Guidelines for Appeals of Material Supervisory Determinations, 30393-30398 [E8-11416]
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removed potentially burdensome
paperwork requirements by encouraging
carriers to comply with the reporting
requirements through electronic means.
We believe that the clarifications
adopted in the Order on
Reconsideration significantly decrease
the paperwork burden on carriers.
Specifically, the Commission: (1)
Clarified that Completing Carriers must
provide the Payphone Service Provider
(PSP) with adequate notice of an
alternative compensation arrangement
(ACA) prior to its effective date with
sufficient time for the PSP to object to
an ACA, and also prior to the
termination of an ACA; (2) clarified any
paperwork burdens imposed on carriers
and allowed Completing Carriers to
provide notice of ACAs on a
clearinghouse’s Web site; (3) required
Completing Carriers to report only
completed calls in their quarterly
reports; and (4) extended the time
period from 18 to 27 months for
Completing Carriers and Intermediate
Carriers to retain certain payphone
records.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. E8–11777 Filed 5–23–08; 8:45 am]
BILLING CODE 6712–01–P
FEDERAL COMMUNICATIONS
COMMISSION
[Report No. 2867]
Petition for Reconsideration of Action
in Rulemaking Proceeding
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May 16, 2008.
A Petition for Reconsideration has
been filed in the Commission’s
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this document is available for viewing
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may be purchased from the
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must be filed by June 11, 2008. See
section 1.4(b)(1) of the Commission’s
rules (47 CFR 1.4(b)(1)). Replies to an
opposition must be filed within 10 days
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Subject: In the Matter of: Federal-State
Joint Board on Universal Service (CC
Docket No. 96–45); Access Charge
Reform (CC Docket No. 96–262) (WC
Docket No. 06–122).
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Number of Petitions Filed: 1.
Marlene H. Dortch,
Secretary.
[FR Doc. E8–11775 Filed 5–23–08; 8:45 am]
BILLING CODE 6712–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
Guidelines for Appeals of Material
Supervisory Determinations
Federal Deposit Insurance
Corporation.
ACTION: Notice and request for comment.
AGENCY:
SUMMARY: The Federal Deposit
Insurance Corporation (FDIC) proposes
to amend its Guidelines for Appeals of
Material Supervisory Determinations to
better align the FDIC’s Supervisory
Appeals Review Committee (SARC)
process with the material supervisory
determinations appeals procedures at
the other Federal banking agencies. The
proposed amendments would modify
the supervisory determinations eligible
for appeal to eliminate the ability of an
FDIC-supervised institution to file an
appeal with the SARC with respect to
determinations or the facts and
circumstances underlying a formal
enforcement-related action or decision,
including the initiation of an
investigation. The proposed
amendments also include limited
technical amendments.
DATES: Written comments on the
Proposal must be received by the FDIC
on or before July 28, 2008 for
consideration.
ADDRESSES: Interested parties are
invited to submit written comments to
the FDIC by any of the following
methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Agency Web Site: https://
www.fdic.gov/regulations/laws/federal/
propose.html. Follow the instructions
for submitting comments.
• E-mail: comments@fdic.gov.
Include ‘‘Guidelines for Appeals of
Material Supervisory Determinations’’
in the subject line of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street, NW.,
Washington, DC 20429.
• Hand Delivery: Comments may be
hand-delivered to the guard station
located at the rear of the FDIC’s 550
17th Street building (accessible from F
Street) on business days between 7 a.m.
and 5 p.m.
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Instructions: All submissions received
must include the agency name and use
the title ‘‘Guidelines for Appeals of
Material Supervisory Determinations.’’
All comments received will be posted
without change to, https://www.fdic.gov/
regulations/laws/federal/propose.html,
including any personal information
provided.
Comments may be inspected and
photocopied in the FDIC Public
Information Center, Room E–1002, 3501
North Fairfax Drive, Arlington, VA
22226 between 9 a.m. and 4:30 p.m. on
business days.
FOR FURTHER INFORMATION CONTACT:
Frank Gray, Section Chief, FDIC, 550
17th Street, NW., Washington, DC 20429
[F–4054]; telephone: (202) 898–3508; or
electronic mail: fgray@fdic.gov; or
Richard Bogue, Counsel, FDIC, 550 17th
Street, NW., Washington, DC 20429
[MB–3014]; telephone: (202) 898–3726;
facsimile: (202) 898–3658; or electronic
mail: rbogue@fdic.gov.
SUPPLEMENTARY INFORMATION: The FDIC
is publishing for notice and comment
proposed amendments to the Guidelines
for Appeals of Material Supervisory
Determinations. The FDIC considers it
desirable in this instance to garner
comments regarding these amendments
to the guidelines, although notice and
comment is not required and may not be
employed in any future amendments.
The proposed amendments would be
effective upon adoption and are
intended to more closely align the
FDIC’s Guidelines for Appeals of
Material Supervisory Determinations to
the material supervisory determination
appeals processes of the other Federal
banking agencies.
Background
Section 309(a) of the Riegle
Community Development and
Regulatory Improvement Act of 1994
(Pub. L. 103–325, 108 Stat. 2160) (Riegle
Act), required the FDIC (as well as the
other Federal banking agencies and the
National Credit Union Administration
Board (NCUA)) to establish an
independent intra-agency appellate
process to review material supervisory
determinations. The Riegle Act defines
the term ‘‘independent appellate
process’’ to mean a review by an agency
official who does not directly or
indirectly report to the agency official
who made the material supervisory
determination under review. In the
appeals process, the FDIC is required to
ensure that (1) an appeal of a material
supervisory determination by an
insured depository institution is heard
and decided expeditiously; and (2)
appropriate safeguards exist for
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protecting appellants from retaliation by
agency examiners.
The term ‘‘material supervisory
determinations’’ is defined in the Riegle
Act to include determinations relating
to: (1) Examination ratings; (2) the
adequacy of loan loss reserve
provisions; and (3) classifications on
loans that are significant to an
institution. The Riegle Act specifically
excludes from the definition of
‘‘material supervisory determinations’’ a
decision to appoint a conservator or
receiver for an insured depository
institution or to take prompt corrective
action pursuant to section 38 of the
Federal Deposit Insurance Act (‘‘FDI
Act’’), 12 U.S.C. 1831o. Finally, Section
309(g) (12 U.S.C. 4806(g)) expressly
provides that the Riegle Act’s
requirement to establish an appeals
process shall not affect the authority of
the Federal banking agencies to take
enforcement or supervisory actions
against an institution.
On December 28, 1994, the FDIC
published in the Federal Register, for a
30-day comment period, a notice of and
request for comments on proposed
Guidelines for Appeals of Material
Supervisory Determinations
(‘‘Guidelines’’) (59 FR 66965). In the
proposed Guidelines, the FDIC
proposed that the term ‘‘material
supervisory determinations,’’ in
addition to the statutory exclusions
noted above, also should not include:
(1) Determinations for which other
appeals procedures exist (such as
determinations relating to deposit
insurance assessment risk
classifications); (2) decisions to initiate
formal enforcement actions under
section 8 of the FDI Act; (3) decisions
to initiate informal enforcement actions
(such as memoranda of understanding);
(4) determinations relating to a violation
of a statute or regulation; and (5) any
other determinations not specified in
the Riegle Act as being eligible for
appeal.
Commenters to the proposed
Guidelines suggested that the proposed
limitations on determinations eligible
for appeal were too restrictive. In
response to comments received, the
FDIC modified the proposed Guidelines.
The FDIC added a final clarifying
sentence to the listing of
‘‘Determinations Not Eligible for
Appeal’’ in the Guidelines as follows:
‘‘The FDIC recognizes that, although
determinations to take prompt
corrective action or initiate formal or
informal enforcement actions are not
appealable, the determinations upon
which such actions may be based (e.g.,
loan classifications) are appealable
provided they otherwise qualify.’’ (60
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FR 15929, March 28, 1995). On March
21, 1995, the FDIC’s Board of Directors
adopted the proposed Guidelines. (60
FR 15923).
