Revised Guidelines for Appeals of Material Supervisory Determinations

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1 85 FR 54377 (Sep. 1, 2020).

2 12 U.S.C. 4806(a).

3 12 U.S.C. 4806(f)(2).

4 12 U.S.C. 4806(b).

5 12 U.S.C. 4806(f)(1)(A).

6 12 U.S.C. 4806(f)(1)(B).

7 12 U.S.C. 4806(g).

8 60 FR 15923 (Mar. 28, 1995).

9 60 FR 15923, 15930. Committee members could

also designate another person to serve on their

behalf.

10 60 FR 15923, 15924.

11 60 FR 15923, 15924.

12 69 FR 41479, 41480 (July 9, 2004).

13 69 FR 41479, 41480.

14 69 FR 41479, 41480–81. For example, the

Ombudsman was excluded from the SARC in order

to avoid any possible conflict between the

Ombudsman’s statutory role as a liaison between

the agency and financial institutions on the one

hand, and as a decision maker on the SARC on the

other hand.

15 69 FR 41479, 41480.

Dated at Washington, DC, on January 19,

2021.

James P. Sheesley,

Assistant Executive Secretary.

[FR Doc. 2021–01543 Filed 1–22–21; 8:45 am]

BILLING CODE 6714–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

RIN 3064–ZA20

Guidelines for Appeals of Material

Supervisory Determinations

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Notice of guidelines.

SUMMARY: The Federal Deposit

Insurance Corporation has adopted

revised Guidelines for Appeals of

Material Supervisory Determinations to

establish an independent office that

would replace the existing Supervision

Appeals Review Committee and to

modify the procedures and timeframes

for considering formal enforcement-

related decisions through the

supervisory appeals process.

DATES: The new Guidelines for Appeals

of Material Supervisory Determinations

will become effective once the Office of

Supervisory Appeals is fully

operational.

FOR FURTHER INFORMATION CONTACT:

Sheikha Kapoor, Senior Counsel, Legal

Division, (202) 898–3960, skapoor@

fdic.gov; James Watts, Counsel, Legal

Division, (202) 898–6678, jwatts@

fdic.gov

ns through the

supervisory appeals process.

DATES: The new Guidelines for Appeals

of Material Supervisory Determinations

will become effective once the Office of

Supervisory Appeals is fully

operational.

FOR FURTHER INFORMATION CONTACT:

Sheikha Kapoor, Senior Counsel, Legal

Division, (202) 898–3960, skapoor@

fdic.gov; James Watts, Counsel, Legal

Division, (202) 898–6678, jwatts@

fdic.gov.

SUPPLEMENTARY INFORMATION:

On September 1, 2020, the Federal

Deposit Insurance Corporation (FDIC)

published in the Federal Register for

notice and comment proposed

amendments to its Guidelines for

Appeals of Material Supervisory

Determinations (Guidelines), which

provide the process by which insured

depository institutions (IDIs) may

appeal material supervisory

determinations made by the FDIC.1 The

FDIC proposed to establish an

independent office that would replace

the existing Supervision Appeals

Review Committee (SARC) and to

modify the procedures and timeframes

for considering formal enforcement-

related decisions through the

supervisory appeals process. The

comment period ended October 20,

2020, and the FDIC received fifteen

comment letters. These comments and

the FDIC’s responses are summarized

below.

I. Background

Section 309(a) of the Riegle

Community Development and

Regulatory Improvement Act of 1994

(Riegle Act) required the FDIC (as well

as the other Federal banking agencies

and the National Credit Union

Administration) to establish an

‘‘independent intra-agency appellate

process’’ to review material supervisory

determinations.2 The Riegle Act defines

the term ‘‘independent appellate

process’’ to mean ‘‘a review by an

agency official who does not directly or

indirectly report to the agency official

who made the material supervisory

determination under review.’’ 3 In the

appeals process, the FDIC is required to

ensure that: (1) An IDI’s appeal of a

material supervisory determination is

heard and decided expeditiously; and

Act defines

the term ‘‘independent appellate

process’’ to mean ‘‘a review by an

agency official who does not directly or

indirectly report to the agency official

who made the material supervisory

determination under review.’’ 3 In the

appeals process, the FDIC is required to

ensure that: (1) An IDI’s appeal of a

material supervisory determination is

heard and decided expeditiously; and

(2) appropriate safeguards exist for

protecting appellants from retaliation by

agency examiners.4

The Riegle Act defines ‘‘material

supervisory determinations’’ 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.5 Expressly

excluded from this definition are

decisions to appoint a conservator or

receiver for an IDI or to take prompt

corrective action pursuant to Section 38

of the Federal Deposit Insurance Act

(FDI Act), 12 U.S.C. 1831o.6 Finally,

Section 309(g) of the Riegle Act

expressly provides that the requirement

to establish an appeals process shall not

affect the authority of the Federal

banking agencies to take enforcement or

supervisory actions against an IDI.7

A. Structure of the Supervisory Appeals

Review Committee

On March 21, 1995, the FDIC’s Board

of Directors (Board) adopted the

Guidelines to implement Section 309(a).

The Board, at that time, established the

SARC to consider and decide appeals of

material supervisory determinations.8

The SARC was initially comprised of

five members: The FDIC’s Vice

Chairperson (as Chairperson of the

SARC), the Director of the Division of

Supervision (DOS) (the predecessor to

the Division of Risk Management

Supervision (RMS)), the Director of the

Division of Compliance and Consumer

Affairs (DCA) (the predecessor to the

Division of Depositor and Consumer

Protection (DCP)), the FDIC

Ombudsman, and the General Counsel.9

Consistent with the Riegle Act’s

mandate to create an intra-agency

appeals process

tor of the Division of

Supervision (DOS) (the predecessor to

the Division of Risk Management

Supervision (RMS)), the Director of the

Division of Compliance and Consumer

Affairs (DCA) (the predecessor to the

Division of Depositor and Consumer

Protection (DCP)), the FDIC

Ombudsman, and the General Counsel.9

Consistent with the Riegle Act’s

mandate to create an intra-agency

appeals process, membership in the

SARC was limited to FDIC officials.10 In

order to ‘‘establish[] a fair and credible

review process,’’ the SARC was

comprised of senior officials at the

FDIC, including the Directors of DOS

and DCA, who were expected to ‘‘bring

to the Committee the necessary

experience and judgment to make well-

informed decisions concerning

determinations under review.’’ 11 The

Guidelines were subsequently amended

to add the Director of the Division of

Insurance as a voting member of the

SARC, and to provide formally that the

Directors of DOS and DCA would not

vote on cases brought before the SARC

involving their respective divisions.12

In July 2004, the FDIC revised the

Guidelines to change the structure and

composition of the SARC to its current

form. Specifically, the voting members

of the SARC are now comprised of: One

of the FDIC’s three inside directors (who

serves as the SARC Chairperson), and

one deputy or special assistant to each

of the other two inside directors.13 The

FDIC’s General Counsel also serves as a

non-voting member of the SARC. In the

event of a vacancy, the Guidelines

authorize the FDIC Chairperson to

designate alternate member(s) to the

SARC, so long as the alternate member

was not directly or indirectly involved

in making or affirming the material

supervisory determination under

review

ant to each

of the other two inside directors.13 The

FDIC’s General Counsel also serves as a

non-voting member of the SARC. In the

event of a vacancy, the Guidelines

authorize the FDIC Chairperson to

designate alternate member(s) to the

SARC, so long as the alternate member

was not directly or indirectly involved

in making or affirming the material

supervisory determination under

review. These changes were intended to

avoid the potential conflicts then faced

by the Ombudsman and Division

Directors,14 and to ‘‘further underscore

the perception of the SARC as a fair and

independent high-level body for review

of material supervisory determinations

within the FDIC.’’ 15

In July 2017, the FDIC further revised

the Guidelines to provide an

opportunity for IDIs to appeal certain

material supervisory determinations

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16 82 FR 34522, 34524 (July 25, 2017). The FDIC

also noted that it provides an informal process

through which institutions can obtain review by the

relevant Division Director of matters that are not

covered by the SARC process or another existing

FDIC appeals or administrative process. See FIL–

51–2016 (July 29, 2016).

