of appeals that are found in favor of the OCC is creating a
perception among OCC supervised entities that challenging material
supervisory determinations, especially in certain areas, will not be
fruitful. This perception may be discouraging supervised entities from
bringing formal appeals.

II. Description of the Proposed Rule and Changes

A. Objectives of Rulemaking and Changes

The purpose of the proposed rulemaking is to ensure that the OCC's
process for appeals of material supervisory determinations provides a
meaningful opportunity for supervised entities to challenge OCC
decisions and actions. These proposed changes are designed to enhance
the independence of the appeals process and the transparency of the
OCC's decision-making standards with the goal of increasing regulated
entities' confidence in the appeals process and their protections
against retaliation for using the process while affording the public an
opportunity to provide comments on changes to the process.

B. Proposed Appeals Process

In general, the appeals process is an informal process that is not
subject to the adjudicative provisions of the APA (5 U.S.C. 554, 556-
557). Even if the OCC adopts the proposed rule, the OCC would still
retain its current policy concerning dispute resolution, which is to
resolve disputed issues in an informal, amicable manner. However, if
supervised entities cannot resolve disagreements through discussion,
they are encouraged to seek a further review of disputed OCC decisions
through the OCC's formal appeals process. The appeals process in the
proposed rule is detailed below.

C. Definitions

The proposed rule would provide definitions for the key terms used.
First, the OCC is proposing to define ``Appeals Board'' to mean a panel
consisting of the chief national bank examiner and two term appointees.
However, the OCC invites comments on how the Appeals Board could be
composed. For instance, the Appeals Board could also include the
Ombudsman or the Chief Counsel. The term appointees, if that option is
selected, would be individuals with relevant supervisory experience
gained either from working with a financial regulator or from working
for a financial institution, law firm, consulting firm, trade group, or
other similar organization.\14\ Under the proposal, current OCC
employees would not be eligible to serve as term appointees to the
Appeals Board, though the OCC is also considering alternatives whereby
OCC employees from reporting lines separate from the one that rendered
the supervisory determination may serve on the Appeals Board. The OCC
invites comment on all of these options and suggestions for other ways
to compose the Appeals Board.
---------------------------------------------------------------------------

\14\ A person will be considered to have such required expertise
if the person has significant executive, professional, educational,
or regulatory experience in banking supervision.
---------------------------------------------------------------------------

The OCC is proposing to define ``de novo standard of review'' to
mean a standard of review that is not deferential to either party and
that does not defer to the determinations of either party. De novo
standard of review means that the review does not defer to the previous
decision but freely considers the matter anew, as if no decision had
been rendered below, on the materials in the review record.\15\ This
standard would be designed to bolster confidence in the fairness and
independence of the appeals process. The OCC anticipates that both the
appellant and the supervisory office involved in the initial decision
will still submit arguments in support of their position to the Appeals
Board, similar to the current process, but the arguments submitted by
both parties will be weighed evenly.
---------------------------------------------------------------------------

\15\ See Dawson v. Marshall, 561 F.3d 930, 933 (9th Cir. 2009).
---------------------------------------------------------------------------

The OCC is proposing to define ``substantively involved'' to mean
someone that directly approved, advised on, or recommended the decision
being appealed or a determination underlying the decision being
appealed.
The OCC is proposing to define ``supervised entity'' to mean an
entity for which the OCC makes material supervisory determinations.
This includes national banks, Federal savings associations, U.S.
agencies or branches of a foreign bank, and permitted payment
stablecoin issuers and foreign payment stablecoin issuers subject to
the OCC's regulatory authority. An

[[Page 7167]]

institution-affiliated party of such an entity that is directly
affected by an informal enforcement action may also appeal the informal
enforcement action. This definition is intentionally broader than the
mandate in the Reigle Community Act, which only covers insured
depository institutions and insured credit unions. The OCC is proposing
this broad definition because it believes that uninsured institutions,
including uninsured national trust banks, should also have a meaningful
opportunity to appeal OCC determinations, and the OCC seeks to enhance
the accessibility of its appeals process to those affected by OCC
material supervisory determinations.

D. Commencement of Appeal

Under the proposal, any supervised entity, as defined above, that
is affected by an OCC material supervisory determination may file an
appeal for review of the determination. An institution-affiliated party
of such an entity that is directly affected by an informal enforcement
action taken against the individual may also appeal the informal
enforcement action, though not other OCC decisions. Outside of this
limited right for institution-affiliated parties, only the supervised
entity who is the direct subject of a material supervisory
determination may appeal the determination. Members of the general
public cannot file an appeal of an OCC material supervisory
determination, and a financial institution cannot file an appeal of a
material supervisory determination directed at another financial
institution, with the exception of the procedure for appeals of SNC
determinations.
The proposed regulation would define material supervisory
determination to mean any final agency or supervisory decision or
action, including, but not limited to, the following:
i. Examination ratings;
ii. Adequacy of the allowance for credit losses methodology;
iii. Individual loan ratings;
iv. Violations of law;
v. SNC decisions;
vi. Fair-lending-related decisions, including referrals to the U.S.
Department of Justice or U.S. Department of Housing and Urban
Development;
vii. Licensing decisions; and
viii. Material supervisory determinations such as matters requiring
attention, compliance with enforcement actions, or other conclusions in
the report of examination (ROE).
This list is not meant to be an exclusive list of matters that
supervised entities may appeal. The regulation would further provide
that a supervised entity may not appeal:
i. Appointments of receivers and conservators;
ii. Decisions related to bidder status or submitted bids on an
institution to which the Corporation provides assistance under 12
U.S.C. 1823;
iii. Preliminary examination conclusions communicated to the bank
before a final ROE or other written communication from the OCC is
issued;
iv. Any formal enforcement-related actions, including, but not
limited to, decisions to:
(A) Seek the issuance of a formal agreement or a cease-and-desist
order, or the assessment of a civil money penalty pursuant to 12 U.S.C.
1818;
(B) Take prompt corrective action pursuant to 12 U.S.C. 1831(o);
(C) Issue a safety and soundness order pursuant to 12 U.S.C. 1831p-
1; or
(D) Commence formal investigations pursuant to 12 U.S.C. 481,
1464(d) 1818(n), and 1820(c).
v. Formal and informal rulemakings pursuant to 5 U.S.C. 500 et
seq.;
vi. Decisions or recommended decisions following formal and
informal adjudications conducted pursuant to 5 U.S.C. 701 et seq.;
vii. Requests for agency records or information under the Freedom
of Information Act covered by 5 U.S.C. 552 or 12 CFR part 4 and
submission of information to the OCC that is governed by this statute
and this regulation;
viii. Decisions to disapprove directors and senior executive
officers pursuant to 12 U.S.C. 1831i;
ix. Any other agency decisions that are subject to judicial review
other than those described as appealable above;
x. Any decision by the agency that is non-final, other than those
described as appealable above;
xi. Supervisory observations;
xii. Conclusions in OCC interpretive letters; or
xiii. Agency decisions that are administrative and do not
substantially affect the rights of the supervised entity.
Certain agency decisions that are insignificant or non-final would
also not be appealable in the interest of conserving agency resources.
Such matters would include issues such as the scheduling for
examinations or additional information requests.
The proposed rule adopts both the list of appealable and non-
appealable matters from the 2013 Guidance with certain additions and
clarifications. Certain items on the lists are mandated by the Riegle
Community Act. The Riegle Community Act specifies that material
supervisory determination must include examination ratings, the
adequacy of loan loss reserve provisions, and loan classifications on
loans that are significant to an institution.\16\ The Act further
explicitly excludes from the appeals process a determination to appoint
a conservator or receiver or a decision to take action pursuant to 12
U.S.C. 1831o, which provides authority for regulators to take prompt
corrective action to resolve problems that could impose losses on the
deposit insurance fund.\17\ The current lists of appealable and non-
appealable matters have worked well based on the OCC's supervisory
experience and have not faced significant criticism. Thus, the OCC is
proposing to generally maintain these lists with certain changes, but
the agency invites comment on whether they should be amended to the
extent statutorily permissible.
---------------------------------------------------------------------------

\16\ 12 U.S.C. 4806(f)(1).
\17\ 12 U.S.C. 4806(f)(1)(B).
---------------------------------------------------------------------------

The proposed rule also continues to largely adopt the procedures in
the 2013 Guidance concerning appeals when formal enforcement
proceedings are pending. That is, under the proposed rule, while
supervised entities may not appeal a decision by the supervisory office
to pursue a formal enforcement-related action, they may appeal
conclusions in the ROE before the commencement of a formal enforcement-
related action. This includes determinations and the underlying facts
and circumstances that may form the basis of a subsequent formal
enforcement action. Once the OCC informs an institution that a formal
enforcement-related action has been approved, a supervised entity may
not pursue an appeal, except for the limited purpose of challenging
whether examiners appropriately followed agency policies and standards
in preparing the ROE. Also, once a supervised entity has entered into a
formal enforcement action, conclusions regarding the supervised
entity's level of compliance with the formal enforcement action are an
appealable matter. However, if the OCC determines that the lack of
compliance with an existing enforcement action requires an additional
enforcement action, the proposed new enforcement action is not
appealable. Remarks in an ROE and other communications about a
potential formal enforcement action made prior to a final decision are
preliminary and therefore may not be appealed. Individual minimum
capital ratios under 12 CFR 3.403 and notices of

[[Page 7168]]

deficiency under 12 CFR part 30 may be appealed.\18\
---------------------------------------------------------------------------

\18\ Only the final order or notice may be appealed, not
preliminary determinations or findings.
---------------------------------------------------------------------------

The proposed appeals process is not intended to allow appeals that
seek to change or modify OCC policies, rules, or legal interpretations.
If an appeal would raise a legal question of first impression, the
matter would be referred to the Chief Counsel's Office for decision
rather than the Appeals Board, as that is the correct forum for legal
determinations.
The proposed rule provides that the appeal may be filed with the
Deputy Comptroller responsible for the unit that issued the
determination in dispute or directly with the Appeals Board. It is at
the supervised entity's discretion where to file the initial appeal,
though the OCC retains the discretion to escalate an appeal directly to
the Appeals Board if there is a risk that delay can harm remediation of
a material financial risk or result in costs to the Deposit Insurance
Fund. This option is preserved from the existing guidance. The OCC
invites comment on whether this option should be maintained. The
proposed rule further adopts from the 2013 Guidance the requirement
that if the Deputy Comptroller was substantively involved in making the
decision under review, he or she must transfer the appeal to the
Appeals Board after informing the appellant.
The proposed rule maintains the deadlines from the existing
guidance for the filing of the appeal, which mandate that the appeal
must be filed within 60 days of receipt of the determination in
dispute, except for decisions relating to fair lending referrals to the
U.S. Department of Justice or notifications to the U.S. Department of
Housing and Urban Development, which must be filed within 15 days. The
OCC's supervisory experience has shown that this time period is
sufficient for banks to prepare and submit appeals. In keeping with the
OCC's policy of encouraging informal resolution of disagreements
between supervised entities and the OCC, the OCC would still maintain
its existing practice of waiving this deadline if an institution is
engaged in good faith dialogue with the supervisory office in an
attempt to informally resolve the dispute. Also adopted from the 2013
Guidance is the requirement that the appeal must include the
supervisory standards that the bank asserts were inappropriately
applied by OCC officials. Supervisory standards means statutes,
regulations, or articulations of OCC policy in guidance such as the
Comptroller's Handbook, bulletins, or interpretive letters. This
requirement is not meant to prevent appeals where the specific standard
applied is unknown to the bank.
If the appeal is by a financial institution, the president or chief
executive officer must submit the appeal and include in the submission
the board of the institution's approval of the action. This requirement
is adopted from the current guidance and is designed to ensure that the
bank's leadership supports the appeal. The OCC is soliciting comment on
whether this requirement is necessary.