On March 18, 2004, the FDIC
published in the Federal Register, for a
30-day comment period, a notice and
request for comments respecting
proposed revisions to the Guidelines.
(69 FR 12855). On July 9, 2004, the FDIC
published in the Federal Register a
notice of guidelines which, effective
June 28, 2004, adopted the revised
Guidelines changing the composition
and procedures of the SARC. (69 FR
41479). The revised Guidelines were
disseminated to FDIC-supervised
financial institutions through a
Financial Institution Letter, FIL–113–
2004, issued October 13, 2004.
Proposed Amendments
I. Amendment of Determinations
Eligible for Review
Determinations underlying
enforcement actions, such as the
citation of apparent violations of law or
regulation, have been appealable under
the FDIC’s Guidelines since their
enactment in 1995. Recent SARC
appeals by FDIC-supervised institutions
have, however, highlighted a situation
where an appeal to the SARC is
inconsistent with the intent of the
Riegle Act that ‘‘the appeals process not
impair, in any way, the agencies’
litigation or enforcement authority.’’
(Senate Report No. 103–169).
Accordingly, the proposed amendments
to the Guidelines would eliminate the
ability of an FDIC-supervised institution
to file an appeal with the SARC with
respect to determinations or the facts
and circumstances underlying formal
enforcement-related actions or
decisions, including the initiation of a
formal investigation. The proposed
amendments to the Guidelines satisfy
the requirements of the Riegle Act and
better align the FDIC’s material
supervisory determination appeals
procedures with those of the other
Federal banking agencies.
A. Independent Review Requirement
Section 309(a) of the Riegle Act
required the FDIC to establish an
appellate process to review material
supervisory determinations. The SARC
must make its decision based on ‘‘facts
of record,’’ which are limited to the
Report of Examination, the FDICsupervised institution’s appeal, an FDIC
staff response, and, in some cases, a
brief oral presentation before the SARC.
The SARC appeals process does not
involve any further factual development
through investigation or discovery.
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Decisions to proceed with a formal
enforcement action, on the other hand,
must be supported by facts
demonstrating both the existence of the
violation at issue as well as facts that
satisfy all of the required elements of
the enforcement action to be pursued.
All FDIC formal enforcement actions are
reviewed by a number of high-level
FDIC officials both prior and subsequent
to their initiation. The ability to initiate
(through issuance of a notice or
stipulated order) routine cease-anddesist actions under section 8(b) of the
FDI Act has for more than a decade been
delegated to FDIC Regional Directors.
Decisions to initiate enforcement
actions pursuant to section 8(b) of the
FDI Act must be made at the Deputy
Regional Director or Regional Director
level, following review and concurrence
by the Regional Counsel.
All other, non-routine formal
enforcement actions are generally
reviewed at the highest levels of the
FDIC before issuance. Ultimately, the
FDIC Board of Directors (the Board)
decides the outcome of any contested
enforcement action and that decision is
fully supported by a factual record
compiled through investigation,
discovery, and an administrative
hearing held before an impartial
administrative law judge who makes
findings of facts, conclusions of law and
recommends a decision to the Board.
The FDIC’s current procedures for
initiating formal enforcement actions
ensure review of material supervisory
determinations by high level FDIC
officials. Thus, there is no need for
determinations underlying formal
enforcement actions to be separately
reviewable by the SARC.
B. Parity With Other Federal Agencies
As previously noted, the Riegle Act
required all of the Federal banking
agencies and the NCUA to establish
appellate processes to review material
supervisory determinations. While the
various appellate processes adopted by
the Federal banking agencies differ in
substance and procedure, no Federal
bank agency, other than the FDIC,
expressly allows review of
determinations that underlie formal
enforcement actions.
OCC Bulletin 2002–9, National Bank
Appeals Procedures (February 25, 2002)
(OCC Guidelines), which governs the
appeals procedure adopted at the OCC,
exempts from its definition of
appealable matters ‘‘any formal
enforcement-related actions or
decisions, including decisions to: (a)
Seek the issuance of a formal agreement
or cease and desist order, or the
assessment of a civil money penalty
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pursuant to Section 8 of the [FDI Act]
* * * and (d) commence formal
investigations pursuant to 12 U.S.C.
481, 1818(n) and 1820(c) * * *.’’
Additionally, OCC Guidelines define
the term ‘‘formal enforcement-related
actions or decisions’’ as including ‘‘the
underlying facts that form the basis of
a recommended or pending formal
enforcement action, the acts or practices
that are the subject of a pending formal
enforcement action, and OCC
determinations regarding compliance
with an existing formal enforcement
action.’’
The supervisory determinations that
may be reviewed on appeal by the OTS,
as defined by Thrift Bulletin TB 68a
(June 10, 2004), include examination
ratings, adequacy of loan loss reserve
provisions, and significant loan
classifications, but does not extend to
decisions relating to ‘‘formal
enforcement-related action’’ such as
‘‘[i]nitiating a formal investigation[,]’’
‘‘[f]iling a notice of charges[,]’’ and
‘‘[a]ssessing civil money penalties.’’
Both the OCC and the OTS specifically
include formal investigations in the
definitions of enforcement-related
actions excepted from appeal.
During the adoption of its internal
appeals process, the Board of Governors
of the Federal Reserve System (Federal
Reserve) specifically rejected a
suggestion received through comment
that institutions consenting to the
issuance of a formal enforcement action,
such as a cease-and-desist order, be
allowed to use the internal appeals
process to challenge the material
supervisory determinations that led to
the enforcement action. The Federal
Reserve found this suggestion to be
inconsistent with the intent of the
Riegle Act, which was to ‘‘provide an
avenue for the review of material
supervisory determinations and not to
contest enforcement actions for which
an alternative appeals mechanism
exists.’’ (60 FR 16472, March 30, 1995).
The National Credit Union
Association (NCUA) limits the type of
determinations eligible for review under
its appeals process to the
determinations expressly stated in
section 309, namely: (1) Composite
CAMEL rating of 3, 4, and 5 and all
component ratings of those composite
ratings; (2) adequacy of loan loss reserve
provisions; and (3) loan classifications
on loans that are significant as
determined by the appealing credit
union. (60 FR 14795, March 20, 1995).
Thus, in addition to satisfying the
Riegle Act’s requirement that the
Federal banking agencies adopt
independent review processes, the
proposed amendments would modify
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the FDIC’s current Guidelines so as to be
consistent with the other Federal
banking agencies, promoting equal
treatment of all banks and thrifts
appealing material supervisory
determinations.
C. Notice of Enforcement-Related Action
or Decision
At present, only the OCC’s Guidelines
explicitly provide that a decision to
pursue a formal enforcement action will
cut off rights to file a material
supervisory determination appeal. In
this regard, OCC Bulletin 2002–9 states
that a formal enforcement-related action
or decision ‘‘commences when a
Supervision Review Committee
determines that the OCC will pursue a
formal action,’’ at which time the matter
becomes unappealable. The OCC has
Supervision Review Committees at both
the Regional and Washington offices
with delegations of authority to initiate
different types of formal enforcement
actions. The FDIC structure of
enforcement matter decisionmaking is
different, generally vesting authority to
initiate formal enforcement actions in
designated DSC officials, in some cases
with concurrence requirements and in
some cases following oversight by the
Case Review Committee in Washington.
The essence of the OCC’s cut-off date
is that a decision has been made by
appropriately authorized officials that a
formal enforcement action will be
pursued. In order to mirror the cut-off
date as closely as possible, the proposed
amendments would establish the FDIC’s
cut-off date as the date when ‘‘the FDIC
* * * provides written notice to the
bank indicating its intention to pursue
available formal enforcement remedies
* * *.’’ Operational procedures will be
established that provide that when an
FDIC official with authority to initiate a
formal enforcement action decides that
the facts and circumstances then known
warrant initiation of such action, a letter
to the bank will be sent notifying the
bank of the decision to pursue formal
action. Such notice will render the
underlying facts and circumstances that
form the basis of the enforcement action
unappealable.