17 82 FR 34522, 34526.

18 See FIL–52–2019 (Sep. 24, 2019), available at

https://www.fdic.gov/news/financial-institution-

letters/2019/fil19052.pdf.

19 85 FR 54377 (Sep. 1, 2020).

underlying formal enforcement actions

through the supervisory appeals

process.16 The Guidelines currently

provide that if the FDIC does not

commence a formal enforcement action

within certain time frames after giving

written notice to an IDI of a

recommended or proposed formal

enforcement action, the IDI may appeal

the facts and circumstances underlying

the formal enforcement action to the

SARC.17

B

mal enforcement actions

through the supervisory appeals

process.16 The Guidelines currently

provide that if the FDIC does not

commence a formal enforcement action

within certain time frames after giving

written notice to an IDI of a

recommended or proposed formal

enforcement action, the IDI may appeal

the facts and circumstances underlying

the formal enforcement action to the

SARC.17

B. 2019 Listening Sessions on

Supervisory Appeals and Dispute

Resolution Process

In 2019, the FDIC decided to explore

potential improvements to the

supervisory appeals process. As part of

this process, the FDIC’s Office of the

Ombudsman hosted a webinar and in-

person listening sessions in each FDIC

Region regarding the agency’s

supervisory appeals and dispute

resolution processes. The sessions

offered bankers and other interested

persons an opportunity to provide

individual input and recommendations

regarding the supervisory appeals

process.18 Participants were encouraged

to comment on various topics,

including: Perceived barriers to, or

concerns about, resolving

disagreements; timeframes and

procedures for pursuing reviews and

appeals; and information publicly

available on appeals and examination

disagreements.

Among other topics, session

participants offered suggestions on the

composition of the SARC. In particular,

participants focused on the composition

of the SARC and opportunities to

further enhance the independence of the

appeals process. Relatedly, participants

emphasized the importance of ensuring

that SARC members have the subject

matter expertise needed to decide

supervisory appeals. Participants

offered a range of suggestions on this

topic, including adding an individual

who is not otherwise affiliated with the

FDIC to the SARC, such as a retired

banking attorney or a former Federal or

State bank regulator

s process. Relatedly, participants

emphasized the importance of ensuring

that SARC members have the subject

matter expertise needed to decide

supervisory appeals. Participants

offered a range of suggestions on this

topic, including adding an individual

who is not otherwise affiliated with the

FDIC to the SARC, such as a retired

banking attorney or a former Federal or

State bank regulator. Certain challenges

were also discussed with respect to

adding an individual who is not

affiliated with the FDIC, such as

ensuring the confidentiality of

information and the avoidance of

conflicts of interest.

Questions related to the timeframes

for appeals and the types of matters that

may be appealed if the FDIC pursues a

formal enforcement action were also

raised at a number of the listening

sessions. Through these discussions, it

appears that the procedures that apply

when the FDIC has provided notice of

a recommended or proposed formal

enforcement action may be a source of

confusion to bankers.

Participants also raised concerns

about bankers’ fear of retaliation by

FDIC examiners, notwithstanding

existing provisions in the Guidelines

prohibiting such retaliation. This

concern was cited as a basis for causing

bankers to be reluctant to fully engage

with the FDIC on material areas of

disagreement. FDIC policy prohibits any

retaliation, abuse, or retribution by an

agency examiner or any FDIC personnel

against an institution, and the FDIC

continues to explore options to reaffirm

its commitment to ensure compliance

with this policy. In addition, while not

specifically related to the supervisory

appeals process, participants provided a

variety of comments and

recommendations on the examination

process. Participants also shared views

regarding the publicly available

information on SARC decisions and

ideas for improving the transparency of

SARC decisions, such as publishing

aggregate data on the outcomes of

supervisory appeals.

C

while not

specifically related to the supervisory

appeals process, participants provided a

variety of comments and

recommendations on the examination

process. Participants also shared views

regarding the publicly available

information on SARC decisions and

ideas for improving the transparency of

SARC decisions, such as publishing

aggregate data on the outcomes of

supervisory appeals.

C. Notice and Request for Comment

In August 2020, the FDIC published

for comment a proposal to replace the

SARC with an independent, standalone

office within the FDIC, known as the

Office of Supervisory Appeals

(Office).19 The Office would have

delegated authority to consider and

resolve appeals of material supervisory

determinations. The Office would be

fully independent of those FDIC

Divisions with authority to issue

material supervisory determinations and

would be staffed by reviewing officials

with bank supervisory or examination

experience. Reviewing officials, as

employees of the FDIC, would be

cleared for conflicts of interest and

subject to the FDIC’s usual requirements

for confidentiality.

Under the proposed Guidelines, an

IDI would be encouraged to make a

good-faith effort to resolve

disagreements with its examiners and/or

the appropriate Regional Office. If these

efforts were not successful, the IDI

would submit a request for review to the

appropriate Division Director, who

would have the option of issuing a

written decision or sending the appeal

directly to the Office. An IDI that

disagrees with the decision made by the

Division Director could submit an

appeal to the Office.

If a material supervisory

determination was appealed to the

Office, a three-member panel of the

Office would consider the appeal and

issue a written decision. The Division

Director and the Ombudsman would be

permitted to submit views on the appeal

to the panel. The Legal Division would

provide counsel to the Office

sion made by the

Division Director could submit an

appeal to the Office.

If a material supervisory

determination was appealed to the

Office, a three-member panel of the

Office would consider the appeal and

issue a written decision. The Division

Director and the Ombudsman would be

permitted to submit views on the appeal

to the panel. The Legal Division would

provide counsel to the Office. Oral

presentation to the panel would be

permitted if a request was made by the

institution or by FDIC staff.

The proposal provided that the panel

would review an 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,

consistent with the existing standard of

review for the SARC. The scope of the

panel’s review would 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 would be given to any

facts or circumstances that occur or

corrective action taken after the

determination was made. The Office’s

role would not be to set policy, and the

Office would not consider aspects of an

appeal that sought to change or modify

FDIC policy or rules.

Consistent with the existing

Guidelines and the Riegle Act, the

Office would not review decisions to

appoint a conservator or receiver for an

IDI. The FDIC proposed to further

clarify that decisions made in

furtherance of the resolution or

receivership process or planning also

would not be considered material

supervisory determinations.

The FDIC also proposed amending the

procedures for considering formal

enforcement-related decisions through

the supervisory appeals process

ecisions to

appoint a conservator or receiver for an

IDI. The FDIC proposed to further

clarify that decisions made in

furtherance of the resolution or

receivership process or planning also

would not be considered material

supervisory determinations.

The FDIC also proposed amending the

procedures for considering formal

enforcement-related decisions through

the supervisory appeals process.

Specifically, the proposal clarified that,

for purposes of the supervisory appeals

process, a formal enforcement-related

action commences—and appeal rights

become unavailable—when the FDIC

initiates a formal investigation, issues a

notice of charges (or notice of

assessment, as applicable), provides the

IDI with a draft consent order, or

otherwise provides written notice to the

IDI that the FDIC is reviewing the

relevant facts and circumstances to

determine whether a formal

enforcement action is merited. The FDIC

would then have 120 days from the date

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20 See 12 U.S.C. 4806(d).

21 The tension between the Ombudsman’s

statutory role and acting as a decision maker with

respect to material supervisory determinations was

among the reasons the FDIC removed the

Ombudsman from the SARC when it was

reconstituted in 2004. The FDIC also considered

making the Ombudsman a non-voting member of

the SARC, but concluded that also would not

resolve this tension. See 69 FR 41479, 41481 (July

9, 2004).

on which notice was given to provide

the IDI with a draft consent order. If the

FDIC failed to provide a draft consent

order within this 120-day period, the

IDI’s supervisory appeal rights would be

made available.

Once the FDIC provides an IDI with

a draft consent order, the parties would

have an opportunity to negotiate the

details of a potential settlement

41479, 41481 (July

9, 2004).

on which notice was given to provide

the IDI with a draft consent order. If the

FDIC failed to provide a draft consent

order within this 120-day period, the

IDI’s supervisory appeal rights would be

made available.