E. Consideration of Appeal by Deputy Comptroller

Under the proposed process, the appellant has the choice whether to
file the appeal directly with the Appeals Board or to first file it
with the Deputy Comptroller of the division that rendered the decision
at issue. The Deputy Comptroller would be required to transfer the
appeal directly to the Appeals Board if the Deputy Comptroller
substantively involved in making the decision under review. If the
Deputy Comptroller determines that such a transfer is necessary, the
appellant would be informed.
Under the proposal, the Deputy Comptroller has 45 days from the
receipt of the appeal to render his or her decision unless there are
extenuating circumstances requiring additional time. This is the same
timeframe contained in the 2013 Guidance. If the Deputy Comptroller
determines that the filed appeal is incomplete or requires more
information from the appellant, the 45 days would not start until the
Deputy Comptroller receives a complete appeal. Consistent with the
current process, the proposed rule would require that once a complete
appeal is received, the Deputy Comptroller would solicit the views of
the supervisory office involved in issuing the material supervisory
determination. The OCC is soliciting comments on whether this initial
appeal to the Deputy Comptroller is a meaningful opportunity for
redress that should be maintained as part of the appeals process.
Under the proposal, when considering the matters being appealed,
the Deputy Comptroller would apply a de novo standard of review. The
OCC is soliciting comments on whether this is the right standard of
review to be applied. Though the Deputy Comptroller may use workpapers
and materials prepared by the supervisory office, he or she would reach
his own conclusions about each issue in dispute and would not give
deference to either party. If necessary to render a decision, the
Deputy Comptroller may, in his or her discretion, request that the
record be supplemented, including through further fact-finding or
sending staff to visit the appellant on site and gather further
information.
The proposed rule would require the Deputy Comptroller to issue a
decision in writing. If the appellant disagrees with the determination
of the Deputy Comptroller, the appellant would have the option of
further appealing the matter to the Appeals Board. This approach
generally follows the process specified in the 2013 Guidance. The
appellant would be required to file its appeal to the Appeals Board
within 15 days of receiving the written decision from the Deputy
Comptroller.

F. Consideration by the Appeals Board

The proposed rule would replace the role currently played by the
Ombudsman with an Appeals Board consisting of the Chief National Bank
Examiner and two term appointees. This change is being proposed to
increase confidence in the independence of the decision making on
appeals. Under the proposal, the term appointees would not be eligible
to have their terms renewed in order to prevent the appointees from
being pressured to find in the OCC's favor to secure reappointment. The
OCC is also considering other options for how to compose the Appeals
Board. For instance, the Board could also include the Ombudsman or the
Chief Counsel. It could also be composed of one term appointee and two
OCC officials. The term appointees, if that option is selected, would
be individuals with relevant banking, regulatory, legal, or supervisory
experience gained either from working with a financial regulator, for a
financial institution, or in the financial services sector. Under the
proposal, current OCC employees would not be eligible to serve as term
appointees to the Appeals Board, though the OCC is also considering
alternatives whereby OCC employees from reporting lines separate from
the one that rendered the supervisory determination may serve on the
Appeals Board. The agency is further considering maintaining the
current structure with the Ombudsman as the decision maker. The OCC
welcomes comments on what structure would provide the most fairness,
independence, and expertise.
Under the proposal, the Appeals Board would be able to consider
issues either directly appealed to it or appealed to it after a
determination by a Deputy Comptroller. It would also consider appeals
referred to it by a Deputy Comptroller who was substantively involved
in the material

[[Page 7169]]

supervisory determination. It would further consider appeals of SNCs,
fair lending determinations, and licensing decisions. Regardless of the
way the matter comes before the Appeals Board, the Appeals Board would
apply a de novo standard of review. As explained above, this means that
no deference would be shown to either party. The OCC is soliciting
comments on whether this is the correct standard of review for the
Appeals Board to apply. On the one hand, this standard of review would
provide the most opportunity for appellants to be able to show the
merits of their arguments. On the other hand, the supervisory staff who
made the initial determination often have more technical expertise
regarding the matter than the members of the Appeals Board, so it could
introduce more risk of error into the process for the Appeals Board to
overturn the supervisory staff without a finding of clear error. The
OCC does anticipate continuing to allow the supervisory office that
made the original determination to submit arguments and explanation in
support of its determination to the Appeals Board, which will weigh the
supervisory office's arguments equally with the appellant's arguments.
The Appeals Board would solicit the views of the supervisory office
involved in issuing the material supervisory determination and would
include in its deliberations their response to the appellant's
arguments. It is envisioned that the Appeals Board would be assisted by
its own independent staff who could help review disputed facts and
standards. The Appeals Board could also supplement the review record by
soliciting the views of other OCC staff, staff of other supervisory
agencies, or other sources. When necessary, the Appeals Board would
consult subject matter experts from across the OCC. When such
consultations occur, the Appeals Board would attempt to use experts who
were not substantively involved in the initial decision. If necessary,
the Appeals Board or its staff could engage in gathering additional
facts or information to verify factual conclusions in the supervisory
record. All decisions by the Appeals Board would be reviewed by an OCC
attorney for conformance with law and OCC policy. The attorney
rendering this opinion would be someone who was not substantively
involved in the initial decision.
The Appeals Board's review will generally be limited to the facts
and circumstances as they existed prior to, or at the time the material
supervisory determination was made. However, the Appeals Board may
gather additional evidence as described above. As well, the Appeals
Board may permit in its discretion supplementation of the record by
either party in the interest of fairness provided the request is timely
received by the Appeals Board. Though the OCC recognizes that this
introduces the possibility of the Appeals Board overturning the
supervisory office's decision based on evidence that the supervisory
office did not have available to consider, in some circumstances it is
important for the OCC to reach the right conclusion for the bank from a
safety and soundness perspective regardless of whether that requires
new materials be considered.
If any member of the Appeals Board had been substantively involved
in one or more of the determinations being appealed, the member would
be required to observe a recusal. If a member of the Appeals Board is
recused and the two remaining members cannot reach a decision, the
Comptroller would decide the matter.
Under the proposal, the Appeals Board would issue a written
decision within 45 days of receiving the appeal unless there are
extenuating circumstances requiring additional time. This is the same
timeframe referenced in the 2013 Guidance. Similar to the current
process, the written decision would state the reasons for the Appeals
Board's conclusion and the evidence it relied upon to reach that
conclusion. If the Appeals Board relied on confidential supervisory
information from other institutions, that information would be subject
to all applicable limits on its disclosure.
The proposal would require a redacted version of the Appeals
Board's decision to be published. The OCC envisions that this
publication would occur on the OCC's website, as is the current
practice. As is the current practice, the decision would be redacted to
remove all identifying information about the bank involved but, to the
greatest extent possible while still maintaining confidentiality, allow
the reader to understand the issues in contention and how the OCC
considered those issues. As well, if any member of the Appeals Board
chooses to write a dissent, this would also be published in redacted
form. These publication requirements would provide transparency into
the OCC's decision making process and accountability to regulated
entities and the public for the outcomes of appeals. This transparency
is important for ensuring that supervisory standards are applied
consistently and fairly.

G. Appeals of Shared National Credit Determinations

The proposed rule would also codify the appeals process for SNCs.
It would generally maintain the current process as contained in the
2013 Guidance, but make revisions as needed to conform to changes such
as the establishment of an Appeals Board as the final decision maker.
Under the proposed rule, an agent bank may submit a SNC appeal
directly or on behalf of any participant bank. If the agent bank
refuses, for whatever reason, to file the appeal on behalf of the bank
group, the OCC would accept an appeal from any participating bank. The
proposal would require a bank to file a SNC appeal with the regulator
that supervises the agent bank. When no agent bank is named, the appeal
would need to be filed with the regulator that supervises the bank at
which the SNC was reviewed. The proposal would require the agent bank
to file the appeal within 14 days of notification by the OCC of the
preliminary disposition of the credit. Any participant bank would be
allowed to appeal either through the agent bank or on its own within 14
days of receiving the preliminary SNC results from the agent bank. If
the agent bank does not provide preliminary results to the participant
banks, participant banks would be permitted to file an appeal within 14
days of receiving the official SNC results from the primary regulator.
These are the same deadlines for appeal as under the 2013 Guidance.
They are designed to provide flexibility for banks to be able to appeal
regardless of the communication processes between the agent bank and
the participant banks.
The proposed rule would require a SNC appeal to identify the
credit, the commitment amount, the disposition, the basis for the
bank's disagreement, and any documentation that supports the
institution's position on the matters in dispute. This is the same
information that is called for by the current guidelines. As under the
2013 Guidance, an interagency panel consisting of senior credit
examiners that are independent of the original voting team would
evaluate the appeal and recommend a decision to OCC senior management.
Absent extenuating circumstances this independent review team would
issue its decision on a SNC appeal within 30 days of receipt of a
complete appeal. If a bank disagrees with the independent review team's
decision, the rule would permit it to appeal the matter to the Appeals
Board within 30 days of receiving the decision letter from the OCC.
These are the same timeframes for rendering a decision and

[[Page 7170]]

for appealing the decision as under the 2013 Guidance, and the OCC's
supervisory experience has found them to be largely appropriate for SNC
appeals. The Appeals Board would hear SNC appeals under the same
procedures, standard of review, and timeframe as it hears all other
appeals. It would also apply the same independence requirements for
Appeals Board members and for supporting staff.