II. Additional Technical Amendments
Paragraph C of the Guidelines
(Institutions Eligible to Appeal) states
that the Guidelines apply to insured
depository institutions that the FDIC
supervises ‘‘(i.e., insured State
nonmember banks (except District
banks) and insured branches of foreign
banks).’’ The 2004 District of Columbia
Omnibus Authorization Act, Public Law
No. 108–386, § 8, extended to the FDIC
regulatory and supervisory authority
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over District of Columbia banks.
Consequently, the parenthetical ‘‘except
District banks’’ would be stricken from
Paragraph C of the Guidelines.
Paragraph G of the Guidelines
(Appeal to the SARC) provides that the
Director of the Division of Supervision
and Consumer Protection may, with the
approval of the SARC Chairperson,
transfer a request for review directly to
the SARC if the Director determines that
the institution is entitled to relief that
the Director lacks delegated authority to
grant. This provision expedites the
SARC process by eliminating the need
for the Division Director to deny relief
to an institution to enable it to file its
appeal to the SARC. In order to further
facilitate the prompt resolution of
requests for review, a mechanism
through which the Division Director
may seek guidance from the SARC
Chairperson is proposed for Paragraph
G. An addition to Paragraph G would
read: ‘‘The Division Director may also
request guidance from the SARC
Chairperson as to procedural or other
questions relating to any request for
review.’’
For the aforementioned reasons, the
FDIC Board of Directors proposes to
revise the Guidelines for Appeals of
Material Supervisory Determinations as
set forth below.
*
*
*
*
*
Proposed Amended Guidelines for
Appeals of Material Supervisory
Determinations
A. Introduction
Section 309(a) of the Riegle
Community Development and
Regulatory Improvement Act of 1994
(Pub. L. 103–325, 108 Stat. 2160)
(‘‘Riegle Act’’) required the Federal
Deposit Insurance Corporation (‘‘FDIC’’)
to establish an independent intra-agency
appellate process to review material
supervisory determinations made at
insured depository institutions that it
supervises. The Guidelines for Appeals
of Material Supervisory Determinations
(‘‘guidelines’’) describe the types of
determinations that are eligible for
review and the process by which
appeals will be considered and decided.
The procedures set forth in these
guidelines establish an appeals process
for the review of material supervisory
determinations by the Supervision
Appeals Review Committee (‘‘SARC’’).
B. SARC Membership
The following individuals comprise
the three (3) voting members of the
SARC: (1) One inside FDIC Board
member, either the Chairperson, the
Vice Chairperson, or the FDIC Director
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(Appointive), as designated by the FDIC
Chairperson (this person would serve as
the Chairperson of the SARC); and (2)
one deputy or special assistant to each
of the inside FDIC Board members who
are not designated as the SARC
Chairperson. The General Counsel is a
non-voting member of the SARC. The
FDIC Chairperson may designate
alternate member(s) to the SARC if there
are vacancies so long as the alternate
member was not involved in making or
affirming the material supervisory
determination under review. A member
of the SARC may designate and
authorize the most senior member of his
or her staff within the substantive area
of responsibility related to cases before
the SARC to act on his or her behalf.
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C. Institutions Eligible To Appeal
The guidelines apply to the insured
depository institutions that the FDIC
supervises (i.e., insured State
nonmember banks and insured branches
of foreign banks) and also to other
insured depository institutions with
respect to which the FDIC makes
material supervisory determinations.
D. Determinations Subject To Appeal
An institution may appeal any
material supervisory determination
pursuant to the procedures set forth in
these guidelines. Material supervisory
determinations include:
(a) CAMELS ratings under the
Uniform Financial Institutions Rating
System;
(b) EDP ratings under the Uniform
Interagency Rating System for Data
Processing Operations;
(c) Trust ratings under the Uniform
Interagency Trust Rating System;
(d) CRA ratings under the Revised
Uniform Interagency Community
Reinvestment Act Assessment Rating
System;
(e) Consumer compliance ratings
under the Uniform Interagency
Consumer Compliance Rating System;
(f) Registered transfer agent
examination ratings;
(g) Government securities dealer
examination ratings;
(h) Municipal securities dealer
examination ratings;
(i) Determinations relating to the
adequacy of loan loss reserve
provisions;
(j) Classifications of loans and other
assets in dispute the amount of which,
individually or in the aggregate, exceed
10 percent of an institution’s total
capital;
(k) Determinations relating to
violations of a statute or regulation that
may impact the capital, earnings, or
operating flexibility of an institution, or
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otherwise affect the nature and level of
supervisory oversight accorded an
institution;
(l) Truth in Lending (Regulation Z)
restitution;
(m) Filings made pursuant to 12 CFR
303.11(f), for which a Request for
Reconsideration has been granted, other
than denials of a change in bank control,
change in senior executive officer or
board of directors, or denial of an
application pursuant to section 19 of the
FDI Act (which are contained in 12 CFR
308, subparts D, L, and M, respectively),
if the filing was originally denied by the
DSC Director, Deputy Director or
Associate Director; and
(n) Any other supervisory
determination (unless otherwise not
eligible for appeal) that may impact the
capital, earnings, operating flexibility,
or capital category for prompt corrective
action purposes of an institution, or
otherwise affect the nature and level of
supervisory oversight accorded an
institution.
Material supervisory determinations
do not include:
(a) Decisions to appoint a conservator
or receiver for an insured depository
institution;
(b) Decisions to take prompt
corrective action pursuant to section 38
of the Federal Deposit Insurance Act, 12
U.S.C. 1831o;
(c) Determinations for which other
appeals procedures exist (such as
determinations of deposit insurance
assessment risk classifications and
payment calculations);
(d) Decisions to initiate informal
enforcement actions (such as
memoranda of understanding); and
(e) Formal enforcement-related
actions and decisions, including
determinations and the underlying facts
and circumstances that form the basis of
a recommended or pending formal
enforcement action, and FDIC
determinations regarding compliance
with an existing formal enforcement
action.
A formal enforcement-related action
or decision commences, and therefore
becomes unappealable, when the FDIC
initiates a formal investigation under 12
U.S.C. 1820(c) or provides written
notice to the bank indicating its
intention to pursue available formal
enforcement remedies under applicable
statutes or published enforcementrelated policies of the FDIC, including
written notice of a referral to the
Attorney General or a notice to the
Secretary of Housing and Urban
Development for violations of the Equal
Credit Opportunity Act or the Fair
Housing Act. For the purposes of these
guidelines, remarks in a Report of
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Examination do not constitute written
notice of intent to pursue formal
enforcement remedies.
E. Good Faith Resolution
An institution should make a good
faith effort to resolve any dispute
concerning a material supervisory
determination with the on-site examiner
and/or the appropriate Regional Office.
The on-site examiner and the Regional
Office will promptly respond to any
concerns raised by an institution
regarding a material supervisory
determination. Informal resolution of
disputes with the on-site examiner and/
or the appropriate Regional Office is
encouraged, but seeking such a
resolution is not a condition to filing a
request for review with the Division of
Supervision and Consumer Protection
or an appeal to the SARC under these
guidelines.
F. Filing a Request for Review With the
FDIC Division of Supervision and
Consumer Protection
An institution may file a request for
review of a material supervisory
determination with the Director,
Division of Supervision and Consumer
Protection, 550 17th Street, NW., Room
F–4076, Washington, DC 20429, within
60 calendar days following the
institution’s receipt of a report of
examination containing a material
supervisory determination or other
written communication of a material
supervisory determination. A request for
review must be in writing and must
include:
(a) A detailed description of the issues
in dispute, the surrounding
circumstances, the institution’s position
regarding the dispute and any
arguments to support that position
(including citation of any relevant
statute, regulation, policy statement or
other authority), how resolution of the
dispute would materially affect the
institution, and whether a good faith
effort was made to resolve the dispute
with the on-site examiner and the
Regional Office; and
(b) A statement that the institution’s
board of directors has considered the
merits of the request and authorized that
it be filed.