Once the FDIC provides an IDI with

a draft consent order, the parties would

have an opportunity to negotiate the

details of a potential settlement. The

proposal did not include a fixed time

limit on such negotiations. At any time,

the IDI could notify the Division in

writing that it believes further

negotiation would not be productive,

and the Division would then have 90

days to issue a notice of charges (or

assessment) or to open an order of

investigation. If the Division failed to

issue such a notice or open an order of

investigation within that time, the IDI

would have 60 days to file an appeal of

the material supervisory determination,

consistent with the standard timeline

following a material supervisory

determination. If the IDI agrees to the

consent order, then the matter would be

resolved, and the need for an appeal

would be obviated.

II. Final Guidelines and Discussion of

Comments

The FDIC received fifteen comments

from a variety of interested parties,

including banks, trade associations, law

firms, and a consultant. Commenters

generally supported the proposal, with

most asserting that the changes would

enhance the supervisory appeals

process. In particular, commenters

supported the steps taken to promote

the independence of the Office,

suggesting that this would bolster the

industry’s confidence in the supervisory

appeals process.

The FDIC’s proposal solicited

feedback on particular aspects of the

supervisory appeals process. Comments

on these matters and the FDIC’s

responses are summarized below.

Review of Office Decisions

The FDIC asked whether commenters

believed that the Chairperson or the

Board should have an opportunity to

review Office decisions before issuance

onfidence in the supervisory

appeals process.

The FDIC’s proposal solicited

feedback on particular aspects of the

supervisory appeals process. Comments

on these matters and the FDIC’s

responses are summarized below.

Review of Office Decisions

The FDIC asked whether commenters

believed that the Chairperson or the

Board should have an opportunity to

review Office decisions before issuance.

While a few commenters asserted that

the FDIC’s senior management should

review Office decisions, most

commenters believed that review by the

Chairperson or the Board would

undermine the independence of the

Office. In particular, two commenters

suggested that review by the

Chairperson or Board could deter banks

from availing themselves of the process.

A trade association also noted that if an

appeal relates to an enforcement action,

review of the appeal by the Board

members could compromise the spirit of

the Board’s review of the administrative

law judge’s recommended decision.

Consistent with the proposal, the final

Guidelines provide for review of

material supervisory determinations by

the Division Director and then by the

Office. The FDIC proposed to establish

the Office with authority to consider

and resolve appeals of material

supervisory determinations in order to

promote independence. Additional

levels of review also could delay the

resolution of appeals, and the FDIC is

mindful of the need to decide appeals

expeditiously. For these reasons, the

final Guidelines do not provide for

additional levels of review beyond the

Office.

Qualifications To Serve in the Office

The FDIC proposed staffing the Office

with reviewing officials who have bank

supervisory or examination experience,

such as retired bank examiners. The

FDIC asked whether bank supervisory or

examination experience would

constitute appropriate qualifications

and experience for these positions.

Commenters expressed a range of views

on this topic

fice.

Qualifications To Serve in the Office

The FDIC proposed staffing the Office

with reviewing officials who have bank

supervisory or examination experience,

such as retired bank examiners. The

FDIC asked whether bank supervisory or

examination experience would

constitute appropriate qualifications

and experience for these positions.

Commenters expressed a range of views

on this topic. Some commenters

supported staffing the Office with

individuals with bank supervisory or

examination experience. On the other

hand, several trade associations, a bank,

and a law firm stated that the Office

should not be limited to staff with

supervisory experience, and should also

include retired bank officers, bank board

members, consultants, or banking law

attorneys. Some of these commenters

suggested that each review panel

include one or more members with

industry experience.

The FDIC appreciates the perspective

and expertise that bankers and other

industry professionals could bring to the

process. At the same time, the FDIC

acknowledges that, because of the

Office’s role in making final decisions

on appeals of material supervisory

determinations on behalf of the agency,

supervisory experience and training

provides a firm foundation for

exercising that responsibility and helps

ensure a thorough understanding of the

supervisory process. With this in mind,

the FDIC will, as proposed, deem bank

supervisory or examination experience

as required background for panelists.

However, the FDIC appreciates that

industry perspective can be valuable

and accordingly will generally view

relevant industry experience favorably.

Staffing

A number of commenters made

suggestions with respect to the staffing

of the Office. A trade association

recommended that reviewing officials

serve staggered terms, with no official

serving more than five years. Another

trade association suggested that terms

should not be renewable

ective can be valuable

and accordingly will generally view

relevant industry experience favorably.

Staffing

A number of commenters made

suggestions with respect to the staffing

of the Office. A trade association

recommended that reviewing officials

serve staggered terms, with no official

serving more than five years. Another

trade association suggested that terms

should not be renewable. Two

commenters recommended that

reviewing officials selected for the

Office should not have been employed

by the FDIC for at least the two years

prior, thereby promoting separation

between the Office and existing staff.

The FDIC believes some of these

recommendations will be beneficial to

promoting the Office’s independence,

and will consider others carefully as it

prepares to hire reviewing officials.

Reviewing officials will be hired for

terms, and only former, rather than

current, government officials will be

eligible to serve as reviewing officials.

Role of the Ombudsman

A few commenters recommended

changes with respect to the

Ombudsman’s role in the process to

promote the Office’s independence. In

particular, a bank encouraged the FDIC

to include the Ombudsman as a non-

voting member on the panel. The

Ombudsman serves as a neutral liaison

between the FDIC and institutions, as

provided by section 309 of the Riegle

Act.20 The FDIC believes including the

Ombudsman as a member of the panel

could undermine this role, because as a

member of the panel, the Ombudsman

would be expected to serve in a

decision-making capacity. In addition,

institutions that might feel free to share

confidential information with the

Ombudsman in its role as liaison may

be reluctant to do so if the Ombudsman

would later be deciding a supervisory

appeal.21 In light of these concerns, and

because the FDIC sees value in the

Ombudsman’s perspective, the final

Guidelines allow the Ombudsman to

submit views to the panel

king capacity. In addition,

institutions that might feel free to share

confidential information with the

Ombudsman in its role as liaison may

be reluctant to do so if the Ombudsman

would later be deciding a supervisory

appeal.21 In light of these concerns, and

because the FDIC sees value in the

Ombudsman’s perspective, the final

Guidelines allow the Ombudsman to

submit views to the panel.

Administrative and Legal Support for

the Office

Two commenters recommended

resourcing the Office with independent

administrative and legal support. The

Office will share administrative support

with the Legal Division, which also will

provide counsel to the Office. To

promote independence, legal staff that

were involved in making the material

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22 See 85 FR 15175, 15180 (Mar. 17, 2020).

supervisory determination that has been

appealed will not advise the Office.

To provide further clarity, the

Guidelines state that the Legal Division

will provide counsel to the Office and

generally advise on FDIC policies and

rules. If an appeal seeks to change or

modify FDIC policies or rules, or raises

a policy matter of first impression, the

Office will, with the Legal Division’s

concurrence, refer the matter to the

Chairperson’s Office. In addition, the

Legal Division will review decisions of

the Office for consistency with

applicable laws, regulations, and

policies of the FDIC prior to their

issuance. If the Legal Division

determines that an Office decision is

contrary to a law, regulation, or FDIC

policy, the Office will be required to

revise the decision to conform with

relevant laws, regulations, or policies.

The Legal Division will not exercise

supervisory judgment or opine on the

merits of an appeal

applicable laws, regulations, and

policies of the FDIC prior to their

issuance. If the Legal Division

determines that an Office decision is

contrary to a law, regulation, or FDIC

policy, the Office will be required to

revise the decision to conform with

relevant laws, regulations, or policies.

The Legal Division will not exercise

supervisory judgment or opine on the

merits of an appeal.

Retaliation Concerns

A trade association stated that the

FDIC should take measures to ensure

that reviewing officials are not retaliated

against for their decisions. The FDIC has

structured the Office to minimize the

risk that a fear of retaliation could

impact decisions by reviewing officials.