H. Alternative Procedures

Under the proposed rule, with a finding of good cause, the Appeals
Board would retain the discretion to extend any time limit, either on
behalf of the OCC or on behalf of an appellant, or waive any other
procedural requirement under the proposed rule. The OCC is proposing
this provision to maintain flexibility for the appeals process in
recognition of the fact that the proposed procedures might not be
appropriate for all situations. For instance, an appeal raising
particularly complex issues might require more than 45 days for the
Appeals Board to consider. Likewise, it might take an appellant more
than 60 days to complete an appeal submission if the applicant needs to
consult outside experts on issues under contention. As well, issues
outside of the OCC or the appellant's control, such as natural
disasters, could affect the party's ability to meet the proposed
regulation's deadlines.
Under the proposal, if the Appeals Board cannot reach a conclusion
on a matter due to a member being recused, then the Comptroller would
decide the matter. The OCC is soliciting comments on this approach and
on whether an official other than the Comptroller should serve as the
decision maker in such situations, for instance, the Chief Counsel or
the Ombudsman. Under the current proposal, if all members of the
Appeals Board are recused, the Comptroller would decide the matter.
However, the OCC is also considering having the Comptroller appoint one
or more replacement members of the Appeals Board in these matters. The
OCC invites comments on these alternative approaches.

I. Staffing of the Appeals Board

Under the proposed rule, the Appeals Board will consist of the
Chief National Bank Examiner and two term appointees. The term
appointees would be individuals not currently employed by the OCC and
who have never before served as a term appointee on the Appeals Board.
The requirement that the term appointee never before has served as a
term appointee on the Appeals Board is to prevent the term appointees
from feeling pressured to decide in the OCC's favor in order to be
reappointed. These individuals would be required to have relevant
experience and expertise, either in government or in the industry. They
would be appointed for a one-year term that is not eligible for renewal
and would be appointed directly by the Comptroller. The OCC is
soliciting comment on whether the term should be longer, such as two-
years, three-years, or four-years, and whether if the term is longer,
the terms should be staggered so that the term appointees are not all
replaced at the same time. The Appeals Board would report directly to
the Comptroller to maintain its independence from the lines of business
issuing the supervisory determinations. The OCC is also considering
having the term appointees be part-time positions and allowing them to
hold outside employment while serving on the Appeals Board. The OCC is
also soliciting comments about whether such an arrangement would raise
ethical or independence concerns. The OCC is considering and soliciting
feedback on what types of external employment should be permitted, if
it decides to adopt that option. For instance, it is considering
allowing term appointees to work for another government agency or for a
consulting firm.
The OCC envisions that the Appeals Board would have OCC staff
appointed as necessary to assist with the investigation and analysis of
the appeals before it. Such staff would be required to be recused from
an appeal if they were substantively involved in the determination
being appealed, the same as for members of the Appeals Board itself.

J. Stay of Determinations

The current guidelines provide that determinations generally will
not be stayed during an appeal, though in the appropriate
circumstances, the Ombudsman may stay a decision with the prior consent
of the Comptroller. The proposed rule would provide more clarity on
when a stay will be granted. Specifically, the proposed rule would
provide that an appealed material supervisory determination will be
stayed if the bank requests a stay and the appropriate Deputy
Comptroller or the Appeals Board concludes that:
i. Delaying the implementation of the material supervisory
determination would not result in a risk of immediate financial harm to
an OCC supervised institution;
ii. The material supervisory determination would impose costs on
the appellant within the timeframe for the OCC to decide the appeal;
and
iii. The public interest would not be harmed by delaying the
implementation of the material supervisory determination.
For instance, if the OCC determination requires an appellant to
immediately adopt costly compliance measures, the OCC could consider
granting a stay if delaying the implementation of corrective actions
during the pendency of the appeal would not result in the risk of
immediate financial harm to the institution or the public. This is
because once an institution has expended the resources on implementing
costly systems and processes, it cannot undo those costs if it wins the
appeal. This reality can discourage appeals. However, the OCC is
cognizant that, depending on the type of potential deficiency, a stay
may not be appropriate.
In weighing whether to grant a stay, the OCC would consider the
size of the institution and the burden that immediately implementing
the appealed determination will have on the appellant's resources. The
OCC would require a lower showing of burden from community banks than
from larger institutions, with a presumption that stays of decision
should mostly be issued for institutions with more limited resources.
The OCC is soliciting feedback on whether these are the right
factors for the OCC to consider when determining whether to grant a
stay of a decision pending the outcome of the appeal. The OCC is also
soliciting feedback on whether to allow the Ombudsman to grant a stay
in addition to the Appeals Board.

K. Expedited Appeals

The proposed rule would provide that when a material supervisory
determination relates to or causes an institution to become critically
undercapitalized, as defined by 12 U.S.C. 1831o, the review of any
appeal of that supervisory determination would be processed on an
expedited basis. For appeals processed on an expedited basis, the
appropriate Deputy Comptroller or the Appeals Board would issue its
decision in no more than 30 days and would issue the decision in less
if the situation demands. The OCC is also considering implementing a
shorter timeline than 30 days and is contemplating timelines between 10
and 30 days. The OCC invites comment on the appropriate timeline for
expedited appeals.

[[Page 7171]]

The expedited appeals process is a change from the 2013 Guidance,
which does not adopt expedited treatment for any issue. However, the
OCC recognizes that, given the severe outcome of becoming critically
undercapitalized, it is important for such issues to be resolved as
rapidly as practicable. Notwithstanding the proposal's timeline,
situations may arise that would prevent an appeal from being completed
before the prompt corrective action framework requires a receivership
to be imposed. In these situations, the existence of an outstanding
appeal would not prevent the OCC from meeting its statutorily mandated
obligation under the prompt corrective action framework to appoint a
receiver, in which case an appeal would become moot.
The OCC is soliciting feedback on whether there are other types of
decisions that should also be subject to expedited proceedings.

L. Role of the Ombudsman

The OCC is proposing to change the role of the Ombudsman in the
appeals process. Currently, the Ombudsman acts as the decision maker in
appeals. As explained above, the proposed rule would replace the
Ombudsman with the Appeals Board as the final decision maker for
appeals. The Ombudsman's role would shift to acting as an impartial
liaison between the appellant and the Deputy Comptroller or the Appeals
Board. This change would allow the Ombudsman to better assist the
appellant as the appellant will be more likely to consult the Ombudsman
with questions if the Ombudsman is not also the final decision maker.
The change would further make the Ombudsman a neutral party in the
appeals process and thus allow him to better focus on assisting
appellants. It would also dovetail with the Ombudsman's new
responsibility under the proposed rule to conduct outreach to
supervised institutions after exams to determine their satisfaction
with the experience and any issues they may wish to discuss.
Institutions are more likely to be open and honest with the Ombudsman
during such outreach if the Ombudsman is not the decision maker in any
appeal they are considering filing. Under the proposed rule, the
Ombudsman's office would be responsible for issuing an annual report to
the Comptroller detailing trends and issues it observed through its
outreach to institutions after their examinations, assisting banks with
navigating the appeals process, and investigating complaints from
supervised entities of OCC misconduct. Examples of misconduct that may
be investigated by the Ombudsman include: failure to follow OCC
procedures for conducting an exam, OCC employees making statements to
discourage a bank from exercising its right to appeal, or an OCC
examiner soliciting a bribe. If the Ombudsman investigates an
allegation that the OCC or its employees engaged in misconduct and
failed to follow the law, the Chief Counsel's Office will coordinate
with the Ombudsman and will render a final decision on all questions of
law.
In this new role, the Ombudsman would be in a unique position to
identify and report patterns of issues arising from complaints related
to OCC regulatory activities. The Ombudsman could track inquiries and
complaints based on relevant characteristics, such as geographic
location, scope, policy implications, and final disposition, to help
identify any such trends, including trends that implicate differently
sized institutions disproportionately. This tracking will be conducted
in a manner designed to preserve confidentiality of the complainant to
the maximum extent possible. In its required annual report, the
Ombudsman will report findings of patterns of issues to the
Comptroller. The Ombudsman will also report any issue stemming from a
complaint that is likely to have a significant impact on the OCC's
mission or activities. The Ombudsman will compose an annual report,
which will be published by the OCC, that will provide information
including the number of appeals for the year, the topics of appeals,
the average length of time it took to resolve the appeals decided that
year, and a summary of the OCC's decisions for the year.
Under the proposed rule, similar to under the 2013 Guidance, the
Ombudsman is responsible for preventing the OCC or any of its employees
from retaliating against the bank for its appeal. This requirement for
the Ombudsman is derived from the Riegle Community Act.\19\ To fulfill
this mission, the proposed rule would require that after the
appropriate OCC official renders a decision on a formal appeal, the
Ombudsman will contact the bank to ask whether the bank believes OCC
examiners have taken actions against the bank in retaliation for its
appeal. The Ombudsman would then contact bank management again 60 days
after the date of the decision letter and then 60 days after completion
of the first examination of the appellant bank following its appeal.
This process is similar to the process under the 2013 Guidance.
---------------------------------------------------------------------------

\19\ 12 U.S.C. 4806(d).
---------------------------------------------------------------------------

Similar to under the current process, the proposed rule also
provides that a bank may also contact the Ombudsman at any time during
or after the appeal if the bank believes that retaliation has occurred.
Under the proposed rule, the Ombudsman's role would be extended to
receiving any bank complaints of misconduct by the OCC or its staff
beyond just claims of retaliation. The Ombudsman would field complaints
not just about OCC employees, but also about the term appointees on the
Appeals Board and about contractors and other third-parties interacting
with supervised entities on the OCC's behalf. The Ombudsman would
assist institutions with issues and questions related to OCC regulatory
activities. In doing so, the Ombudsman would operate independently of
the supervisory process to ensure that appropriate safeguards exist to
encourage complainants to come forward and preserve confidentiality.
The Ombudsman may initiate a factual inquiry into complaints of alleged
retaliation or complaints of other misconduct or mistakes at any time.
In the absence of extenuating circumstances, the Ombudsman will
complete the investigation within 30 days.
Similar to the OCC's current structure, the Ombudsman would
continue to report directly to the Comptroller in order to preserve his
independence.
In cases involving allegations of retaliation, if the Ombudsman
finds that retaliation has occurred, the Ombudsman will forward the
complaint directly to the Inspector General. Appropriate action,
including disciplinary action consistent with OCC policies, will be
taken as warranted, and the Ombudsman may recommend to the Comptroller
that the next examination of the bank exclude personnel involved in the
ruling appealed by the bank. The Comptroller will make the final
decision on any such exclusion.