The Director, Division of Supervision
and Consumer Protection, will issue a
written determination of the request for
review, setting forth the grounds for that
determination, within 30 days of receipt
of the request. No appeal to the SARC
will be allowed unless an institution has
first filed a timely request for review
with the Division of Supervision and
Consumer Protection.
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G. Appeal to the SARC
An institution that does not agree
with the written determination rendered
by the Director of the Division of
Supervision and Consumer Protection
must appeal that determination to the
SARC within 30 calendar days from the
date of that determination. The
Director’s determination will inform the
institution of the 30-day time period for
filing with the SARC and will provide
the mailing address for any appeal the
institution may wish to file. Failure to
file within the 30-day time limit may
result in denial of the appeal by the
SARC. If the Director of the Division of
Supervision and Consumer Protection
determines that an institution is entitled
to relief that the Director lacks delegated
authority to grant, the Director may,
with the approval of the Chairperson of
the SARC, transfer the matter directly to
the SARC without issuing a
determination. Notice of such a transfer
will be provided to the institution. The
Division Director may also request
guidance from the SARC Chairperson as
to procedural or other questions relating
to any request for review.
H. Filing With the SARC
An appeal to the SARC will be
considered filed if the written appeal is
received by the FDIC within 30 calendar
days from the date of the division
director’s written determination or if the
written appeal is placed in the U.S. mail
within that 30-day period. If the 30th
day after the date of the division
director’s written determination is a
Saturday, Sunday or Federal holiday,
filing may be made on the next business
day. The appeal should be sent to the
address indicated on the determination
being appealed.
pwalker on PROD1PC71 with NOTICES
I. Contents of Appeal
The appeal should be labeled to
indicate that it is an appeal to the SARC
and should contain the name, address,
and telephone number of the institution
and any representative, as well as a
copy of the determination being
appealed. If oral presentation is sought,
that request should be included in the
appeal. Only matters previously
reviewed at the division level, resulting
in a written determination or direct
referral to the SARC, may be appealed
to the SARC. Evidence not presented for
review to the DSC Director may be
submitted to the SARC only if
authorized by the SARC Chairperson.
The institution should set forth all of
the reasons, legal and factual, why it
disagrees with the determination.
Nothing in the SARC administrative
VerDate Aug<31>2005
17:22 May 23, 2008
Jkt 214001
process shall create any discovery or
other such rights.
J. Burden of Proof
The burden of proof as to all matters
at issue in the appeal, including
timeliness of the appeal if timeliness is
at issue, rests with the institution.
K. Oral Presentation
The SARC may, in its discretion,
whether or not a request is made,
determine to allow an oral presentation.
The SARC generally grants a request for
oral presentation only if it determines
that oral presentation is likely to be
helpful or would otherwise be in the
public interest. Notice of the SARC’s
determination to grant or deny a request
for oral presentation will be provided to
the institution. If oral presentation is
held, the institution will be allowed to
present its positions on the issues raised
in the appeal and to respond to any
questions from the SARC. The SARC
may also require that FDIC staff
participate as the SARC deems
appropriate.
L. Dismissal and Withdrawal
An appeal may be dismissed by the
SARC if it is not timely filed, if the basis
for the appeal is not discernable from
the appeal, or if the institution moves to
withdraw the appeal.
M. Scope of Review and Decision
The SARC will review the appeal for
consistency with the policies, practices
and mission of the FDIC and the overall
reasonableness of and the support
offered for the positions advanced, and
notify the institution, in writing, of its
decision concerning the disputed
material supervisory determination(s)
within 60 days from the date the appeal
is filed, or within 60 days from oral
presentation, if held. SARC review will
be limited to the facts and
circumstances as they existed prior to or
at the time the material supervisory
determination was made, even if later
discovered, and no consideration will
be given to any facts or circumstances
that occur or corrective action taken
after the determination was made. The
SARC may reconsider its decision only
on a showing of an intervening change
in the controlling law or the availability
of material evidence not reasonably
available when the decision was issued.
N. Publication of Decisions
SARC decisions will be published.
Published SARC decisions will be
redacted to avoid disclosure of exempt
information. Published SARC decisions
may be cited as precedent in appeals to
the SARC.
PO 00000
Frm 00023
Fmt 4703
Sfmt 4703
30397
O. SARC Guidelines Generally
Appeals to the SARC will be governed
by these guidelines. The SARC will
retain the discretion to waive any
provision of the guidelines for good
cause; the SARC may adopt
supplemental rules governing SARC
operations; the SARC may order that
material be kept confidential; and the
SARC may consolidate similar appeals.
P. Limitation on Agency Ombudsman
The subject matter of a material
supervisory determination for which
either an appeal to the SARC has been
filed or a final SARC decision issued is
not eligible for consideration by the
Ombudsman.
Q. Coordination With State Regulatory
Authorities
In the event that a material
supervisory determination subject to a
request for review is the joint product of
the FDIC and a State regulatory
authority, the Director, Division of
Supervision and Consumer Protection,
will promptly notify the appropriate
State regulatory authority of the request,
provide the regulatory authority with a
copy of the institution’s request for
review and any other related materials,
and solicit the regulatory authority’s
views regarding the merits of the request
before making a determination. In the
event that an appeal is subsequently
filed with the SARC, the SARC will
notify the institution and the State
regulatory authority of its decision.
Once the SARC has issued its
determination, any other issues that
may remain between the institution and
the State authority will be left to those
parties to resolve.
R. Effect on Supervisory or Enforcement
Actions
The use of the procedures set forth in
these guidelines by any institution will
not affect, delay, or impede any formal
or informal supervisory or enforcement
action in progress or affect the FDIC’s
authority to take any supervisory or
enforcement action against that
institution.
S. Effect on Applications or Requests for
Approval
Any application or request for
approval made to the FDIC by an
institution that has appealed a material
supervisory determination which 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.
E:\FR\FM\27MYN1.SGM
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30398
Federal Register / Vol. 73, No. 102 / Tuesday, May 27, 2008 / Notices
T. Prohibition on Examiner Retaliation
The FDIC has an experienced
examination workforce and is proud of
its professionalism and dedication.
FDIC policy prohibits any retaliation,
abuse, or retribution by an agency
examiner or any FDIC personnel against
an institution. Such behavior against an
institution that appeals a material
supervisory determination constitutes
unprofessional conduct and will subject
the examiner or other personnel to
appropriate disciplinary or remedial
action. Institutions that believe they
have been retaliated against are
encouraged to contact the Regional
Director for the appropriate FDIC region.
Any institution that believes or has any
evidence that it has been subject to
retaliation may file a complaint with the
Director, Office of the Ombudsman,
Federal Deposit Insurance Corporation,
550 17th Street, Washington, DC 20429,
explaining the circumstances and the
basis for such belief or evidence and
requesting that the complaint be
investigated and appropriate
disciplinary or remedial action taken.
The Office of the Ombudsman will work
with the Division of Supervision and
Consumer Protection to resolve the
allegation of retaliation.
By order of the Board of Directors.
Dated at Washington, DC, the 15th day of
April, 2008.
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. E8–11416 Filed 5–23–08; 8:45 am]
BILLING CODE 6714–01–P
persons may express their views in
writing on the standards enumerated in
the BHC Act (12 U.S.C. 1842(c)). If the
proposal also involves the acquisition of
a nonbanking company, the review also
includes whether the acquisition of the
nonbanking company complies with the
standards in section 4 of the BHC Act
(12 U.S.C. 1843). Unless otherwise
noted, nonbanking activities will be
conducted throughout the United States.
Additional information on all bank
holding companies may be obtained
from the National Information Center
website at www.ffiec.gov/nic/.
Unless otherwise noted, comments
regarding each of these applications
must be received at the Reserve Bank
indicated or the offices of the Board of
Governors not later than June 20, 2008.
A. Federal Reserve Bank of Chicago
(Burl Thornton, Assistant Vice
President) 230 South LaSalle Street,
Chicago, Illinois 60690–1414:
1. Capitol Bancorp, Ltd., and Capitol
Development Bancorp Limited VII, both
of Lansing, Michigan, to acquire 51
percent of the voting shares of Central
Arizona Bank (in organization), Casa
Grande, Arizona.