Reviewing officials will be hired for

terms, and only former, rather than

current, government officials will be

eligible to serve as reviewing officials.

Additionally, all decisions related to

which reviewing officials will serve on

which panels will be decided by the

Office, and not by any FDIC officials

outside of the Office.

The FDIC also received comments

reiterating that some IDIs may not

appeal decisions due to a fear of

retaliation from examiners. As noted in

the proposal, FDIC policy currently

prohibits any retaliation, abuse, or

retribution by an agency examiner or

any FDIC personnel against an

institution, and the FDIC continues to

explore options to reaffirm its

commitment to and ensure compliance

with this policy.

Standard of Review

Like the current standard of review,

under the proposed Guidelines, the

Division Director and the Office would

review appeals for consistency with the

policies, practices, and mission of the

FDIC and the overall reasonableness of,

and the support offered for, the

positions advanced. Two trade

associations encouraged the FDIC to

adopt a de novo standard of review, and

align the standard with the approach

recently taken by the Federal Reserve

Board (FRB)

the

Division Director and the Office would

review appeals for consistency with the

policies, practices, and mission of the

FDIC and the overall reasonableness of,

and the support offered for, the

positions advanced. Two trade

associations encouraged the FDIC to

adopt a de novo standard of review, and

align the standard with the approach

recently taken by the Federal Reserve

Board (FRB).

The FDIC agrees that a change in the

standard of review for appeals to the

Division Director would be appropriate.

The final Guidelines therefore provide

that the Division Director will make his

or her own supervisory determination,

which is substantially similar to the

standard adopted by the initial review

panel under the FRB’s approach.22

Under this standard, the Division

Director would have discretion to

consider examination workpapers and

other materials developed by staff

during an examination, but would make

an independent supervisory

determination, without deferring to the

judgments of either party. The final

guidelines do not, however, alter the

standard of review when the appeal is

reviewed by the Office. Consistent with

the proposal, the Office would review

appeals for consistency with the

policies, practices, and mission of the

FDIC and the overall reasonableness of,

and the support offered for, the

positions advanced.

Ex Parte Communications

A law firm and two trade associations

recommended that the FDIC prohibit ex

parte communications between

supervisory staff and the Office during

an appeal, asserting that this is a due

process and fairness concern. The FDIC

understands this concern and is

addressing it in the final Guidelines by

requiring that communications between

the Office and either supervisory staff or

the appealing institution, including

materials submitted to the Office for

review, are also shared with the other

party to the appeal, subject to

limitations on disclosure

erting that this is a due

process and fairness concern. The FDIC

understands this concern and is

addressing it in the final Guidelines by

requiring that communications between

the Office and either supervisory staff or

the appealing institution, including

materials submitted to the Office for

review, are also shared with the other

party to the appeal, subject to

limitations on disclosure.

Review Panel Size

The FDIC proposed that each appeal

would be heard by a panel of three

reviewing officials, and asked whether

three reviewers per panel would be an

appropriate number, or whether there

were some situations where more or

fewer panelists might be appropriate. A

number of commenters suggested panels

comprised of five reviewing officials. In

particular, a trade association asserted

that this number is common across

governmental bodies, affords increased

diversity in perspectives and expertise,

and decreases the likelihood of

deference to the strong opinions of one

panel member. Other commenters

suggested expanding the size of panels

to five members in order to

accommodate the addition of staff with

industry experience. Two commenters,

including a trade association and a

consultant, suggested expanding the

size of review panels in case a review

official becomes ill or must be recused.

A law firm suggested that relatively

minor matters (e.g., examination ratings,

loan loss reserve provisions, loan

classifications) should be handled by a

panel of three members, while more

serious matters (e.g., violations of law or

regulation, applications, decisions to

initiate informal enforcement actions,

matters requiring Board attention)

should be handled by five-member

panels.

The FDIC agrees that five-member

panels could be beneficial in some

situations. To provide the Office with

flexibility, the final Guidelines provide

that panels may be comprised of either

three or five reviewing officials

ons of law or

regulation, applications, decisions to

initiate informal enforcement actions,

matters requiring Board attention)

should be handled by five-member

panels.

The FDIC agrees that five-member

panels could be beneficial in some

situations. To provide the Office with

flexibility, the final Guidelines provide

that panels may be comprised of either

three or five reviewing officials. When

an appeal is submitted to the Office, a

panel of either three or five reviewing

officials will be assigned to consider the

matter. The FDIC believes that initial

experiences administering this new

process may help to determine the most

appropriate size for panels going

forward.

Other Levels of Review

The FDIC proposed that an IDI would

be able to appeal the Division Director’s

decision to the Office, and that no

appeal of the Office’s decision would be

permissible. The FDIC asked

commenters whether the appellate

process should have any additional

level(s) of review before or after the

Office.

Commenters generally stated that the

process should not include an

additional level of review before an

appeal to the Office. In particular, a

trade association asserted that the FDIC

should remove barriers for institutions

wishing to appeal material supervisory

determinations, including layers of

review. However, a few commenters

recommended an additional level of

review following a decision by the

Office. A law firm suggested allowing

Office decisions to be appealed to the

individuals that currently serve on the

SARC, and a trade association suggested

that either the Board or the institution

could request reconsideration of Office

decisions within 30 days of issuance. A

bank holding company also

recommended that institutions have the

option to bring matters to an

administrative law judge as an

alternative to review by the Office.

The final Guidelines do not include

any additional levels of review

ARC, and a trade association suggested

that either the Board or the institution

could request reconsideration of Office

decisions within 30 days of issuance. A

bank holding company also

recommended that institutions have the

option to bring matters to an

administrative law judge as an

alternative to review by the Office.

The final Guidelines do not include

any additional levels of review. It is not

clear that review by the individuals

currently comprising the current SARC

would be beneficial because replacing

the SARC with the Office was intended

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23 Two commenters, including a bank and a trade

association, requested that the FDIC make clear that

Office decisions are subject to further review by the

federal courts. The FDIC has noted in the past that

because supervisory decisions are entrusted to

agency discretion, they cannot be appealed to the

courts.

to promote independence, and

commenters generally supported that

aspect of the proposal. The final

Guidelines balance the statutory

objectives of independent review and

timely resolution of appeals by allowing

the Office’s decision to serve as the final

review.23 Proceedings before an

administrative law judge serve a

different purpose and are governed by

different procedural standards, and

therefore may not be well-suited for

appeals of material supervisory

determinations. For example,

proceedings before administrative law

judges typically involve motion

practice, discovery, and oral hearings.

The supervisory appeals process, by

contrast, is intended to resolve

disagreements in a more informal and

expeditious manner. For these reasons,

the FDIC concludes that the appeals

process should not provide for review

by an administrative law judge as an

alternative to review by the Office

before administrative law

judges typically involve motion

practice, discovery, and oral hearings.

The supervisory appeals process, by

contrast, is intended to resolve

disagreements in a more informal and

expeditious manner. For these reasons,

the FDIC concludes that the appeals

process should not provide for review

by an administrative law judge as an

alternative to review by the Office.

Timelines for Appeals

The FDIC asked whether the proposed

timelines properly balance the goals of

resolving appeals as expeditiously as

possible and providing adequate time

for preparation and review. Under the

Guidelines, an institution would have

60 calendar days in which to file a

request for review with the Division

Director. Within 45 calendar days after

receiving that request, the Division

Director would either review the appeal

and issue a written determination or

refer the request for review to the Office

for consideration. Upon receiving the

Division Director’s decision, an IDI

would have 30 calendar days to file an

appeal with the Office. Within 90

calendar days after receiving the appeal

(including 30 days for the Ombudsman

and the Division Director to submit

views), the Office would meet to

adjudicate the appeal, and would notify

the institution of its decision within 45

calendar days after that meeting.

