FDIC Adopts Revised Guidelines for Appeals of Material Supervisory Determinations

Effective July 18, 2017, the FDIC has enacted amendments to the Guidelines for Appeals of Material Supervisory Determinations (“Guidelines”), which are in response to the FDIC’s belief that financial institutions need broader avenues of redress with respect to material supervisory determinations and enhanced consistency with the appeals process.

The FDIC had previously established an appellate process to review material supervisory determinations in order to ensure that appeals are heard and decided expeditiously, and that appropriate safeguards exist for protecting appellants from retaliation by agency examiners.  “Material supervisory determinations” is defined to include, among other things, determinations relating to examination ratings, CRA ratings, the adequacy of loan loss reserve provisions, and classifications of loans that are significant to an institution.  Under the Guidelines, an institution cannot file an appeal to the Supervisory Appeals Review Committee (“SARC”) unless it has first filed a timely request for review of a material supervisory determination with the Director of either the Division of Depositor and Consumer Protection or the Division of Risk Management Supervision, as appropriate.

The newest amendments to the Guidelines make the following changes: (1) permitting the appeal of the level of compliance with an existing formal enforcement action, the decision to initiate an informal enforcement action (such as memoranda of understanding), and matters requiring board attention; (2) providing that a formal enforcement-related action or decision does not affect an appeal that is pending under the Guidelines; (3) making additional opportunities for appeal under the Guidelines in certain circumstances; (4) providing for the publication of annual reports on Division Directors’ decisions with respect to material supervisory determinations; and (5) making other limited technical and conforming amendments.