2. Capitol Bancorp, Ltd., and Capitol
Development Bancorp Limited VII, both
of Lansing, Michigan, to acquire 51
percent of the voting shares of Sunrise
Bank of Norman (in organization),
Norman, Oklahoma.
Board of Governors of the Federal Reserve
System, May 21, 2008.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc. E8–11743 Filed 5–23–08; 8:45 am]
BILLING CODE 6210–01–S
FEDERAL RESERVE SYSTEM
FEDERAL RESERVE SYSTEM
pwalker on PROD1PC71 with NOTICES
Formations of, Acquisitions by, and
Mergers of Bank Holding Companies
The companies listed in this notice
have applied to the Board for approval,
pursuant to the Bank Holding Company
Act of 1956 (12 U.S.C. 1841 et seq.)
(BHC Act), Regulation Y (12 CFR Part
225), and all other applicable statutes
and regulations to become a bank
holding company and/or to acquire the
assets or the ownership of, control of, or
the power to vote shares of a bank or
bank holding company and all of the
banks and nonbanking companies
owned by the bank holding company,
including the companies listed below.
The applications listed below, as well
as other related filings required by the
Board, are available for immediate
inspection at the Federal Reserve Bank
indicated. The applications also will be
available for inspection at the offices of
the Board of Governors. Interested
VerDate Aug<31>2005
17:22 May 23, 2008
Jkt 214001
Notice of Proposals to Engage in
Permissible Nonbanking Activities or
to Acquire Companies that are
Engaged in Permissible Nonbanking
Activities
The companies listed in this notice
have given notice under section 4 of the
Bank Holding Company Act (12 U.S.C.
1843) (BHC Act) and Regulation Y (12
CFR Part 225) to engage de novo, or to
acquire or control voting securities or
assets of a company, including the
companies listed below, that engages
either directly or through a subsidiary or
other company, in a nonbanking activity
that is listed in § 225.28 of Regulation Y
(12 CFR 225.28) or that the Board has
determined by Order to be closely
related to banking and permissible for
bank holding companies. Unless
otherwise noted, these activities will be
conducted throughout the United States.
PO 00000
Frm 00024
Fmt 4703
Sfmt 4703
Each notice is available for inspection
at the Federal Reserve Bank indicated.
The notice also will be available for
inspection at the offices of the Board of
Governors. Interested persons may
express their views in writing on the
question whether the proposal complies
with the standards of section 4 of the
BHC Act. Additional information on all
bank holding companies may be
obtained from the National Information
Center website at www.ffiec.gov/nic/.
Unless otherwise noted, comments
regarding the applications must be
received at the Reserve Bank indicated
or the offices of the Board of Governors
not later than June 10, 2008.
A. Federal Reserve Bank of Atlanta
(Steve Foley, Vice President) 1000
Peachtree Street, N.E., Atlanta, Georgia
30309:
1. Bancolombia, S.A., and Suramerica
de Inversiones S.A., Inversiones Argos
S.A., both of Medellin, Colombia, and
Cementos Argos S.A. Barranquilla,
Colombia, to retain 50 percent of their
direct and indirect interests in Todo 1
Services, Inc., Medley, Florida, and
thereby engage in providing data
processing and data transmission
services, pursuant to section
225.28(b)(14)(ii) of Regulation Y.
B. Federal Reserve Bank of Chicago
(Burl Thornton, Assistant Vice
President) 230 South LaSalle Street,
Chicago, Illinois 60690–1414:
1. First Community Financial
Partners, Inc., Joliet, Illinois; to continue
to engage de novo in extending credit
and servicing loans, pursuant to section
225.28(b)(1) of Regulation Y.
Board of Governors of the Federal Reserve
System, May 21, 2008.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc. E8–11746 Filed 5–23–08; 8:45 am]
BILLING CODE 6210–01–S
GENERAL SERVICES
ADMINISTRATION
Multiple Award Schedule Advisory
Panel; Notification of Public Advisory
Panel Meeting
U.S. General Services
Administration (GSA).
ACTION: Notice.
AGENCY:
SUMMARY: The U.S. General Services
Administration (GSA) Multiple Award
Schedule Advisory Panel (MAS Panel),
a Federal Advisory Committee, will
hold a public meeting on Monday, June
16, 2008. GSA utilizes the Schedules
program to establish long-term
Governmentwide contracts with
responsible firms to provide Federal,
E:\FR\FM\27MYN1.SGM
27MYN1
]]>Agencies
[Federal Register Volume 73, Number 102 (Tuesday, May 27, 2008)]
[Notices]
[Pages 30393-30398]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-11416]
=======================================================================
-----------------------------------------------------------------------
FEDERAL DEPOSIT INSURANCE CORPORATION
Guidelines for Appeals of Material Supervisory Determinations
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Notice and request for comment.
-----------------------------------------------------------------------
SUMMARY: The Federal Deposit Insurance Corporation (FDIC) proposes to
amend its Guidelines for Appeals of Material Supervisory Determinations
to better align the FDIC's Supervisory Appeals Review Committee (SARC)
process with the material supervisory determinations appeals procedures
at the other Federal banking agencies. The proposed amendments would
modify the supervisory determinations eligible for appeal to eliminate
the ability of an FDIC-supervised institution to file an appeal with
the SARC with respect to determinations or the facts and circumstances
underlying a formal enforcement-related action or decision, including
the initiation of an investigation. The proposed amendments also
include limited technical amendments.
DATES: Written comments on the Proposal must be received by the FDIC on
or before July 28, 2008 for consideration.
ADDRESSES: Interested parties are invited to submit written comments to
the FDIC by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Agency Web Site: https://www.fdic.gov/regulations/laws/
federal/propose.html. Follow the instructions for submitting comments.
E-mail: comments@fdic.gov. Include ``Guidelines for
Appeals of Material Supervisory Determinations'' in the subject line of
the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
Hand Delivery: Comments may be hand-delivered to the guard
station located at the rear of the FDIC's 550 17th Street building
(accessible from F Street) on business days between 7 a.m. and 5 p.m.
Instructions: All submissions received must include the agency name
and use the title ``Guidelines for Appeals of Material Supervisory
Determinations.''
All comments received will be posted without change to, https://
www.fdic.gov/regulations/laws/federal/propose.html, including any
personal information provided.
Comments may be inspected and photocopied in the FDIC Public
Information Center, Room E-1002, 3501 North Fairfax Drive, Arlington,
VA 22226 between 9 a.m. and 4:30 p.m. on business days.
FOR FURTHER INFORMATION CONTACT: Frank Gray, Section Chief, FDIC, 550
17th Street, NW., Washington, DC 20429 [F-4054]; telephone: (202) 898-
3508; or electronic mail: fgray@fdic.gov; or Richard Bogue, Counsel,
FDIC, 550 17th Street, NW., Washington, DC 20429 [MB-3014]; telephone:
(202) 898-3726; facsimile: (202) 898-3658; or electronic mail:
rbogue@fdic.gov.
SUPPLEMENTARY INFORMATION: The FDIC is publishing for notice and
comment proposed amendments to the Guidelines for Appeals of Material
Supervisory Determinations. The FDIC considers it desirable in this
instance to garner comments regarding these amendments to the
guidelines, although notice and comment is not required and may not be
employed in any future amendments.
The proposed amendments would be effective upon adoption and are
intended to more closely align the FDIC's Guidelines for Appeals of
Material Supervisory Determinations to the material supervisory
determination appeals processes of the other Federal banking agencies.
Background
Section 309(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994 (Pub. L. 103-325, 108 Stat. 2160) (Riegle Act),
required the FDIC (as well as the other Federal banking agencies and
the National Credit Union Administration Board (NCUA)) to establish an
independent intra-agency appellate process to review material
supervisory determinations. The Riegle Act defines the term
``independent appellate process'' to mean a review by an agency
official who does not directly or indirectly report to the agency
official who made the material supervisory determination under review.