While several commenters stated that

these timeframes were reasonable,

others encouraged the FDIC to consider

changes to expedite the process. A law

firm asserted that unless a particularly

serious matter is involved, the appeals

process should be completed within 180

days of the examination exit meeting,

rather than within 270 days as the

proposal would allow. A bank holding

company stated that the Office should

issue decisions within 60 days of

receiving appeals. A few commenters

recommended allowing institutions to

petition the Office for expedited review

of supervisory determinations in certain

circumstances

process should be completed within 180

days of the examination exit meeting,

rather than within 270 days as the

proposal would allow. A bank holding

company stated that the Office should

issue decisions within 60 days of

receiving appeals. A few commenters

recommended allowing institutions to

petition the Office for expedited review

of supervisory determinations in certain

circumstances. In addition, two trade

associations suggested allowing

extensions of the time frames in the

appeals process. Another commenter

suggested that the FDIC clarify that

whenever a deadline falls on a weekend

or federal holiday, the deadline should

move to the next business day.

The FDIC believes that, in general, the

proposed timeframes appropriately

balance the interest in resolving appeals

expeditiously with the need for

adequate preparation and review. The

FDIC expects that the process will move

more quickly in straightforward cases

that do not involve complex issues or

review of extensive documents.

Additionally, certain circumstances may

warrant expedited consideration of an

appeal, and the FDIC agrees that the

process should permit institutions to

petition for expedited review. Under

section G.2 of the final Guidelines, an

institution may request expedited

review in its appeal to the Office.

The FDIC expects that extensions will

generally be unnecessary, but believes

that it is reasonable to permit

institutions to request extensions under

appropriate circumstances. This is

consistent with both the spirit of the

process and current FDIC practice.

Accordingly, the final Guidelines

provide that an institution may request

an extension of the time period to

submit an appeal. Such requests may be

directed to the appropriate Division

Director with respect to the first stage of

the appeal, and to the Office with

respect to the second stage

e circumstances. This is

consistent with both the spirit of the

process and current FDIC practice.

Accordingly, the final Guidelines

provide that an institution may request

an extension of the time period to

submit an appeal. Such requests may be

directed to the appropriate Division

Director with respect to the first stage of

the appeal, and to the Office with

respect to the second stage. Finally, the

FDIC agrees that the suggested

clarification with respect to deadlines

that fall on a weekend or federal holiday

would be helpful, and has adopted it in

the final Guidelines.

Publicly Available Information on the

Process

The FDIC proposed publishing

decisions of the Office as soon as

practicable and with redactions to avoid

disclosure of the name of the appealing

institution and other information

exempt from disclosure under the

Freedom of Information Act. For cases

in which redaction is deemed

insufficient to prevent improper

disclosure, the FDIC proposed

publishing decision summaries. The

FDIC also proposed that published

Office decisions could be cited as

precedent in Office appeals. Finally, the

FDIC proposed publishing annual

reports on decisions issued by Division

Directors. These proposals are

consistent with the FDIC’s current

policies regarding decisions issued by

Division Directors and the SARC. The

FDIC asked commenters what other

information should be published about

the appeals process or specific decisions

while still maintaining confidentiality.

Several commenters agreed that the

information published about the

supervisory appeals process was

sufficient, and agreed that the FDIC

should continue to ensure that

confidentiality is preserved. One

commenter encouraged the FDIC to

publish a chart online listing the

outcome of appeals along with a short

summary of the case. The FDIC agrees

that the transparency of the appeals

process could be enhanced by providing

summary statistics on the outcomes of

appeals

ry appeals process was

sufficient, and agreed that the FDIC

should continue to ensure that

confidentiality is preserved. One

commenter encouraged the FDIC to

publish a chart online listing the

outcome of appeals along with a short

summary of the case. The FDIC agrees

that the transparency of the appeals

process could be enhanced by providing

summary statistics on the outcomes of

appeals. The final Guidelines therefore

provide for the publication of such

information.

Authorization To Submit an Appeal

Two trade associations requested that

an institution’s senior management

should be permitted to authorize

supervisory appeals. The FDIC has

adopted this suggestion in the final

Guidelines. If an institution’s senior

management files an appeal, it must

inform the board of directors of the

substance of the appeal before filing and

keep the board of directors informed of

the appeal’s status.

Formal Enforcement-Related Changes

The FDIC proposed a timeline that

would apply to supervisory appeals in

instances in which the FDIC is also

evaluating whether a formal

enforcement action is merited. In any

case where the FDIC has provided

notice to an IDI that it is determining

whether a formal enforcement action is

merited based on an examination, the

FDIC would have 120 days to issue an

order of investigation, a notice of

charges (or notice of assessment, as

applicable), or provide the institution

with a draft consent order. If the FDIC

fails to do so within the 120-day

timeframe, the IDI’s supervisory appeal

rights would be made available.

However, if the FDIC provides an IDI

with a draft consent order, the parties

would have an opportunity to negotiate

the details of a potential settlement

without a fixed time limit

otice of assessment, as

applicable), or provide the institution

with a draft consent order. If the FDIC

fails to do so within the 120-day

timeframe, the IDI’s supervisory appeal

rights would be made available.

However, if the FDIC provides an IDI

with a draft consent order, the parties

would have an opportunity to negotiate

the details of a potential settlement

without a fixed time limit. At any time,

if the IDI believes that further

negotiations would not be productive, it

could notify the Division of its decision

in writing, at which point the Division

would have 90 days to issue a notice of

charges (or assessment) or to open an

order of investigation. If the Division

failed to produce a notice of charges (or

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assessment) or to open an order of

investigation within those 90 days, the

IDI’s supervisory appeal rights to the

Office would be made available. The IDI

would have 60 days to file an appeal,

consistent with the standard timeline

following a material supervisory

determination.

The FDIC proposed that these time

periods could be extended with the

approval of the Chairperson’s Office, or

with the mutual agreement of both

parties. The FDIC asked commenters

whether this timeline would be too

restrictive for some cases, and whether

commenters expect to invoke the

provision(s) allowing for an extension.

Several commenters stated that the

proposed timeframe was appropriate. A

bank suggested that instead of the

proposed extension provisions, the

process should permit both the FDIC

and the institution to request a one-time

extension of a deadline for 30 days

timeline would be too

restrictive for some cases, and whether

commenters expect to invoke the

provision(s) allowing for an extension.

Several commenters stated that the

proposed timeframe was appropriate. A

bank suggested that instead of the

proposed extension provisions, the

process should permit both the FDIC

and the institution to request a one-time

extension of a deadline for 30 days. The

FDIC believes that limiting the parties to

a one-time 30-day extension could

hinder the parties’ efforts to settle an

enforcement action, and is therefore

finalizing these provisions as proposed.

Transition Period

The FDIC expects that a period of

time will be necessary to establish and

staff the Office. The current Guidelines,

which permit appeals of Division

Directors’ decisions to the SARC, will

apply until the Office is fully

operational. The FDIC will publish a

notice to inform institutions when this

occurs.

For the reasons set out in the

preamble, the Federal Deposit Insurance

Corporation’s Board of Directors adopts

the Guidelines for Appeals of Material

Supervisory Determinations as set forth

below.

Guidelines for Appeals of Material

Supervisory Determinations

A. Introduction

Section 309(a) of the Riegle

Community Development and

Regulatory Improvement Act of 1994

(Pub. L. 103–325, 108 Stat. 2160) (Riegle

Act) 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 Office of

Supervisory Appeals (Office).

B

s. 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 Office of

Supervisory Appeals (Office).

B. Reviewing Officials

The Office will be staffed with

reviewing officials who have bank

supervisory or examination experience.

Reviewing officials will be hired for

terms, and only former, rather than

current, government officials will be

eligible to serve as reviewing officials.

Reviewing officials will consider and

decide appeals submitted to the Office.

Each appeal will be reviewed and

decided by a panel of either three or five

reviewing officials who have no

conflicts of interest with respect to the

appeal or the parties to the appeal. All

decisions related to which reviewing

officials will serve on which panels will

be decided by the Office.

C. Institutions Eligible To Appeal

The Guidelines apply to the insured

depository institutions that the FDIC

supervises (i.e., insured State

nonmember banks, insured branches of

foreign banks, and state savings

associations), and to other insured

depository institutions for which the

FDIC makes material supervisory

determinations.

D. Determinations Subject to Appeal

An institution may appeal any

material supervisory determination

pursuant to the procedures set forth in

these Guidelines.