M. Retaliation and Dissuasion Forbidden

The proposed rule would provide that neither the OCC nor any
employee of the OCC may retaliate against an institution or person for
filing an appeal. Retaliation would be defined as any action or
decision by the OCC or by OCC employees that causes a supervised entity
to be treated differently or more harshly than other similarly situated
entities because the supervised entity attempted to resolve a complaint
by filing an appeal of a material supervisory determination or utilized

[[Page 7172]]

any other OCC mechanisms for resolving complaints, including informal
discussions with OCC supervisory staff.
The proposed rule further provides that neither the OCC nor any of
its employees may discourage a supervised entity from filing an appeal
or from otherwise communicating concerns and objections to the OCC
through the appeals process, through the Ombudsman's office, or through
other channels such as reaching out directly to the Comptroller. The
OCC values honest communication and feedback from supervised entities,
and any attempt by examiners or others to discourage banks from such
communication or to retaliate against banks for such communication is
prohibited.
The proposed rule further provides that if the Appeals Board finds
in favor of a supervised entity on an appeal, the OCC may not impose a
substantially similar decision based on the same underlying facts in
future material supervisory determinations. This is to prevent
examiners from retaliating against a supervised entity for filing an
appeal and to reaffirm the importance of the appeals process.
Supervised entities may be discouraged from filing appeals if the OCC
does not make it clear that the decision of the Appeals Board will be
respected by the supervisory staff and others across the OCC.

III. Request for Comments

The OCC seeks comment on all aspects of the proposed rule,
including the following:
1. Is the definition of supervised entity correct? Is it too broad
or too narrow? Are there other groups not included in the definition
who should have an opportunity to challenge the OCC's supervisory
determinations?
2. Is the composition of the Appeals Board, consisting of the Chief
National Bank Examiner and two term appointees, a preferable approach
to a single OCC decisionmaker or a board with a different composition?
Would a different composition better ensure independence or better
promote the confidence of supervised entities in the process's
independence and fairness? For instance, the Appeals Board could also
be composed of one term appointee and two OCC officials. It could also
be composed of three term appointees and no OCC officials.
3. Would removing the Ombudsman's role as the decisionmaker on
appeals increase the independence and fairness of the appeals process
and the perception of independence and fairness? Would the Appeals
Board consisting of the Chief National Bank Examiner and two term
appointees, or some other composition, be better positioned to render
an impartial decision than the Ombudsman?
4. Does restricting the Appeals Board's term appointees to only
serving one term better position them to render fair and impartial
decisions than permitting reappointments, which could cause the
appointees to feel pressured to find in the OCC's favor to secure
reappointment? Are there other provisions that could be placed in
appointees' terms or conditions of service that would be effective in
positioning them to render fair and impartial decisions and to prevent
the term appointees from being pressured to find in the agency's favor?
Are there alternatives other than term appointees that the OCC should
consider in determining the composition of the Appeals Board that would
be more likely to promote impartial decision-making?
5. What should be the criteria for those selected to serve on the
Appeals Board as term appointees in terms of experience and
independence? Should the rule further clarify what constitutes relevant
experience for serving on the Appeals Board? Should there be a
restriction on the Appeals Board being constituted exclusively of ex-
OCC employees? Should there be a requirement that the Appeals Board
include someone with community banking experience?
6. Are there other changes that would increase the independence of
the Appeals Board and prevent the Appeals Board from being predisposed
to find in favor of the supervisory office?
7. Should the OCC implement a de novo standard of review as
contemplated, or would it be a better use of agency resources to
implement a standard of review more deferential to the work already
done by the supervisory office? Should the OCC clarify the standard for
the burden of proof, and, if so, what should that standard be?
8. Should the OCC maintain the current structure whereby supervised
entities have the option to appeal to the appropriate Deputy
Comptroller before appealing to the final decision maker (either the
Appeals Board or the Ombudsman, depending on the structure ultimately
chosen)?
9. Is the list of examples of OCC actions or decisions that can be
appealed as material supervisory determinations sufficient, or are
there further types of decisions that the OCC should explicitly note
can be appealed?
10. Is the list of decisions that are excluded from the appeals
process sufficient, or are there further types of OCC actions or
determinations that should be excluded?
11. If one or more members of the Appeals Board is recused from
deciding a matter due to conflicts of interest or having participated
in the initial decision, and the remaining two members cannot come to a
joint decision, how should the OCC decide the matter? Should the
Comptroller decide the matter himself? Or should the Comptroller
appoint someone else as the replacement such as the Ombudsman, the
Chief Counsel, or another term appointee?
12. When discussing the relevant experience required for members of
the Appeals Board, the proposed regulation would provide that ``a
person will be considered to have such required expertise if the person
has significant executive, professional, educational, or regulatory
experience in banking supervision.'' Does this standard need further
clarification or refinement? Should the OCC have a more detailed
standard, or a more flexible standard? Is there a different standard
that would be more appropriate?
13. Are the deadlines proposed for an appellant filing an appeal
and the OCC rendering a decision reasonable? Have the current deadlines
and timeframes contained in the 2013 Guidance been appropriate?
14. If the OCC does adopt the proposal to replace the Ombudsman
with an Appeals Board, is the proposed one-year term the appropriate
term length for the term appointees? Or would it work better for the
term appointees to have two-year, three-year, or four-year terms? If
the OCC does select a term longer than one year, should it stagger the
terms so that term appointees do not all change at the same time? Would
the frequent staffing changes that such a short term would dictate
cause delays in the processing of matters? Given the high level of
expertise required of the members of the Appeals Board, would it be
difficult for the OCC to hire the necessary experts for such short
durations?
15. Are the expedited procedures for determinations that cause an
institution to become critically undercapitalized appropriate? Should
the timelines for such matters be longer or shorter? The OCC is
considering implementing a shorter timeline and is contemplating
timelines between 10 and 30 days. Are there other types of
determinations that should also be subject to expedited procedures such
as a potential program violation of the Bank Secrecy Act that

[[Page 7173]]

involves a risk of money laundering or Office of Foreign Asset Controls
sanctions violations?
16. Would the proposed rule have any costs, benefits, or other
effects that the OCC has not identified? If so, please describe any
such costs, benefits, or other effects.
17. Is the proposed definition of ``substantively involved''
appropriate? Will this definition help ensure independence of the
process? Would a different definition be more appropriate?
18. The OCC is considering making the term appointees part-time
positions. While the OCC would observe all applicable ethics laws for
the term appointees, the agency is considering allowing the term
appointees to hold outside employment while serving on the Appeals
Board. Would there be a conflict of interest if the term appointees are
employed outside of the OCC while serving on the Appeals Board? If the
OCC does choose to make the term appointee positions part-time, what
restrictions should the OCC place on outside employment? For instance,
would a bank be comfortable having its appeal heard by someone who is
employed by a competitor? Should the term appointees be permitted to
work for another government agency or for a consulting firm?
19. Currently, the proposed rule provides that the Appeals Board
can issue a stay of a decision while an appeal of that decision is
pending. Should the OCC also give the Ombudsman the ability to issue a
stay of a decision pending an appeal?
20. Should appeals of decisions related to licensing applications
that cause a delay in the licensing application being decision be
considered on an expedited basis?

IV. Expected Effects

As previously discussed, the OCC believes the proposed rulemaking
is necessary to ensure that the OCC's process for appeals of material
supervisory determinations provides a meaningful opportunity for
supervised entities to challenge OCC decisions and actions. Currently,
the standard of review for an appeal is not clear. For example, the
OCC's guidance remains silent on whether the Ombudsman and Deputy
Comptroller will apply a de novo standard of review or whether they
will defer to the judgment of the supervisory office and only
overruling findings where there is clear error. The proposed changes
are designed to enhance the independence of the appeals process and the
transparency of the OCC's decision-making standards with the goal of
increasing regulated entities' confidence in the appeals process and
their protections against retaliation for using the process while
affording the public an opportunity to provide comments on changes to
the process.
The proposed rule would move the Ombudsman from the role of
decision maker on appeals to the role of a neutral liaison between the
OCC and its supervised institutions who are seeking redress. The role
of decision maker for appeals would be assigned to a newly created
Appeals Board. The proposed rule is soliciting public feedback on how
the Appeals Board should be composed, but it is proposing that it be
composed of two term appointees selected by the Comptroller who are not
current OCC employees and one OCC employee, possibly the Chief National
Bank Examiner.
Another major change in the proposed rulemaking would be the
adoption of a formal de novo standard of review. As previously stated,
the current guidance is silent on the standard of review.
The proposed rule adopts the list of what is appealable and not
appealable from the current guidance with certain additions and
clarifications. It maintains the current prohibition on appeals of
formal enforcement orders, a determination to appoint a conservator or
receiver, or a decision to take action pursuant to 12 U.S.C. 1831,
which provides authority for regulators to take prompt corrective
action to resolve problems that could impose losses on the deposit
insurance fund.
The proposed rule would maintain the current deadlines for
submission of the appeal and related materials and the OCC's review of
the appeal. The proposal would establish standards for independence for
those involved in reviewing the appeal. It would provide for the
publication of the final decision and any dissent in writing.
The proposed rule would also expand the role and responsibilities
of the Ombudsman. Rather than being the decision maker in the appeals,
the Ombudsman would act as a neutral liaison for supervised entities
considering filing an appeal or another grievance against the OCC. The
Ombudsman would also have the new duty of issuing an annual report to
the Comptroller detailing trends and issues it has observed. The
Ombudsman would continue to have the duty of reaching out to
institutions after they have appealed to determine their satisfaction
with the process and whether they believe they have suffered any
retaliation for filing the appeal. In addition to this duty, the
proposal would have the Ombudsman reach out to institutions after each
examination to determine whether they have grievances or concerns
stemming from the examination.
The proposed rule would establish standards for when a stay of a
decision would be granted pending an appeal, would clarify the record
on review, and would clarify the authority of the Comptroller. In
addition, the proposed rule would clarify that neither the OCC nor any
of its employees can discourage a supervised entity from filing an
appeal or from otherwise communicating concerns or objections to the
OCC through the appeals process, through the Ombudsman's office, or
through any other channel. As well, the proposed rule further provides
that if the Appeals Board finds in favor of a supervised entity on an
appeal, the OCC may not impose a substantially similar material
supervisory determination based on the same underlying facts in future
material supervisory determinations.