In the appeals process, the FDIC is required to ensure that (1) an
appeal of a material supervisory determination by an insured depository
institution is heard and decided expeditiously; and (2) appropriate
safeguards exist for
[[Page 30394]]
protecting appellants from retaliation by agency examiners.
The term ``material supervisory determinations'' is defined in the
Riegle Act to include determinations relating to: (1) Examination
ratings; (2) the adequacy of loan loss reserve provisions; and (3)
classifications on loans that are significant to an institution. The
Riegle Act specifically excludes from the definition of ``material
supervisory determinations'' a decision to appoint a conservator or
receiver for an insured depository institution or to take prompt
corrective action pursuant to section 38 of the Federal Deposit
Insurance Act (``FDI Act''), 12 U.S.C. 1831o. Finally, Section 309(g)
(12 U.S.C. 4806(g)) expressly provides that the Riegle Act's
requirement to establish an appeals process shall not affect the
authority of the Federal banking agencies to take enforcement or
supervisory actions against an institution.
On December 28, 1994, the FDIC published in the Federal Register,
for a 30-day comment period, a notice of and request for comments on
proposed Guidelines for Appeals of Material Supervisory Determinations
(``Guidelines'') (59 FR 66965). In the proposed Guidelines, the FDIC
proposed that the term ``material supervisory determinations,'' in
addition to the statutory exclusions noted above, also should not
include: (1) Determinations for which other appeals procedures exist
(such as determinations relating to deposit insurance assessment risk
classifications); (2) decisions to initiate formal enforcement actions
under section 8 of the FDI Act; (3) decisions to initiate informal
enforcement actions (such as memoranda of understanding); (4)
determinations relating to a violation of a statute or regulation; and
(5) any other determinations not specified in the Riegle Act as being
eligible for appeal.
Commenters to the proposed Guidelines suggested that the proposed
limitations on determinations eligible for appeal were too restrictive.
In response to comments received, the FDIC modified the proposed
Guidelines. The FDIC added a final clarifying sentence to the listing
of ``Determinations Not Eligible for Appeal'' in the Guidelines as
follows: ``The FDIC recognizes that, although determinations to take
prompt corrective action or initiate formal or informal enforcement
actions are not appealable, the determinations upon which such actions
may be based (e.g., loan classifications) are appealable provided they
otherwise qualify.'' (60 FR 15929, March 28, 1995). On March 21, 1995,
the FDIC's Board of Directors adopted the proposed Guidelines. (60 FR
15923).
On March 18, 2004, the FDIC published in the Federal Register, for
a 30-day comment period, a notice and request for comments respecting
proposed revisions to the Guidelines. (69 FR 12855). On July 9, 2004,
the FDIC published in the Federal Register a notice of guidelines
which, effective June 28, 2004, adopted the revised Guidelines changing
the composition and procedures of the SARC. (69 FR 41479). The revised
Guidelines were disseminated to FDIC-supervised financial institutions
through a Financial Institution Letter, FIL-113-2004, issued October
13, 2004.
Proposed Amendments
I. Amendment of Determinations Eligible for Review
Determinations underlying enforcement actions, such as the citation
of apparent violations of law or regulation, have been appealable under
the FDIC's Guidelines since their enactment in 1995. Recent SARC
appeals by FDIC-supervised institutions have, however, highlighted a
situation where an appeal to the SARC is inconsistent with the intent
of the Riegle Act that ``the appeals process not impair, in any way,
the agencies' litigation or enforcement authority.'' (Senate Report No.
103-169). Accordingly, the proposed amendments to the Guidelines would
eliminate the ability of an FDIC-supervised institution to file an
appeal with the SARC with respect to determinations or the facts and
circumstances underlying formal enforcement-related actions or
decisions, including the initiation of a formal investigation. The
proposed amendments to the Guidelines satisfy the requirements of the
Riegle Act and better align the FDIC's material supervisory
determination appeals procedures with those of the other Federal
banking agencies.
A. Independent Review Requirement
Section 309(a) of the Riegle Act required the FDIC to establish an
appellate process to review material supervisory determinations. The
SARC must make its decision based on ``facts of record,'' which are
limited to the Report of Examination, the FDIC-supervised institution's
appeal, an FDIC staff response, and, in some cases, a brief oral
presentation before the SARC. The SARC appeals process does not involve
any further factual development through investigation or discovery.
Decisions to proceed with a formal enforcement action, on the other
hand, must be supported by facts demonstrating both the existence of
the violation at issue as well as facts that satisfy all of the
required elements of the enforcement action to be pursued. All FDIC
formal enforcement actions are reviewed by a number of high-level FDIC
officials both prior and subsequent to their initiation. The ability to
initiate (through issuance of a notice or stipulated order) routine
cease-and-desist actions under section 8(b) of the FDI Act has for more
than a decade been delegated to FDIC Regional Directors. Decisions to
initiate enforcement actions pursuant to section 8(b) of the FDI Act
must be made at the Deputy Regional Director or Regional Director
level, following review and concurrence by the Regional Counsel.
All other, non-routine formal enforcement actions are generally
reviewed at the highest levels of the FDIC before issuance. Ultimately,
the FDIC Board of Directors (the Board) decides the outcome of any
contested enforcement action and that decision is fully supported by a
factual record compiled through investigation, discovery, and an
administrative hearing held before an impartial administrative law
judge who makes findings of facts, conclusions of law and recommends a
decision to the Board. The FDIC's current procedures for initiating
formal enforcement actions ensure review of material supervisory
determinations by high level FDIC officials. Thus, there is no need for
determinations underlying formal enforcement actions to be separately
reviewable by the SARC.
B. Parity With Other Federal Agencies
As previously noted, the Riegle Act required all of the Federal
banking agencies and the NCUA to establish appellate processes to
review material supervisory determinations. While the various appellate
processes adopted by the Federal banking agencies differ in substance
and procedure, no Federal bank agency, other than the FDIC, expressly
allows review of determinations that underlie formal enforcement
actions.
OCC Bulletin 2002-9, National Bank Appeals Procedures (February 25,
2002) (OCC Guidelines), which governs the appeals procedure adopted at
the OCC, exempts from its definition of appealable matters ``any formal
enforcement-related actions or decisions, including decisions to: (a)
Seek the issuance of a formal agreement or cease and desist order, or
the assessment of a civil money penalty
[[Page 30395]]
pursuant to Section 8 of the [FDI Act] * * * and (d) commence formal
investigations pursuant to 12 U.S.C. 481, 1818(n) and 1820(c) * * *.''
Additionally, OCC Guidelines define the term ``formal enforcement-
related actions or decisions'' as including ``the underlying facts that
form the basis of a recommended or pending formal enforcement action,
the acts or practices that are the subject of a pending formal
enforcement action, and OCC determinations regarding compliance with an
existing formal enforcement action.''
The supervisory determinations that may be reviewed on appeal by
the OTS, as defined by Thrift Bulletin TB 68a (June 10, 2004), include
examination ratings, adequacy of loan loss reserve provisions, and
significant loan classifications, but does not extend to decisions
relating to ``formal enforcement-related action'' such as
``[i]nitiating a formal investigation[,]'' ``[f]iling a notice of
charges[,]'' and ``[a]ssessing civil money penalties.'' Both the OCC
and the OTS specifically include formal investigations in the
definitions of enforcement-related actions excepted from appeal.
During the adoption of its internal appeals process, the Board of
Governors of the Federal Reserve System (Federal Reserve) specifically
rejected a suggestion received through comment that institutions
consenting to the issuance of a formal enforcement action, such as a
cease-and-desist order, be allowed to use the internal appeals process
to challenge the material supervisory determinations that led to the
enforcement action. The Federal Reserve found this suggestion to be
inconsistent with the intent of the Riegle Act, which was to ``provide
an avenue for the review of material supervisory determinations and not
to contest enforcement actions for which an alternative appeals
mechanism exists.'' (60 FR 16472, March 30, 1995).