(1) Material supervisory

determinations include:

(a) CAMELS ratings under the

Uniform Financial Institutions Rating

System;

(b) IT ratings under the Uniform

Rating System for Information

Technology;

(c) Trust ratings under the Uniform

Interagency Trust Rating System;

(d) CRA ratings under the Revised

Uniform Interagency Community

Reinvestment Act Assessment Rating

System;

uidelines.

(1) Material supervisory

determinations include:

(a) CAMELS ratings under the

Uniform Financial Institutions Rating

System;

(b) IT ratings under the Uniform

Rating System for Information

Technology;

(c) Trust ratings under the Uniform

Interagency Trust Rating System;

(d) CRA ratings under the Revised

Uniform Interagency Community

Reinvestment Act Assessment Rating

System;

(e) Consumer compliance ratings

under the Uniform Interagency

Consumer Compliance Rating System;

(f) Registered transfer agent

examination ratings;

(g) Government securities dealer

examination ratings;

(h) Municipal securities dealer

examination ratings;

(i) Determinations relating to the

appropriateness of loan loss reserve

provisions;

(j) Classifications of loans and other

assets in dispute the amount of which,

individually or in the aggregate, exceeds

10 percent of an institution’s total

capital;

(k) Determinations relating to

violations of a statute or regulation that

may affect the capital, earnings, or

operating flexibility of an institution, or

otherwise affect the nature and level of

supervisory oversight accorded an

institution;

(l) Truth in Lending Act (Regulation

Z) restitution;

(m) Filings made pursuant to 12 CFR

303.11(f), for which a request for

reconsideration has been granted, other

than denials of a change in bank control,

change in senior executive officer or

board of directors, or denial of an

application pursuant to section 19 of the

Federal Deposit Insurance Act (FDI Act),

12 U.S.C. 1829 (which are contained in

12 CFR 308, subparts D, L, and M,

respectively), if the filing was originally

denied by the Director, Deputy Director,

or Associate Director of the Division of

Depositor and Consumer Protection

(DCP) or the Division of Risk

Management Supervision (RMS);

(n) Decisions to initiate informal

enforcement actions (such as

memoranda of understanding);

),

12 U.S.C. 1829 (which are contained in

12 CFR 308, subparts D, L, and M,

respectively), if the filing was originally

denied by the Director, Deputy Director,

or Associate Director of the Division of

Depositor and Consumer Protection

(DCP) or the Division of Risk

Management Supervision (RMS);

(n) Decisions to initiate informal

enforcement actions (such as

memoranda of understanding);

(o) Determinations regarding the

institution’s level of compliance with a

formal enforcement action; however, if

the FDIC determines that the lack of

compliance with an existing formal

enforcement action requires an

additional formal enforcement action,

the proposed new enforcement action is

not appealable;

(p) Matters requiring board attention;

and

(q) Any other supervisory

determination (unless otherwise not

eligible for appeal) that may affect the

capital, earnings, operating flexibility,

or capital category for prompt corrective

action purposes of an institution, or that

otherwise affects the nature and level of

supervisory oversight accorded an

institution.

(2) Material supervisory

determinations do not include:

(a) Decisions to appoint a conservator

or receiver for an insured depository

institution, and other decisions made in

furtherance of the resolution or

receivership process, including but not

limited to determinations pursuant to

parts 370, 371, and 381, and § 360.10 of

the FDIC’s rules and regulations;

(b) Decisions to take prompt

corrective action pursuant to section 38

of the FDI Act, 12 U.S.C. 1831o;

(c) Determinations for which other

appeals procedures exist (such as

determinations of deposit insurance

assessment risk classifications and

payment calculations); and

not

limited to determinations pursuant to

parts 370, 371, and 381, and § 360.10 of

the FDIC’s rules and regulations;

(b) Decisions to take prompt

corrective action pursuant to section 38

of the FDI Act, 12 U.S.C. 1831o;

(c) Determinations for which other

appeals procedures exist (such as

determinations of deposit insurance

assessment risk classifications and

payment calculations); and

(d) Formal enforcement-related

actions and decisions, including

determinations and the underlying facts

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and circumstances that form the basis of

a recommended or pending formal

enforcement action.

(3) A formal enforcement-related

action or decision commences, and

becomes unappealable, when the FDIC

initiates a formal investigation under 12

U.S.C. 1820(c) (Order of Investigation),

issues a notice of charges or a notice of

assessment under 12 U.S.C. 1818 or

other applicable laws (Notice of

Charges), provides the institution with a

draft consent order, or otherwise

provides written notice to the

institution that the FDIC is reviewing

the facts and circumstances presented to

determine if a formal enforcement

action is merited under applicable

statutes or published enforcement-

related policies of the FDIC, including

written notice of a referral to the

Attorney General pursuant to the Equal

Credit Opportunity Act (ECOA) or a

notice to the Secretary of Housing and

Urban Development (HUD) for

violations of ECOA or the Fair Housing

Act (FHA). Such notice may be

provided in the transmittal letter

accompanying a Report of Examination.

For the purposes of these Guidelines,

remarks in a Report of Examination do

not constitute written notice that the

FDIC is reviewing the facts and

circumstances presented to determine if

a proposed enforcement action is

merited

velopment (HUD) for

violations of ECOA or the Fair Housing

Act (FHA). Such notice may be

provided in the transmittal letter

accompanying a Report of Examination.

For the purposes of these Guidelines,

remarks in a Report of Examination do

not constitute written notice that the

FDIC is reviewing the facts and

circumstances presented to determine if

a proposed enforcement action is

merited. Commencement of a formal

enforcement-related action or decision

will not suspend or otherwise affect a

pending request for review or appeal

that was submitted before the

commencement of the formal

enforcement-related action or decision.

(4) Additional Appeal Rights:

(a) In the case of any written notice

from the FDIC to the institution that the

FDIC is determining whether a formal

enforcement action is merited, the FDIC

must issue an Order of Investigation,

issue a Notice of Charges, or provide the

institution with a draft consent order

within 120 days of such a notice, or

appeal rights will be made available

pursuant to these Guidelines. If the

FDIC timely provides the institution

with a draft consent order and the

institution rejects the draft consent

order in writing, the FDIC must issue an

Order of Investigation or a Notice of

Charges within 90 days from the date on

which the institution rejects the draft

consent order in writing or appeal rights

will be made available pursuant to these

Guidelines. The FDIC may extend these

periods, with the approval of the

Chairperson’s Office, after the FDIC

notifies the institution that the relevant

Division Director is seeking formal

authority to take an enforcement action.

(b) In the case of a referral to the

Attorney General for violations of the

ECOA, beginning on the date the referral

is returned to the FDIC, the FDIC must

proceed in accordance within paragraph

(a), including within the specified

timeframes, or appeal rights will be

made available pursuant to these

Guidelines.

Division Director is seeking formal

authority to take an enforcement action.

(b) In the case of a referral to the

Attorney General for violations of the

ECOA, beginning on the date the referral

is returned to the FDIC, the FDIC must

proceed in accordance within paragraph

(a), including within the specified

timeframes, or appeal rights will be

made available pursuant to these

Guidelines.

(c) In the case of providing notice to

HUD for violations of the ECOA or the

FHA, beginning on the date the notice

is provided, the FDIC must proceed in

accordance within paragraph (a),

including within the specified

timeframes, or appeal rights will be

made available pursuant to these

Guidelines.

(d) Written notification will be

provided to the institution within 10

days of a determination that appeal

rights have been made available under

this section.

(e) The relevant FDIC Division and

the institution may mutually agree to

extend the timeframes in paragraphs (a),

(b), and (c) if the parties deem it

appropriate.

E. Good-Faith Resolution

An institution should make a good-

faith effort to resolve any dispute

concerning a material supervisory

determination with the on-site examiner

and/or the appropriate Regional Office.

The on-site examiner and the Regional

Office will promptly respond to any

concerns raised by an institution

regarding a material supervisory

determination. Informal resolution of

disputes with the on-site examiner and

the appropriate Regional Office is

encouraged, but seeking such a

resolution is not a condition to filing a

request for review with the appropriate

Division, either DCP, RMS, or the

Division of Complex Institution

Supervision and Resolution (CISR), or to

filing a subsequent appeal with the

Office under these Guidelines.