Affected Parties

OCC-Supervised Institutions
The OCC currently supervises approximately 998 national banks and
Federal savings associations (banks). Because the proposed rule revises
the appeals process for all OCC-regulated banks, the proposed rule
would affect all 998 OCC-regulated banks.
In addition, the OCC notes that the proposed rule would cover the
appeals of permitted payment stablecoin issuers that will probably fall
under OCC supervision in the near future. Because the OCC does not have
experience supervising this novel industry, the agency does not believe
that it can accurately predict how many stablecoin issuers the OCC will
supervise.

Legal and Regulatory Baseline

The baseline for the proposed rule includes the pre-existing review
process which is described in the 2013 Guidance. The 2013 Guidance
provides a process for appeals for OCC institutions whereby these
institutions may appeal to the Ombudsman for a reconsideration of
material supervisory determinations. The proposed rule would replace
this guidance.
When the OCC evaluates the costs and benefits of the mandates and
effects of the proposed rule, the agency evaluates the costs and
benefits of the mandates that impose costs beyond those already
incurred in the existing process.
The Agency also notes that its evaluation of the proposed rule only
evaluates the impact of the differences between the proposed rule and
the

[[Page 7174]]

baseline. That is, the agency does not incorporate possible changes
stemming from other OCC guidance or rules when evaluating the impact of
this proposed rule. The agency assumes that all other factors, such as
the number of possible appeals and the types remain the same.

Costs and Benefits

Appeal Rate Estimate
The agency expects that both the OCC and OCC-regulated institutions
would be affected by the proposed rule. The agency expects that the OCC
would incur costs in setting up the new appeals process and processing
new appeals. The agency also expects OCC-regulated institutions would
incur costs in making more appeals that they may not have made under
the 2013 Guidance, but also may benefit from having a greater number of
appeals potentially approved and stays granted due to the proposed
rule.
To calculate the costs and benefits of the proposed rule, the
agency first estimates the number of new appeals, the expected
percentage increase in accepted appeals, and the percentage of stays
granted from appeals due to the proposed rule. The agency expects that
the proposed rule would increase the number of appeals that OCC-
regulated institutions make because of the proposal's de novo standard
of review, the possibility of receiving a temporary stay from filing an
appeal, the possibility of receiving expedited review, and the
assistance that appellants would receive in making appeals from the
newly independent Ombudsman. The agency believes that the increased
clarity in the appeals process articulated as well as other changes
(e.g., stays) would significantly increase the number of appeals
relative to the appeals that would continue to take place under the
baseline.
To estimate the number of new appeals, the OCC used information
from a survey of regulated financial institutions exploring their
desires to make appeals cited in a study by Hill (2015).\20\ Hill cited
survey data that the OCC believes suggests that OCC-regulated
institutions would appeal supervisory determinations at a significantly
higher rate than they have historically. The study stated that:
---------------------------------------------------------------------------

\20\ Hill, Julie Andersen (2015): When Bank Examiners Get It
Wrong: Financial Institution Appeals of Material Supervisory
Determinations, Washington University Law Review, pages 1101-1185,
volume 92, issue 5.

[T]he Alliance of Bankers Associations, in connection with the
American Bankers Association, conducted a nation-wide survey
questioning banks about their most recent examination. The survey,
which received more than 1000 responses, asked banks to rate
satisfaction with the most recent examination and results on a 1 to
5 scale with 1 being very satisfied and 5 being very unsatisfied.
More than 30% of responding banks were unsatisfied or very
unsatisfied. Respondents were also asked to evaluate agreement with
the assigned CAMELS rating on the same 1 to 5 scale. That question
yielded an average response of 3.38, evidencing some disagreement
with examination ratings. Moreover, surveys of credit unions
produced similar results. In 2010, the Credit Union National
Association conducted a survey in which ``27% of respondents
reported dissatisfaction with their most recent exam.'' Moreover,
``one-in-five (21%) [of the responding credit unions] indicated that
they wanted to appeal but did not.'' ``Two-thirds of the credit
unions that wanted to appeal indicated they did not appeal for fear
of retaliation by examination staff. Nearly the same number
indicated they did not appeal because they did not believe it would
make a difference in outcome.'' \21\
---------------------------------------------------------------------------

\21\ Id. at 1165-1166.

Although Hill cited data on credit unions, the OCC believes that
OCC and credit union regulations and supervision are similar enough to
justify extrapolating conclusions from credit union survey responses to
OCC-regulated institutions. And coupled with Hill's citing of banks'
general dissatisfaction with examinations and CAMELS ratings, the OCC
believes that her study provides a sufficient basis for the agency to
expect the revised appeal process in the proposed rule would increase
the number of appeals made by OCC-regulated institutions.
The article also stated that the survey responses were voluntary
and that responses could be biased toward respondents with grievances
that are more likely to complain. Therefore, this analysis expects that
the claim that 21 percent of credit unions would appeal could overstate
the number of institutions that would like to appeal supervisory
actions. However, since these percentages of credit unions seeking to
appeal are much higher than past appeal rates that the OCC has observed
amount OCC-supervised institutions, the OCC takes these statements as
reasonable support for believing that the number of appeals could
significantly increase due to the proposed rule.
Based on this information, the OCC concludes that it expects the
new appeals process would significantly increase the number of appeals.
The agency notes that in the past five years, the OCC received only
five appeals per year on average. Based on the above articles and
subject matter expert (SME) input that also suggests appeals could
significantly increase, the agency estimates that appeals could
increase by 50 appeals per year if five percent of OCC regulated banks
make an appeal each year under the new process. This represents a much
smaller percentage of institutions predicted to appeal than the 21
percent number from the article by Hill (2015) and still represents a
large, predicted increase in appeals relative to recent appeal rates.
Appeal Success Rates
The OCC assumes that the average appeal would have an equal
likelihood of success or failure under then proposed rule because the
new appeals system would not defer to supervisory determinations and
because the new appeal system would not treat any party preferentially.
Therefore, the OCC predicts that 50 percent of appeals would be
successful and therefore, there would be 25 successful new appeals per
year due to the proposed rule.
The agency notes that this implies that it predicts that the
proposed rule would increase the acceptance rate for appeals, as the
pre-existing appeals system resulted in appeals that favored
supervisors more on average. This would imply that the agency would
expect the percentage of appeals decided in favor of banks would rise
from under 50 percent to 50 percent under the proposed rule.
Possibility That Supervisory Determinations Likely To Be Successful in
Appeal Would Decrease in Frequency in Response to the New Appeals
Process
The OCC also wanted to address the possibility that supervisory
staff could anticipate which appeals would most likely succeed and
cease making supervisory determinations that would be likely to be
successfully appealed. In the extreme, the agency could expect that
supervision could potentially anticipate nearly all supervisory
determinations that would be successfully appealed under the proposed
rule and that there could be very few successful appeals following the
enactment of the proposed rule.
If the agency expected this to be the most likely scenario to
result from the proposed rule, it would revise our numbers to predict
25 appeals without any successful appeals. However, it would then
revise the analysis to state that the deterrence of the 25 appeals that
would have been approved would have been an effect of the proposed
rule. And it would state that even though no appeals were successful in
this case, the rule would result in a cost savings to the banks by
reducing the number of

[[Page 7175]]

supervisory determinations that may likely be overturned on appeal.
Therefore, if the proposed rule would result in a decrease in
supervisory determinations because examiners anticipate and refrain
from making determinations that would be ruled in favor of the bank,
the overall conclusion remains the same. In fact, there may be even
more cost savings because neither the banks nor the OCC would have to
incur costs associated with the appeal process for cases that would
likely have been overturned from the new appeals process.
However, the agency would assume for its analysis of expected
effects that supervisors would not change the way in which they make
supervisory determinations in response to the proposed rule, and the
agency believes that its estimate of 50 appeals is more realistic.
For the purpose of the remainder of the analysis, the agency
assumes that examiners would not change their decisions as to whether
or not they make supervisory determinations in response to the proposed
rule. However, the agency notes that our overall cost estimate for the
proposed rule would be decreased for each determination that would not
be made in response to the proposed rule.
Rate of Granted Stays
Finally, to estimate the benefits of stays that would be granted
under the proposed rule, the agency assumes that as an upper bound, all
appeals would be granted a temporary stay of supervisory actions.
Therefore, the OCC predicts that there would be 50 stays granted per
year due to the proposed rule. A stay suggests that if the appeal is
not overturned, the cost associated with addressing the supervisory
determination would be shifted in the future, while for those that are
eventually overturned, there would be cost savings associated with not
having to start addressing the supervisory determination during the
appeals process. On net, the OCC believes the stays would result in a
cost savings to the bank.

Effect on the OCC

Because the proposed rule states that the OCC would incur the costs
of hiring two new full time appeals board members, the OCC estimates
that this mandate would cause the OCC to incur an expense for these
staff of $730,800 per year ($730,800 = 2 x $365,400 salaries and
benefits for appeals board members).
The agency also expects that the OCC could incur some costs under
the proposal to gather new information on certain appeals and obtain
additional staff as needed to investigate appeals. Additional resources
for appeals would be needed because of the enhanced standard of
independent review under the de novo standard of appeal. This is
because the de novo standard which requires reviewers to freely
consider the matter anew, as if no decision had been rendered below, on
the materials in the review record, without deferring to any prior
determinations.
To estimate these costs, the agency assumes that the deputy
comptroller and Appeals Board would have one staff member allocated to
an appeal. The OCC assumes that support staff would separately spend at
most 2 full days supporting the appeal to both the deputy comptroller
and the appeals board. The analysis assumes that the hourly wage for
OCC support staff for appeals would be $173.75 per hour. Given this
wage, the OCC would incur a cost for support staff of $556,000
($556,000 = 4 days x 2 staff x 8 hours x $173.75 x 50 appeals).
Therefore, the OCC calculates that in total the OCC would incur
total costs from the proposed rule of $1,286,800.00 ($1,286,800.00 =
$556,000 + $730,800).