The National Credit Union Association (NCUA) limits the type of
determinations eligible for review under its appeals process to the
determinations expressly stated in section 309, namely: (1) Composite
CAMEL rating of 3, 4, and 5 and all component ratings of those
composite ratings; (2) adequacy of loan loss reserve provisions; and
(3) loan classifications on loans that are significant as determined by
the appealing credit union. (60 FR 14795, March 20, 1995).
Thus, in addition to satisfying the Riegle Act's requirement that
the Federal banking agencies adopt independent review processes, the
proposed amendments would modify the FDIC's current Guidelines so as to
be consistent with the other Federal banking agencies, promoting equal
treatment of all banks and thrifts appealing material supervisory
determinations.
C. Notice of Enforcement-Related Action or Decision
At present, only the OCC's Guidelines explicitly provide that a
decision to pursue a formal enforcement action will cut off rights to
file a material supervisory determination appeal. In this regard, OCC
Bulletin 2002-9 states that a formal enforcement-related action or
decision ``commences when a Supervision Review Committee determines
that the OCC will pursue a formal action,'' at which time the matter
becomes unappealable. The OCC has Supervision Review Committees at both
the Regional and Washington offices with delegations of authority to
initiate different types of formal enforcement actions. The FDIC
structure of enforcement matter decisionmaking is different, generally
vesting authority to initiate formal enforcement actions in designated
DSC officials, in some cases with concurrence requirements and in some
cases following oversight by the Case Review Committee in Washington.
The essence of the OCC's cut-off date is that a decision has been
made by appropriately authorized officials that a formal enforcement
action will be pursued. In order to mirror the cut-off date as closely
as possible, the proposed amendments would establish the FDIC's cut-off
date as the date when ``the FDIC * * * provides written notice to the
bank indicating its intention to pursue available formal enforcement
remedies * * *.'' Operational procedures will be established that
provide that when an FDIC official with authority to initiate a formal
enforcement action decides that the facts and circumstances then known
warrant initiation of such action, a letter to the bank will be sent
notifying the bank of the decision to pursue formal action. Such notice
will render the underlying facts and circumstances that form the basis
of the enforcement action unappealable.
II. Additional Technical Amendments
Paragraph C of the Guidelines (Institutions Eligible to Appeal)
states that the Guidelines apply to insured depository institutions
that the FDIC supervises ``(i.e., insured State nonmember banks (except
District banks) and insured branches of foreign banks).'' The 2004
District of Columbia Omnibus Authorization Act, Public Law No. 108-386,
Sec. 8, extended to the FDIC regulatory and supervisory authority over
District of Columbia banks. Consequently, the parenthetical ``except
District banks'' would be stricken from Paragraph C of the Guidelines.
Paragraph G of the Guidelines (Appeal to the SARC) provides that
the Director of the Division of Supervision and Consumer Protection
may, with the approval of the SARC Chairperson, transfer a request for
review directly to the SARC if the Director determines that the
institution is entitled to relief that the Director lacks delegated
authority to grant. This provision expedites the SARC process by
eliminating the need for the Division Director to deny relief to an
institution to enable it to file its appeal to the SARC. In order to
further facilitate the prompt resolution of requests for review, a
mechanism through which the Division Director may seek guidance from
the SARC Chairperson is proposed for Paragraph G. An addition to
Paragraph G would read: ``The Division Director may also request
guidance from the SARC Chairperson as to procedural or other questions
relating to any request for review.''
For the aforementioned reasons, the FDIC Board of Directors
proposes to revise the Guidelines for Appeals of Material Supervisory
Determinations as set forth below.
* * * * *
Proposed Amended Guidelines for Appeals of Material Supervisory
Determinations
A. Introduction
Section 309(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994 (Pub. L. 103-325, 108 Stat. 2160) (``Riegle
Act'') required the Federal Deposit Insurance Corporation (``FDIC'') to
establish an independent intra-agency appellate process to review
material supervisory determinations made at insured depository
institutions that it supervises. The Guidelines for Appeals of Material
Supervisory Determinations (``guidelines'') describe the types of
determinations that are eligible for review and the process by which
appeals will be considered and decided. The procedures set forth in
these guidelines establish an appeals process for the review of
material supervisory determinations by the Supervision Appeals Review
Committee (``SARC'').
B. SARC Membership
The following individuals comprise the three (3) voting members of
the SARC: (1) One inside FDIC Board member, either the Chairperson, the
Vice Chairperson, or the FDIC Director
[[Page 30396]]
(Appointive), as designated by the FDIC Chairperson (this person would
serve as the Chairperson of the SARC); and (2) one deputy or special
assistant to each of the inside FDIC Board members who are not
designated as the SARC Chairperson. The General Counsel is a non-voting
member of the SARC. The FDIC Chairperson may designate alternate
member(s) to the SARC if there are vacancies so long as the alternate
member was not involved in making or affirming the material supervisory
determination under review. A member of the SARC may designate and
authorize the most senior member of his or her staff within the
substantive area of responsibility related to cases before the SARC to
act on his or her behalf.
C. Institutions Eligible To Appeal
The guidelines apply to the insured depository institutions that
the FDIC supervises (i.e., insured State nonmember banks and insured
branches of foreign banks) and also to other insured depository
institutions with respect to which the FDIC makes material supervisory
determinations.
D. Determinations Subject To Appeal
An institution may appeal any material supervisory determination
pursuant to the procedures set forth in these guidelines. Material
supervisory determinations include:
(a) CAMELS ratings under the Uniform Financial Institutions Rating
System;
(b) EDP ratings under the Uniform Interagency Rating System for
Data Processing Operations;
(c) Trust ratings under the Uniform Interagency Trust Rating
System;
(d) CRA ratings under the Revised Uniform Interagency Community
Reinvestment Act Assessment Rating System;
(e) Consumer compliance ratings under the Uniform Interagency
Consumer Compliance Rating System;
(f) Registered transfer agent examination ratings;
(g) Government securities dealer examination ratings;
(h) Municipal securities dealer examination ratings;
(i) Determinations relating to the adequacy of loan loss reserve
provisions;
(j) Classifications of loans and other assets in dispute the amount
of which, individually or in the aggregate, exceed 10 percent of an
institution's total capital;
(k) Determinations relating to violations of a statute or
regulation that may impact the capital, earnings, or operating
flexibility of an institution, or otherwise affect the nature and level
of supervisory oversight accorded an institution;
(l) Truth in Lending (Regulation Z) restitution;
(m) Filings made pursuant to 12 CFR 303.11(f), for which a Request
for Reconsideration has been granted, other than denials of a change in
bank control, change in senior executive officer or board of directors,
or denial of an application pursuant to section 19 of the FDI Act
(which are contained in 12 CFR 308, subparts D, L, and M,
respectively), if the filing was originally denied by the DSC Director,
Deputy Director or Associate Director; and
(n) Any other supervisory determination (unless otherwise not
eligible for appeal) that may impact the capital, earnings, operating
flexibility, or capital category for prompt corrective action purposes
of an institution, or otherwise affect the nature and level of
supervisory oversight accorded an institution.
Material supervisory determinations do not include:
(a) Decisions to appoint a conservator or receiver for an insured
depository institution;
(b) Decisions to take prompt corrective action pursuant to section
38 of the Federal Deposit Insurance Act, 12 U.S.C. 1831o;
(c) Determinations for which other appeals procedures exist (such
as determinations of deposit insurance assessment risk classifications
and payment calculations);
(d) Decisions to initiate informal enforcement actions (such as
memoranda of understanding); and
(e) Formal enforcement-related actions and decisions, including
determinations and the underlying facts and circumstances that form the
basis of a recommended or pending formal enforcement action, and FDIC
determinations regarding compliance with an existing formal enforcement
action.
A formal enforcement-related action or decision commences, and
therefore becomes unappealable, when the FDIC initiates a formal
investigation under 12 U.S.C. 1820(c) or provides written notice to the
bank indicating its intention to pursue available formal enforcement
remedies under applicable statutes or published enforcement-related
policies of the FDIC, including written notice of a referral to the
Attorney General or a notice to the Secretary of Housing and Urban
Development for violations of the Equal Credit Opportunity Act or the
Fair Housing Act. For the purposes of these guidelines, remarks in a
Report of Examination do not constitute written notice of intent to
pursue formal enforcement remedies.