F. Filing a Request for Review with the

Appropriate Division

r and

the appropriate Regional Office is

encouraged, but seeking such a

resolution is not a condition to filing a

request for review with the appropriate

Division, either DCP, RMS, or the

Division of Complex Institution

Supervision and Resolution (CISR), or to

filing a subsequent appeal with the

Office under these Guidelines.

F. Filing a Request for Review with the

Appropriate Division

(1) An institution may file a request

for review of a material supervisory

determination with the Division that

made the determination, either the

Director, DCP, the Director, RMS, or the

Director, CISR (Director or Division

Director), 550 17th Street, NW, Room F–

4076, Washington, DC 20429, within 60

calendar days following the institution’s

receipt of a report of examination

containing a material supervisory

determination or other written

communication of a material

supervisory determination. 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

cumstances, the institution’s position

regarding the dispute and any

arguments to support that position

(including citation of any relevant

statute, regulation, policy statement, or

other authority), how resolution of the

dispute would materially affect the

institution, and whether a good-faith

effort was made to resolve the dispute

with the on-site examiner and the

Regional Office; and

(b) A statement that the institution’s

board of directors or senior management

has considered the merits of the request

and has authorized that it be filed.

Senior management is defined as the

core group of individuals directly

accountable to the board of directors for

the sound and prudent day-to-day

management of the institution. If an

institution’s senior management files an

appeal, it must inform the board of

directors of the substance of the appeal

before filing and keep the board of

directors informed of the appeal’s

status.

(2) Within 45 calendar days after

receiving a request for review described

in paragraph (1), the Division Director

will:

(a) Review the appeal, considering

whether the material supervisory

determination is consistent with

applicable laws, regulations, and policy,

make his or her own supervisory

determination without deferring to the

judgments of either party, and issue a

written determination on the request for

review, setting forth the grounds for that

determination; or

(1), the Division Director

will:

(a) Review the appeal, considering

whether the material supervisory

determination is consistent with

applicable laws, regulations, and policy,

make his or her own supervisory

determination without deferring to the

judgments of either party, and issue a

written determination on the request for

review, setting forth the grounds for that

determination; or

(b) refer the request for review to the

Office for consideration as an appeal

under Section G and provide written

notice to the institution that the request

for review has been referred to the

Office.

(3) No appeal to the Office will be

allowed unless an institution has first

filed a timely request for review with

the appropriate Division Director.

(4) In any decision issued pursuant to

paragraph (2)(a) of this section, the

Director will inform the institution of

the 30-day time period for filing with

the Office and will provide the mailing

address for any appeal the institution

may wish to file.

(5) The Division Director may request

guidance from the Office or the Legal

Division as to procedural or other

questions relating to any request for

review.

G. Appeal to the Office

An institution that does not agree

with the written determination rendered

by the Division Director may appeal that

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ffice or the Legal

Division as to procedural or other

questions relating to any request for

review.

G. Appeal to the Office

An institution that does not agree

with the written determination rendered

by the Division Director may appeal that

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determination to the Office within 30

calendar days after the date of receipt of

that determination. Failure to file within

the 30-day time limit may result in

denial of the appeal by the Office.

1. Filing with the Office

An appeal to the Office will be

considered filed if the written appeal is

received by the FDIC within 30 calendar

days after the date of receipt of the

Division Director’s written

determination or if the written appeal is

placed in the U.S. mail within that 30-

day period. The appeal should be sent

to the address indicated on the Division

Director’s determination being

appealed, or sent via email to ESS_

Appeals@fdic.gov. Upon receiving the

appeal, the Office will send an

acknowledgment to the institution, and

will send copies of the institution’s

appeal to the Office of the Ombudsman

and the appropriate Division Director.

2. Contents of Appeal

The appeal should be labeled to

indicate that it is an appeal to the Office

and should contain the name, address,

and telephone number of the institution

and any representative, as well as a

copy of the Division Director’s

determination being appealed. If oral

presentation is sought, that request

should be included in the appeal. If

expedited review is requested, the

appeal should state the reason for the

request. Only matters submitted to the

appropriate Division Director in a

request for review may be appealed to

the Office

institution

and any representative, as well as a

copy of the Division Director’s

determination being appealed. If oral

presentation is sought, that request

should be included in the appeal. If

expedited review is requested, the

appeal should state the reason for the

request. Only matters submitted to the

appropriate Division Director in a

request for review may be appealed to

the Office. Evidence not presented for

review to the Division Director is

generally not permitted; such evidence

may be submitted to the Office only if

approved by the reviewing panel and

with a reasonable time for the Division

Director to review and respond. The

institution should set forth all of the

reasons, legal and factual, why it

disagrees with the Division Director’s

determination. Nothing in the Office

administrative process shall create any

discovery or other such rights.

3. Burden of Proof

The burden of proof as to all matters

at issue in the appeal, including

timeliness of the appeal if timeliness is

at issue, rests with the institution.

4. Submissions from the Ombudsman

and the Division Director

The Ombudsman and the Division

Director each may submit views

regarding the appeal to the Office within

30 calendar days of the date on which

the appeal is received by the Office.

5. Oral Presentation

The Office will, if a request is made

by the institution or by FDIC staff, allow

an oral presentation. The Office may

hear oral presentations in person,

telephonically, electronically, or

through other means agreed upon by the

parties. If an oral presentation is held,

the institution and FDIC staff will be

allowed to present their positions on the

issues raised in the appeal and to

respond to any questions from the

Office.

6. Consolidation, Dismissal, and

Rejection

Appeals based upon similar facts and

circumstances may be consolidated for

expediency

, electronically, or

through other means agreed upon by the

parties. If an oral presentation is held,

the institution and FDIC staff will be

allowed to present their positions on the

issues raised in the appeal and to

respond to any questions from the

Office.

6. Consolidation, Dismissal, and

Rejection

Appeals based upon similar facts and

circumstances may be consolidated for

expediency. An appeal may be

dismissed by the Office if it is not

timely filed, if the basis for the appeal

is not discernable from the appeal, or if

the institution moves to withdraw the

appeal. The Office will decline to

consider an appeal if the institution’s

right to appeal is not yet available under

Section D(4), above.

7. Scope of Review and Decision

The Office will be an appellate body

and will make independent supervisory

determinations. The Office 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. The Office’s 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

Office will not consider any aspect of an

appeal that seeks to change or modify

existing FDIC rules or policy. The Office

will notify the institution, in writing, of

its decision concerning the disputed

material supervisory determination(s)

within 45 days after the date the Office

meets to consider the appeal, which

meeting will be held within 90 days

after either the date of the filing of the

appeal or the date that the Division

Director refers the appeal to the Office.

8. Role of the Legal Division

The Legal Division will provide

counsel to the Office and generally

advise the Office on FDIC policies and

rules

mination(s)

within 45 days after the date the Office

meets to consider the appeal, which

meeting will be held within 90 days

after either the date of the filing of the

appeal or the date that the Division

Director refers the appeal to the Office.

8. Role of the Legal Division

The Legal Division will provide

counsel to the Office and generally

advise the Office on FDIC policies and

rules. If an appeal seeks to change or

modify FDIC policies or rules, or raises

a policy matter of first impression, the

Office will, with the Legal Division’s

concurrence, refer the matter to the

Chairperson’s Office.

The Legal Division also will review

decisions of the Office for consistency

with applicable laws, regulations, and

policies of the FDIC prior to their

issuance. If the Legal Division

determines that a decision is contrary to

a law, regulation, or policy of the FDIC,

the Office will revise the decision to

conform with relevant laws, regulations,

or policies.

9. Other Communications

Any communications between the

Office and either supervisory staff or the

appealing institution will be shared

with the other party to the appeal,

subject to limitations on disclosure.