Effect on OCC-Regulated Banking Entities

Benefits to OCC-Regulated Banking Entities
Savings From Successful Appeals
The OCC expects that OCC regulated entities would result in cost
savings due to the increased number of successful appeals. In
discussions with internal SMEs with regard to the cost of supervisory
actions, the SMEs have suggested that the upward bound of consulting
costs to remediate a matter requiring attention (MRA) could range
upwards of several million dollars, depending on the size and
complexity of the institution as well as the complexity and the
severity of the MRA.
Because supervisory determinations cover a broad range of actions,
some of which would be less costly than MRAs for institutions to
resolve, the OCC estimates that OCC-regulated entities would save
$1,000,000 in expenditures from resolving a supervisory determination
for each successful appeal. The OCC expects that $1,000,000 would be a
conservative estimate that reflects the lower end of the SME range of
cost savings for supervisory determinations terminated under appeal.
Therefore, since this analysis stated earlier that the OCC expects
entities to obtain 25 successful appeals per year, the OCC estimates
that total cost savings from the rule would be $25 million per year
($25 million = 25 x $1,000,000).
Savings From Delayed Expenditures Due to Granted Stays
The OCC also expects that OCC-regulated entities would benefit from
the discounted-time-value of delaying expenditures to comply with
supervisory determinations for appeals that are not found in favor of
the appellant. The benefit from delaying expenditures would be the
difference between $1,000,000 expenditure that institutions would incur
to immediately resolve a supervisory determination and the value of a
$1,000,000 expenditure that would be made following the failure of an
appeal.
Since the appeals board and the deputy comptroller each have 45
days to decide on appeals, the OCC assumes that the expenditures would
be delayed by roughly 90 days. Therefore, the OCC would like to
calculate the value of a $1,000,000 expenditure 90 days in the future.
As stated earlier, the OCC estimates that 25 out of 50 appeals would
receive a stay and be unsuccessful, and therefore, 25 appeals would
benefit from delaying expenditures under a stay. If the analysis
assumes a discount rate of 7 percent as suggested by OMB, the
discounted value of the $1,000,000 expenditure over the 90 day stay
period to regulated entities would be $24.57 million [$24.57 million =
25 x $1,000,000/(1 + (.07 x (90/360)))]. Therefore, the total savings
to regulated institutions from delaying expenditures would be $429,975
($429,975 = $25 million-$24.57 million).
Costs to OCC-Regulated Banking Entities
Because the OCC expects the proposed rule to induce OCC-regulated
entities to increase the number of appeals entities would make relative
to the regulatory baseline, the OCC predicts that, due to the proposed
rule, these entities would incur costs in making these additional
appeals.
The OCC estimates that entities would incur an average cost of
$100,000 to make an appeal. This would include the costs of internal
staff and resources and the hiring of legal representation and any
other outside services to make the appeal. Therefore, the OCC expects
banks would incur costs of $5 million ($5 million = 50 x $100,000) to
make new appeals under the proposed rule.

Total Impact

The OCC estimates that the proposed rule would result in an ongoing
total

[[Page 7176]]

yearly net benefit of $19,143,200. This net benefit reflects the total
gross savings to OCC regulated entities of $25,430,000 due to
overturned and delayed supervisory determinations less $5 million in
costs cost incurred from OCC regulated entities appealing 50
supervisory determinations. The OCC would incur total costs of
$1,286,800 from implementing the process articulated in the proposed
rule.

V. Regulatory Analysis

Paperwork Reduction Act

The Paperwork Reduction Act of 1995 \22\ (PRA) states that no
agency may conduct or sponsor, nor is the respondent required to
respond to, an information collection unless it displays a currently
valid Office of Management and Budget (OMB) control number. The OCC has
reviewed this proposed rule and determined that it does not create any
new or revise any existing collection of information pursuant to the
PRA. Accordingly, no PRA submissions to OMB will be made with respect
to this proposed rule.
---------------------------------------------------------------------------

\22\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

Regulatory Flexibility Act

As part of our analysis, the OCC considers whether the proposed
rule would have a significant economic impact on a substantial number
of small entities, pursuant to the Regulatory Flexibility Act. The OCC
currently supervises approximately 609 small entities, all of which may
be impacted by the proposed rule.\23\
---------------------------------------------------------------------------

\23\ The OCC bases its estimate of the number of small entities
on the Small Business Administration's size thresholds for
commercial banks and savings institutions, and trust companies,
which are $850 million and $47 million, respectively. Consistent
with the General Principles of Affiliation 13 CFR 121.103(a), the
OCC counts the assets of affiliated financial institutions when
determining if the OCC should classify an OCC-supervised institution
as a small entity. The OCC uses December 31, 2024, to determine size
because a ``financial institution's assets are determined by
averaging the assets reported on its four quarterly financial
statements for the preceding year.'' See footnote 8 of the U.S.
Small Business Administration's Table of Size Standards.
---------------------------------------------------------------------------

In general, the OCC classifies the economic impact on an individual
small entity as significant if the total estimated impact in one year
is greater than 5 percent of the small entity's total annual salaries
and benefits or greater than 2.5 percent of the small entity's total
non-interest expense. Furthermore, the OCC considers 5 percent or more
of OCC-supervised small entities to be a substantial number. Thus, at
present, 30 OCC-supervised small entities would constitute a
substantial number.
While our analysis concludes that all small OCC-regulated entities
would be subject to the proposed rule, the OCC does not believe 30 OCC-
supervised small entities would increase their number of appeals nor
would any small entity spend over 5 percent of their total annual
salaries and benefits or greater than 2.5 percent of the small entity's
total non-interest expense to appeal in one year. Accordingly, the
proposed rule would not have a significant economic impact on a
substantial number of OCC-supervised small entities.

Unfunded Mandates Reform Act

The OCC has analyzed the proposed rule under the factors in the
Unfunded Mandates Reform Act of 1995 (UMRA).\24\ Under this analysis,
the OCC considered whether the proposed rule includes a Federal mandate
that may result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year ($187 million as adjusted annually for
inflation). Pursuant to section 202 of the UMRA,\25\ if a proposed rule
meets this UMRA threshold the OCC would need to prepare a written
statement that includes, among other things, a cost-benefit analysis of
the proposal.
---------------------------------------------------------------------------

\24\ 2 U.S.C. 1531 et seq.
\25\ 2 U.S.C. 1532.
---------------------------------------------------------------------------

The OCC's estimated UMRA cost is a net benefit of $20,430,000. This
net benefit reflects the total gross savings to OCC regulated entities
of $25,430,000 due to overturned and delayed supervisory determinations
less $5 million in costs cost incurred from OCC regulated entities
appealing 50 supervisory determinations. Therefore, the OCC finds that
the proposed rule does not trigger the UMRA cost threshold.
Accordingly, the OCC has not prepared the written statement described
in section 202 of the UMRA.

Riegle Community Development and Regulatory Improvement Act of 1994

Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994,\26\ in determining the effective
date and administrative compliance requirements for new regulations
that impose additional reporting, disclosure, or other requirements on
insured depository institutions, the OCC must consider, consistent with
principles of safety and soundness and the public interest (1) any
administrative burdens that the final rule would place on depository
institutions, including small depository institutions and customers of
depository institutions and (2) the benefits of the final rule. This
rulemaking would not impose any reporting, disclosure, or other
requirements on insured depository institutions. Therefore, section
302(a) of the Riegle Community Development and Regulatory Improvement
Act of 1994 does not apply to this rulemaking.
---------------------------------------------------------------------------

\26\ 12 U.S.C. 4802(a).
---------------------------------------------------------------------------

Providing Accountability Through Transparency Act of 2023

The Providing Accountability Through Transparency Act of 2023 \27\
requires that a notice of proposed rulemaking include the internet
address of a summary of not more than 100 words in length of a proposed
rule, in plain language, that shall be posted on the internet website
<a href="http://www.regulations.gov">www.regulations.gov</a>.
---------------------------------------------------------------------------

\27\ 5 U.S.C. 553(b)(4).
---------------------------------------------------------------------------

The Office of the Comptroller of the Currency (OCC) is issuing a
notice of proposed rulemaking to establish revised procedures and
policies for appeals of material supervisory determinations by OCC
supervised entities. The proposed changes would reflect the OCC's
experience administering the bank appeals process and are intended to
enhance the independence and efficiency of the appeals function. The
proposed changes would include changing the role of the Ombudsman,
establishing an Appeals Board to decide appeals, and clarifying a de
novo standard of review.
The proposal and the required summary can be found for the OCC at
<a href="https://www.regulations.gov">https://www.regulations.gov</a> by searching for Docket ID OCC-2026-0001
and <a href="https://occ.gov/topics/laws-and-regulations/occ-regulations/proposed-issuances/index-proposed-issuances.html">https://occ.gov/topics/laws-and-regulations/occ-regulations/proposed-issuances/index-proposed-issuances.html</a>.

Executive Order 12866 (as Amended)

Executive Order 12866, titled ``Regulatory Planning and Review,''
as amended, requires the Office of Information and Regulatory Affairs
(OIRA), OMB, to determine whether a proposed rule is a ``significant
regulatory action'' prior to the disclosure of the proposed rule to the
public. If OIRA finds the proposed rule to be a ``significant
regulatory action,'' Executive Order 12866 requires the OCC to conduct
a cost-benefit analysis of the proposed rule and for OIRA to conduct a
review of the proposed rule prior to publication in the Federal
Register. Executive Order 12866 defines a ``significant regulatory
action'' to mean a regulatory action that is likely to (1) have an
annual effect on the economy of $100 million or more or adversely
affect in a material way the economy, a

[[Page 7177]]

sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
Executive Order 12866.
OIRA has determined that this proposed rule is not a significant
regulatory action under section 3(f)(1) of Executive Order 12866 and,
therefore, is subject to review under Executive Order 12866. The OCC's
analysis conducted in connection with Executive Order 12866 is included
above under the ``Expected Impacts'' section of this document.

Executive Order 14192

Executive Order 14192, titled ``Unleashing Prosperity Through
Deregulation,'' was issued on January 31, 2025. Section 3(a) of
Executive Order 14192 requires an agency, unless prohibited by law, to
identify at least ten existing regulations to be repealed when the
agency publicly proposes for notice and comment or otherwise
promulgates a new regulation. In furtherance of this standard, section
3(c) of Executive Order 14192 requires that the new incremental costs
associated with new regulations shall, to the extent permitted by law,
be offset by the elimination of existing costs associated with at least
ten prior regulations.
Under E.O. 14192, although the OCC predicts that the OCC and OCC-
regulated institutions would incur new expenditures due to the proposed
rule, the agency concludes that the proposed rule is deregulatory
because it would provide standards for institutions appealing OCC
material supervisory determinations to receive a stay during the
pendency of the appeal. Since more institutions would be able to
receive a stay during their appeal and thus avoid expending resources
to comply with OCC determinations that may ultimately be overturned, it
would have a minor net cost savings for OCC institutions.