E. Good Faith Resolution
An institution should make a good faith effort to resolve any
dispute concerning a material supervisory determination with the on-
site examiner and/or the appropriate Regional Office. The on-site
examiner and the Regional Office will promptly respond to any concerns
raised by an institution regarding a material supervisory
determination. Informal resolution of disputes with the on-site
examiner and/or the appropriate Regional Office is encouraged, but
seeking such a resolution is not a condition to filing a request for
review with the Division of Supervision and Consumer Protection or an
appeal to the SARC under these guidelines.
F. Filing a Request for Review With the FDIC Division of Supervision
and Consumer Protection
An institution may file a request for review of a material
supervisory determination with the Director, Division of Supervision
and Consumer Protection, 550 17th Street, NW., Room F-4076, Washington,
DC 20429, within 60 calendar days following the institution's receipt
of a report of examination containing a material supervisory
determination or other written communication of a material supervisory
determination. A request for review must be in writing and must
include:
(a) A detailed description of the issues in dispute, the
surrounding circumstances, the institution's position regarding the
dispute and any arguments to support that position (including citation
of any relevant statute, regulation, policy statement or other
authority), how resolution of the dispute would materially affect the
institution, and whether a good faith effort was made to resolve the
dispute with the on-site examiner and the Regional Office; and
(b) A statement that the institution's board of directors has
considered the merits of the request and authorized that it be filed.
The Director, Division of Supervision and Consumer Protection, will
issue a written determination of the request for review, setting forth
the grounds for that determination, within 30 days of receipt of the
request. No appeal to the SARC will be allowed unless an institution
has first filed a timely request for review with the Division of
Supervision and Consumer Protection.
[[Page 30397]]
G. Appeal to the SARC
An institution that does not agree with the written determination
rendered by the Director of the Division of Supervision and Consumer
Protection must appeal that determination to the SARC within 30
calendar days from the date of that determination. The Director's
determination will inform the institution of the 30-day time period for
filing with the SARC and will provide the mailing address for any
appeal the institution may wish to file. Failure to file within the 30-
day time limit may result in denial of the appeal by the SARC. If the
Director of the Division of Supervision and Consumer Protection
determines that an institution is entitled to relief that the Director
lacks delegated authority to grant, the Director may, with the approval
of the Chairperson of the SARC, transfer the matter directly to the
SARC without issuing a determination. Notice of such a transfer will be
provided to the institution. The Division Director may also request
guidance from the SARC Chairperson as to procedural or other questions
relating to any request for review.
H. Filing With the SARC
An appeal to the SARC will be considered filed if the written
appeal is received by the FDIC within 30 calendar days from the date of
the division director's written determination or if the written appeal
is placed in the U.S. mail within that 30-day period. If the 30th day
after the date of the division director's written determination is a
Saturday, Sunday or Federal holiday, filing may be made on the next
business day. The appeal should be sent to the address indicated on the
determination being appealed.
I. Contents of Appeal
The appeal should be labeled to indicate that it is an appeal to
the SARC and should contain the name, address, and telephone number of
the institution and any representative, as well as a copy of the
determination being appealed. If oral presentation is sought, that
request should be included in the appeal. Only matters previously
reviewed at the division level, resulting in a written determination or
direct referral to the SARC, may be appealed to the SARC. Evidence not
presented for review to the DSC Director may be submitted to the SARC
only if authorized by the SARC Chairperson. The institution should set
forth all of the reasons, legal and factual, why it disagrees with the
determination. Nothing in the SARC administrative process shall create
any discovery or other such rights.
J. Burden of Proof
The burden of proof as to all matters at issue in the appeal,
including timeliness of the appeal if timeliness is at issue, rests
with the institution.
K. Oral Presentation
The SARC may, in its discretion, whether or not a request is made,
determine to allow an oral presentation. The SARC generally grants a
request for oral presentation only if it determines that oral
presentation is likely to be helpful or would otherwise be in the
public interest. Notice of the SARC's determination to grant or deny a
request for oral presentation will be provided to the institution. If
oral presentation is held, the institution will be allowed to present
its positions on the issues raised in the appeal and to respond to any
questions from the SARC. The SARC may also require that FDIC staff
participate as the SARC deems appropriate.
L. Dismissal and Withdrawal
An appeal may be dismissed by the SARC if it is not timely filed,
if the basis for the appeal is not discernable from the appeal, or if
the institution moves to withdraw the appeal.
M. Scope of Review and Decision
The SARC will review the appeal for consistency with the policies,
practices and mission of the FDIC and the overall reasonableness of and
the support offered for the positions advanced, and notify the
institution, in writing, of its decision concerning the disputed
material supervisory determination(s) within 60 days from the date the
appeal is filed, or within 60 days from oral presentation, if held.
SARC review will be limited to the facts and circumstances as they
existed prior to or at the time the material supervisory determination
was made, even if later discovered, and no consideration will be given
to any facts or circumstances that occur or corrective action taken
after the determination was made. The SARC may reconsider its decision
only on a showing of an intervening change in the controlling law or
the availability of material evidence not reasonably available when the
decision was issued.
N. Publication of Decisions
SARC decisions will be published. Published SARC decisions will be
redacted to avoid disclosure of exempt information. Published SARC
decisions may be cited as precedent in appeals to the SARC.
O. SARC Guidelines Generally
Appeals to the SARC will be governed by these guidelines. The SARC
will retain the discretion to waive any provision of the guidelines for
good cause; the SARC may adopt supplemental rules governing SARC
operations; the SARC may order that material be kept confidential; and
the SARC may consolidate similar appeals.
P. Limitation on Agency Ombudsman
The subject matter of a material supervisory determination for
which either an appeal to the SARC has been filed or a final SARC
decision issued is not eligible for consideration by the Ombudsman.
Q. Coordination With State Regulatory Authorities
In the event that a material supervisory determination subject to a
request for review is the joint product of the FDIC and a State
regulatory authority, the Director, Division of Supervision and
Consumer Protection, will promptly notify the appropriate State
regulatory authority of the request, provide the regulatory authority
with a copy of the institution's request for review and any other
related materials, and solicit the regulatory authority's views
regarding the merits of the request before making a determination. In
the event that an appeal is subsequently filed with the SARC, the SARC
will notify the institution and the State regulatory authority of its
decision. Once the SARC has issued its determination, any other issues
that may remain between the institution and the State authority will be
left to those parties to resolve.
R. Effect on Supervisory or Enforcement Actions
The use of the procedures set forth in these guidelines by any
institution will not affect, delay, or impede any formal or informal
supervisory or enforcement action in progress or affect the FDIC's
authority to take any supervisory or enforcement action against that
institution.
S. Effect on Applications or Requests for Approval
Any application or request for approval made to the FDIC by an
institution that has appealed a material supervisory determination
which 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.
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T. Prohibition on Examiner Retaliation
The FDIC has an experienced examination workforce and is proud of
its professionalism and dedication. FDIC policy prohibits any
retaliation, abuse, or retribution by an agency examiner or any FDIC
personnel against an institution. Such behavior against an institution
that appeals a material supervisory determination constitutes
unprofessional conduct and will subject the examiner or other personnel
to appropriate disciplinary or remedial action. Institutions that
believe they have been retaliated against are encouraged to contact the
Regional Director for the appropriate FDIC region. Any institution that
believes or has any evidence that it has been subject to retaliation
may file a complaint with the Director, Office of the Ombudsman,
Federal Deposit Insurance Corporation, 550 17th Street, Washington, DC
20429, explaining the circumstances and the basis for such belief or
evidence and requesting that the complaint be investigated and
appropriate disciplinary or remedial action taken. The Office of the
Ombudsman will work with the Division of Supervision and Consumer
Protection to resolve the allegation of retaliation.
By order of the Board of Directors.
Dated at Washington, DC, the 15th day of April, 2008.
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. E8-11416 Filed 5-23-08; 8:45 am]
BILLING CODE 6714-01-P