H. Publication of Decisions

Decisions of the Office will be

published as soon as practicable, and

the published decisions will be redacted

to avoid disclosure of the name of the

appealing institution and any

information exempt from disclosure

under the Freedom of Information Act

and the FDIC’s document disclosure

regulations found in 12 CFR 309. In

cases in which redaction is deemed

insufficient to prevent improper

disclosure, published decisions may be

presented in summary form. Published

Office decisions may be cited as

precedent in appeals to the Office.

Annual reports on the Office’s decisions

and Division Directors’ decisions with

respect to institutions’ requests for

review of material supervisory

determinations also will be published.

I

h redaction is deemed

insufficient to prevent improper

disclosure, published decisions may be

presented in summary form. Published

Office decisions may be cited as

precedent in appeals to the Office.

Annual reports on the Office’s decisions

and Division Directors’ decisions with

respect to institutions’ requests for

review of material supervisory

determinations also will be published.

I. Appeal Guidelines Generally

Appeals to the Office will be governed

by these Guidelines. The Office, with

the concurrence of the Legal Division,

will retain discretion to waive any

provision of the Guidelines for good

cause. Supplemental rules governing the

Office’s operations may be adopted.

Institutions may request extensions of

the time period for submitting appeals

under these Guidelines from either the

appropriate Division Director or the

Office, as appropriate. If a filing under

these Guidelines is due on a Saturday,

Sunday, or a Federal holiday, the filing

may be made on the next business day.

J. Limitation on Agency Ombudsman

The subject matter of a material

supervisory determination for which

either an appeal to the Office has been

filed, or a final Office decision issued,

is not eligible for consideration by the

Ombudsman. However, pursuant to

Section (G)(4) of these Guidelines, the

Ombudsman may submit views to the

Office for its consideration in

connection with any pending appeal.

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l Office decision issued,

is not eligible for consideration by the

Ombudsman. However, pursuant to

Section (G)(4) of these Guidelines, the

Ombudsman may submit views to the

Office for its consideration in

connection with any pending appeal.

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6888

Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices

K. Coordination with State Regulatory

Authorities

In the event that a material

supervisory determination subject to a

request for review is the joint product of

the FDIC and a State regulatory

authority, the Director, DCP, the

Director, RMS, or the Director, CISR, as

appropriate, will promptly notify the

appropriate State regulatory authority of

the request, provide the regulatory

authority with a copy of the institution’s

request for review and any other related

materials, and solicit the regulatory

authority’s views regarding the merits of

the request before making a

determination. In the event that an

appeal is subsequently filed with the

Office, the Office will notify the

institution and the State regulatory

authority of its decision. Once the Office

has issued its determination, any other

issues that may remain between the

institution and the State authority will

be left to those parties to resolve.

L. 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 during the appeal or

affect the FDIC’s authority to take any

supervisory or enforcement action

against that institution.

M

ll

be left to those parties to resolve.

L. 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 during the appeal or

affect the FDIC’s authority to take any

supervisory or enforcement action

against that institution.

M. Effect on Applications or Requests

for Approval

Any application or request for

approval made to the FDIC by an

institution that has appealed a material

supervisory determination that relates

to, or could affect the approval of, the

application or request will not be

considered until a final decision

concerning the appeal is made unless

otherwise requested by the institution.

N. Prohibition on Examiner Retaliation

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,

3501 Fairfax Drive, Suite E–2022,

Arlington, Virginia, 22226, explaining

the circumstances and the basis for such

belief or evidence and requesting that

the complaint be investigated and

appropriate disciplinary or remedial

action taken. The Office of the

Ombudsman will work with the

appropriate Division Director to resolve

the allegation of retaliation.

Federal Deposit Insurance Corporation

Fairfax Drive, Suite E–2022,

Arlington, Virginia, 22226, explaining

the circumstances and the basis for such

belief or evidence and requesting that

the complaint be investigated and

appropriate disciplinary or remedial

action taken. The Office of the

Ombudsman will work with the

appropriate Division Director to resolve

the allegation of retaliation.

Federal Deposit Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on January 19,

2021.

James P. Sheesley,

Assistant Executive Secretary.

[FR Doc. 2021–01547 Filed 1–22–21; 8:45 am]

BILLING CODE 6714–01–P

FEDERAL ELECTION COMMISSION

Sunshine Act Meeting

TIME AND DATE: Thursday, January 28,

2021 at 10:00 a.m.

PLACE: Virtual meeting. Note: Because of

the covid–19 pandemic, we will

conduct the open meeting virtually. If

you would like to access the meeting,

see the instructions below.

STATUS: This meeting will be open to the

public. to access the virtual meeting, go

to the commission’s website

www.fec.gov and click on the banner to

be taken to the meeting page.

MATTERS TO BE CONSIDERED:

Draft Advisory Opinion 2020–06:

Escobar

Audit Division Recommendation

Memorandum on the Mississippi

Republican Party (A17–15)

Management and Administrative

Matters

CONTACT PERSON FOR MORE INFORMATION:

Judith Ingram, Press Officer; Telephone:

(202) 694–1220.

Authority: Government in the Sunshine

Act, 5 U.S.C. 552b.

Laura E. Sinram,

Acting Secretary and Clerk of the

Commission.

[FR Doc. 2021–01594 Filed 1–21–21; 11:15 am]

BILLING CODE 6715–01–P

FEDERAL TRADE COMMISSION

[File No. 192 3172]

Everalbum, Inc.; Analysis of Proposed

Consent Order To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement;

request for comment.

SUMMARY: The consent agreement in this

matter settles alleged violations of

federal law prohibiting unfair or

deceptive acts or practices

–21–21; 11:15 am]

BILLING CODE 6715–01–P

FEDERAL TRADE COMMISSION

[File No. 192 3172]

Everalbum, Inc.; Analysis of Proposed

Consent Order To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement;

request for comment.

SUMMARY: The consent agreement in this

matter settles alleged violations of

federal law prohibiting unfair or

deceptive acts or practices. The attached

Analysis of Proposed Consent Order to

Aid Public Comment describes both the

allegations in the draft complaint and

the terms of the consent order—

embodied in the consent agreement—

that would settle these allegations.

DATES: Comments must be received on

or before February 24, 2021.

ADDRESSES: Interested parties may file

comments online or on paper by

following the instructions in the

Request for Comment part of the

SUPPLEMENTARY INFORMATION section

below. Please write ‘‘Everalbum, Inc.;

File No. 192 3172’’ on your comment,

and file your comment online at https://

www.regulations.gov by following the

instructions on the web-based form. If

you prefer to file your comment on

paper, mail your comment to the

following address: Federal Trade

Commission, Office of the Secretary,

600 Pennsylvania Avenue NW, Suite

CC–5610 (Annex D), Washington, DC

20580, or deliver your comment to the

following address: Federal Trade

Commission, Office of the Secretary,

Constitution Center, 400 7th Street SW,

5th Floor, Suite 5610 (Annex D),

Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT:

James Trilling (202–326–3497), Bureau

of Consumer Protection, Federal Trade

Commission, 600 Pennsylvania Avenue

NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant

to Section 6(f) of the Federal Trade

Commission Act, 15 U.S.C

Office of the Secretary,

Constitution Center, 400 7th Street SW,

5th Floor, Suite 5610 (Annex D),

Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT:

James Trilling (202–326–3497), Bureau

of Consumer Protection, Federal Trade

Commission, 600 Pennsylvania Avenue

NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant

to Section 6(f) of the Federal Trade

Commission Act, 15 U.S.C. 46(f), and

FTC Rule 2.34, 16 CFR 2.34, notice is

hereby given that the above-captioned

consent agreement containing a consent

order to cease and desist, having been

filed with and accepted, subject to final

approval, by the Commission, has been

placed on the public record for a period

of thirty (30) days. The following

Analysis to Aid Public Comment

describes the terms of the consent

agreement and the allegations in the

complaint. An electronic copy of the

full text of the consent agreement

package can be obtained at https://

www.ftc.gov/news-events/commission-

actions.

You can file a comment online or on

paper. For the Commission to consider

your comment, we must receive it on or

before February 24, 2021. Write

‘‘Everalbum, Inc.; File No. 192 3172’’ on

your comment. Your comment—

including your name and your state—

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