List of Subjects in 12 CFR Part 4

Administrative practice and procedure, Freedom of information,
Individuals with disabilities, Minority businesses, Organization and
functions (Government agencies), Reporting and recordkeeping
requirements, Women.

Authority and Issuance

For the reasons set forth in the preamble, the OCC proposes to
amend chapter I of title 12 of the Code of Federal Regulations as
follows:

PART 4--ORGANIZATION AND FUNCTIONS, AVAILABILITY AND RELEASE OF
INFORMATION, CONTRACTING OUTREACH PROGRAM, POST-EMPLOYMENT
RESTRICTIONS FOR SENIOR EXAMINERS

0
1. The authority citation for part 4 is revised to read as follows:

Authority: 5 U.S.C. 301, 552; 12 U.S.C. 1, 93a, 161, 481, 482,
484(a), 1442, 1462a, 1463, 1464 1817(a), 1818, 1820, 1821, 1831m,
1831p-1, 1831o, 1833e, 1867, 1951 et seq., 2601 et seq., 2801 et
seq., 2901 et seq., 3101 et seq., 3401 et seq., 4806, 5321, 5412,
5414; 15 U.S.C. 77uu(b), 78q(c)(3); 18 U.S.C. 641, 1905, 1906; 29
U.S.C. 1204; 31 U.S.C. 5318(g)(2), 9701; 42 U.S.C. 3601; 44 U.S.C.
3506, 3510; E.O. 12600 (3 CFR, 1987 Comp., p. 235).
0
2. Subpart I is added to part 4 to read as follows:

Subpart I--Bank Appeals Process

Sec.
4.101 Purpose and Scope.
4.102 Definitions
4.103 Commencement of Appeal
4.104 Consideration by Deputy Comptroller
4.105 Consideration by Appeals Board
4.106 Appeals of Shared National Credit Determinations
4.107 Comptroller Authority
4.108 Staffing of Appeals Board
4.109 Stay of Determinations
4.110 Expedited Appeals
4.111 Role of Ombudsman
4.112 Prohibition on Retaliation
4.113 Construction of Time Limits
4.114 Retention of Authority

Sec. 4.101 Purpose and Scope.

Pursuant to the Riegle Community Development and Regulatory
Improvement Act of 1994, Public Law 103-325, 108 Stat. 2160 (12 U.S.C.
4806), this subpart establishes the process by which the OCC will
consider and resolve appeals of material supervisory determinations.
This subpart applies to all appeals of material supervisory
determinations by OCC regulated entities, except as provided in this
subpart.

Sec. 4.102 Definitions.

For purposes of this subpart:
Appeals Board means a panel consisting of the chief national bank
examiner and two term appointees, as defined in Sec. 4.108.
Appellant means the party initiating the appeal of an OCC material
supervisory determination.
De novo standard of review means a standard of review that is not
deferential to either party and that does not defer to the
determinations of either party. This standard of review does not defer
to the previous decision but freely considers the matter anew, as if no
decision had been rendered below, on the materials in the review
record.
Review Record means the record the Appeals Board will use in
conducting its review, which shall consist of the material filed by the
appellant, the material developed by the OCC in reaching its initial
determination, any additional arguments submitted by the supervisory
office in responding to the supervised entities appeal, and any
materials adduced from supplementation discussed in Sec. 4.105(b) or
otherwise permitted or directed by the Appeals Board.
Shared National Credit means any loan(s) and/or formal loan
commitment(s) extended to a borrower by a supervised institution or any
of its subsidiaries and affiliates which aggregates $20 million or more
and:
(1) Is shared by two or more institutions under a formal lending
agreement; or
(2) A portion of which is sold to one or more institution(s), with
the purchasing institution(s) assuming its pro rata share of the credit
risk.
Substantively involved means directly approved, advised on, or
recommended the decision being appealed or a determination underlying
the decision being appealed.
Supervised entity means an entity for which the OCC makes material
supervisory determinations. This includes national banks, Federal
savings associations, U.S. agencies or branches of a foreign bank,
permitted payment stablecoin issuers and foreign payment stablecoin
issuers subject to the OCC's regulatory authority, and an institution-
affiliated party, as defined by 12 U.S.C. 1813(u) or 12 U.S.C.
5901(13), of any of the above listed organizations directly affected by
an informal enforcement action.
Supervisory standard means a statute, law, or statement of OCC
policy. Statements of OCC policy include, but are not limited to,
standards articulated in the Comptroller's Handbook, the OCC Licensing
Manual, OCC issued bulletins, and interpretive letters.

Sec. 4.103 Commencement of Appeal.

(a) A supervised entity affected by an OCC material supervisory
determination may file an appeal for review of the determination.
(b) Except as provided in paragraph (b)(2) of this section, any
material

[[Page 7178]]

supervisory determination may be appealed.
(1) A ``material supervisory determination'' for purposes of this
subpart means any agency or supervisory decision or action, including,
but not limited to, the following:
(i) Examination ratings;
(ii) Adequacy of the allowance for credit losses methodology;
(iii) Individual loan ratings;
(iv) Violations of law;
(v) Shared National Credit decisions;
(vi) Fair-lending-related decisions, including referrals to the
U.S. Department of Justice or U.S. Department of Housing and Urban
Development;
(vii) Licensing decisions; and
(viii) Material supervisory determinations such as matters
requiring attention, compliance with enforcement actions, or other
conclusions in the report of examination.
(2) A supervised entity may not appeal:
(i) Appointments of receivers and conservators;
(ii) Decisions related to bidder status or submitted bids on an
institution to which the Corporation provides assistance under 12
U.S.C. 1823;
(iii) Preliminary examination conclusions communicated to the bank
before a final report of examination or other written communication
from the OCC is issued;
(iv) Any formal enforcement-related actions, including, but not
limited to, decisions to:
(A) Seek the issuance of a formal agreement or a cease-and-desist
order, or the assessment of a civil money penalty pursuant to 12 U.S.C.
1818;
(B) Take prompt corrective action pursuant to 12 U.S.C. 1831(o);
(C) Issue a safety and soundness order pursuant to 12 U.S.C. 1831p-
1; or
(D) Commence formal investigations pursuant to 12 U.S.C. 481,
1464(d) 1818(n), and 1820(c);
(v) Formal and informal rulemakings pursuant to 5 U.S.C. 500 et
seq.;
(vi) Decisions or recommended decisions following formal and
informal adjudications conducted pursuant to 5 U.S.C. 701 et seq.;
(vii) Requests for agency records or information under the Freedom
of Information Act covered by 5 U.S.C. 552 or 12 CFR part 4 and
submission of information to the OCC that is governed by this statute
and this regulation;
(viii) Decisions to disapprove directors and senior executive
officers pursuant to 12 U.S.C. 1831i;
(ix) Any other agency decisions that are subject to judicial review
other than those described in paragraph (b)(1), of this section;
(x) Any decision by the agency that is non-final, other than those
described in paragraph (b)(1), of this section;
(xi) Supervisory observations;
(xii) Conclusions in OCC interpretive letters; or
(xiii) Agency decisions that are administrative and do not
substantially affect the rights of the supervised entity.
(c) The appeal may be filed with the Deputy Comptroller responsible
for the division that issued the determination in dispute or directly
with the Appeals Board. However, if the Deputy Comptroller was
substantively involved in the material supervisory determination, he or
she must transfer the appeal to the Appeals Board after informing the
appellant. An individual will be considered to have been substantively
involved in a material supervisory determination if the individual was
personally consulted regarding the issue being determined and provided
guidance regarding how it should be resolved. If there is a risk that a
delay could harm remediation of material financial risk or impose loses
on the Deposit Insurance Fund, the OCC maintains the discretion to
elevate the appeal directly to the Appeals Board.
(d) The appeal must be filed within 60 days of receipt of the
determination in dispute, except for an appeal of a determination by
the OCC that there is reason to believe an instance or pattern or
practice of discrimination exists requiring either a referral to the
U.S. Department of Justice or notification to the U.S. Department of
Housing and Urban Development or as provided in Sec. 4.106 for Shared
National Credits.
(f) A supervised entity may not file an appeal of a material
supervisory determination once the OCC informs the supervised entity
that it has approved a formal enforcement-related action arising from
the determination, except for the limited purpose of challenging
whether the OCC appropriately followed agency policies and standards in
reaching the determination.
(g) The appeal must include the supervisory standards that the bank
asserts were inappropriately applied by OCC officials.
(h) If the appeal is by a financial institution, the institution's
president or chief executive officer must submit the appeal and include
in the submission the board of the institution's approval of the
action.
(i) An institution-affiliated party of a supervised entity, as
defined in 12 U.S.C. 1813(u) or 12 U.S.C. 5901(13), may file an appeal
of an informal enforcement action that directly affects the
institution-affiliated party.
(j) Within seven days of receiving the appeal, the OCC will notify
the appellant in writing whether the appeal has been accepted based on
the criteria in this subpart.

Sec. 4.104 Consideration of Appeal by the Deputy Comptroller.

(a) If the appeal is filed with the appropriate Deputy Comptroller
and the Deputy Comptroller determines that he or she does not need to
transfer the appeal to the Appeals Board under Sec. 4.103(c), the
Deputy Comptroller will render his or her decision on the appeal within
45 days of the receipt of the appeal unless there are extenuating
circumstances requiring additional time.
(b) The Deputy Comptroller will solicit the views of the
supervisory office involved in issuing the material supervisory
determination.
(c) The Deputy Comptroller will apply a de novo standard of review
using the review record when considering the matters being appealed.
(d) The Deputy Comptroller will issue his or her decision in
writing.
(e) If the appellant disagrees with the determination of the Deputy
Comptroller, it may further appeal to the Appeals Board. This appeal
must be filed within 15 days of receiving the written decision from the
Deputy Comptroller.

Sec. 4.105 Consideration by the Appeals Board.

(a) The Appeals Board may consider issues either directly appealed
to it, appealed to it after a determination by a Deputy Comptroller
under Sec. 4.104, or appealed to it after a determination by the
Shared National Credit program under Sec. 4.106. It may also consider
appeals referred to it by a Deputy Comptroller who was substantively
involved in making the decision under review.
(b) The Appeals Board will solicit the views of the supervisory
office involved in issuing the material supervisory determination. The
Appeals Board may also supplement the review record by soliciting the
views of other OCC staff, staff of other supervisory agencies, or other
sources.
(c) The Appeals Board will apply a de novo standard of review to
all matters before it.
(d) If any member of the Appeals Board has been substantively
involved in one or more of the determinations being appealed, the
member must recuse itself from the matter.
(e) All decisions by the Appeals Board will be reviewed by an OCC
attorney for

[[Page 7179]]

conformance with law and OCC policy. This attorney must be independent
from the original determination. The Appeals Board may not reconsider
or change OCC interpretations of law or policy.
(f) The Appeals Board will issue a written decision within 45 days
of receiving the appeal unless there are extenuating circumstances
requiring additional time.
(1) The written decision will state the reasons for the Appeals
Board's conclusion and the evidence it relied upon to reach that
conclusion. However, if the Appeals Board relied on confidential
supervisory information from another institution, that information is
subject to all relevant limits on its disclosure.
(2) A redacted version of the Appeals Board's decision will be
published.
(3) A redacted version of any dissent from the majority opinion by
a member of the Appeals Board will be published.
(g) If any member of the Appeals Board was substantively involved
in the supervisory determination at issue, they must recuse themselves
from the deliberations. An individual will be considered to have been
substantively involved in a material supervisory determination if the
individual was personally consulted regarding the issue being
determined and provided guidance regarding how it should be resolved.

Sec. 4.106 Appeals of Shared National Credit Determinations.

(a) An agent bank may submit a Shared National Credit appeal
directly or on behalf of any participant bank. If the agent bank
refuses, for whatever reason, to file the appeal on behalf of the bank
group, the OCC will accept an appeal from any participating bank.
(b) A bank must file a Shared National Credit appeal with the
regulator that supervises the agent bank. When no agent bank is named,
the appeal shall be filed with the appropriate Federal banking agency,
as defined in 12 U.S.C. 1813(q), for the bank at which the Shared
National Credit was reviewed.
(c) The agent bank shall file a Shared National Credit appeal
within 14 days of notification by the OCC of the preliminary
disposition of the credit.
(1) Any participant bank can appeal either through the agent bank
or on its own within 14 days of receiving the preliminary Shared
National Credit results from the agent bank.
(2) If the agent bank does not provide preliminary results, a
participant bank may file an appeal within 14 days of receiving the
official Shared National Credit results from its from its appropriate
Federal banking agency, as defined in 12 U.S.C. 1813(q).
(d) The appeal must identify the credit, the commitment amount, the
disposition, the basis for the bank's disagreement, and any
documentation that supports the institution's position on the matter(s)
in dispute.
(e) An interagency panel consisting of senior credit examiners that
are independent of the original voting team will evaluate the appeal
and recommend a decision to senior management.
(f) Absent extenuating circumstances, the OCC will issue its
decision on a Shared National Credit appeal within 30 days of receipt
of a complete appeal.
(g) If a bank disagrees with the OCC's decision, it may appeal the
matter to the Appeals Board within 30 days of receiving the decision
letter from the OCC.

Sec. 4.107 Alternative Procedures.

(a) With a finding of good cause, the Appeals Board may:
(1) Extend any time limit in this subpart, either on behalf of the
OCC or on behalf of an appellant; and
(2) Waive any other procedural requirement in this subpart.
(b) If the Appeals Board cannot reach a conclusion on a matter due
to a member being recused, then the Comptroller will decide the matter.
(c) If all members of the Appeals Board are recused, the
Comptroller will decide the matter.
(d) The Comptroller may overturn any decision by the Appeals Board.

Sec. 4.108 Staffing of the Appeals Board.

(a) The Appeals Board will consist of the Chief National Bank
Examiner and two term appointees. The term appointees will be:
(1) Individuals not currently employed by the OCC and who have
never before served as a term appointee on the Appeals Board;
(2) Individuals with relevant experience and expertise, either in
government or in the private sector;
(3) Appointed for a one-year term that is not eligible for renewal;
and
(4) Appointed directly by the Comptroller.
(b) The Appeals Board will report directly to the Comptroller.
(c) The Appeals Board may have staff appointed as necessary to
assist with the investigation and analysis of the appeals before it.
Such staff must be recused from a matter if they were substantively
involved in the determination being appealed.
(d) The term appointees will be disclosed to the public.
(e) The appellant will be informed which term appointees or other
officials are deciding the matter.

Sec. 4.109 Stay of determinations.

(a) Appealed material supervisory determinations will be stayed if
the appellant requests a stay and the appropriate Deputy Comptroller or
the Appeals Board conclude that:
(1) Delaying the implementation of the material supervisory
determination will not result in a risk of immediate financial harm to
an OCC supervised institution;
(2) The material supervisory determination would impose costs on
the appellant within the timeframe for the OCC to decide the appeal;
and
(3) The public interest would not be harmed by delaying the
implementation of the material supervisory determination.
(b) In weighing the above considerations, the OCC will take into
consideration the size of the institution and the resources necessary
to implement the determination, with a lower showing of burden
necessary for smaller institutions.

Sec. 4.110 Expedited Appeals.

(a) When a material supervisory determination relates to or causes
an institution to become critically undercapitalized, as defined by 12
U.S.C. 1831o, the review of any appeal of that supervisory
determination will be processed on an expedited basis.
(b) The Comptroller, at his or her discretion, may determine that
any appeal must be processed on an expedited basis.
(c) For appeals processed on an expedited basis, the appropriate
Deputy Comptroller or the Appeals Board will issue its decision in 30
days.

Sec. 4.111 Role of the Ombudsman.

(a) The Ombudsman shall act as an impartial liaison between the
appellant and the Deputy Comptroller or the Appeals Board.
(b) The Ombudsman is responsible for preventing retaliation against
a bank for its appeal. (1) After the appropriate OCC official renders a
decision on a formal appeal, the Ombudsman will contact the bank to ask
whether the bank believes OCC examiners have taken actions against the
bank in retaliation for its appeal.
(2) The Ombudsman will contact bank management again 60 days after
the date of the decision letter and then 60 days after completion of
the first examination of the appellant bank following its appeal.
(3) A bank may also contact the Ombudsman any time during or after

[[Page 7180]]

the appeal if the bank believes that retaliation has occurred.
(4) The Ombudsman may initiate a factual inquiry into alleged
retaliation at any time.
(c) If a bank claims that retaliatory actions have taken place, the
Ombudsman will investigate the complaint. In the absence of extenuating
circumstances, the Ombudsman will complete the investigation within 30
days.
(d) If the Ombudsman finds that retaliation has occurred:
(1) The Ombudsman will forward the complaint directly to the
Department of the Treasury's Office of Inspector General;
(2) Appropriate action, including disciplinary action consistent
with OCC policies, will be taken as warranted; and
(3) The Ombudsman may recommend to the Comptroller that the next
examination of the bank exclude personnel involved in the ruling
appealed by the bank or involved in any retaliation. The Comptroller
will make the final decision on any such exclusion.
(e) Thirty days after the conclusion of each examination of a
financial institution or service provider, the Ombudsman will reach out
to the examined entity for feedback about any issues encountered during
the process.
(f) The Ombudsman will be responsible for receiving and
investigating complaints from supervised entities alleging misconduct
by the OCC staff or a failure of the OCC to follow laws and policy. The
Chief Counsel's Office will coordinate with the Ombudsman and will
render a final decision on all questions of law. Supervised entities
may contact the Ombudsman at any time to informally discuss concerns
about OCC misconduct or to file a formal complaint of misconduct.
(g) The Ombudsman will prepare an annual report for the Comptroller
detailing trends it observed in appeals, received complaints, and post-
examination outreach.
(h) The Ombudsman will publish an annual report that publicly
discloses:
(1) The number of appeals the OCC received for the prior calendar
year;
(2) The number of appeals decided;
(3) The average length of time each appeal took to be decided;
(4) The topics of the appeals received for the year; and
(5) The redacted decision for each decided appeal, including any
published dissent.
(i) The Ombudsman will report directly to the Comptroller of the
Currency.

Sec. 4.112 Retaliation and Dissuasion Forbidden.

(a) Neither the OCC nor any employee of the OCC may retaliate
against an institution or person for filing an appeal under this
subpart.
(b) For purposes of this subpart, ``retaliation'' or ``retaliate''
is defined as any action or decision by the OCC or OCC employees that
causes a supervised entity to be treated differently or more harshly
than other similarly situated supervised entities because the
supervised entity attempted to resolve a complaint by filing an appeal
of a material supervisory determination or utilized any other OCC
mechanisms for resolving complaints, including informal discussions
with OCC supervisory staff.
(c) Neither the OCC nor any of its employees may discourage a
supervised entity from filing an appeal or from otherwise communicating
concerns and objections to the OCC through the appeals process, through
the Ombudsman's Office, or through other channels.
(d) If the Appeals Board finds in favor of a supervised entity on
an appeal and overrules an OCC supervisory determination, the OCC may
not impose a substantially similar supervisory determination based on
the same underlying facts in future material supervisory
determinations.

Sec. 4.113 Construction of Time Limits.

In computing any period of time prescribed by this subpart, the
date of the act or event that commences the designated period of time
is not included. The last day so computed is included unless it is a
Saturday, Sunday, or Federal holiday. When the last day is a Saturday,
Sunday, or Federal holiday, the period runs until the end of the next
day that is not a Saturday, Sunday, or Federal holiday. Intermediate
Saturdays, Sundays, and Federal holidays are included in the
computation of time.

Sec. 4.114 Retention of Authority.

(a) The OCC retains the discretion to waive any provision of this
subpart for cause at the discretion of the Comptroller of the Currency.
(b) Nothing in this subpart should be construed to interfere with
the OCC's authority to bring an enforcement action against an
institution.
(c) Any application or request for approval made to the OCC 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 or unless the OCC
determines there is good cause not to stay the consideration of the
request for approval pending the decision of the appeal.
(d) Nothing in this subpart subjects (or is intended to subject)
any material supervisory determination or any other substantive
decision of the OCC to judicial review except as provided in another
source of law.

Jonathan V. Gould,
Comptroller of the Currency.
[FR Doc. 2026-03086 Filed 2-13-26; 8:45 am]
BILLING CODE 4810-33-P

</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on February 17, 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.