U.S. Sen. Jerry Moran (R-KS) on Dec. 14 sponsored bipartisan legislation that aims to create a fair and effective supervisory examination process for America’s banks that would help them better resolve issues with regulators.
“The bank examination process should be free from bias and fair to bankers,” Sen. Moran said. “This legislation will help bring much-needed transparency to the examination process to make certain all banks — particularly rural, community banks — are treated fairly and afforded due process through a rigorous appeals process.”
Sen. Moran introduced the Fair Audits and Inspections for Regulators’ (FAIR) Exams Act, S. 3541, alongside three original cosponsors, including U.S. Sens. Thom Tillis (R-NC) and Joe Manchin (D-WV), to establish an appeals process to resolve disagreements between banks and regulators by hiring an independent director to review appeals, according to a bill summary provided by the lawmakers.
“An effective and fair examination process for financial institutions is vital to the health of our banking system and beneficial for consumers, especially in rural states like West Virginia,” said Sen. Manchin. “I encourage my colleagues on both sides of the aisle to support this common-sense bill to strengthen transparency in our financial institutions and increase accountability on agencies.”
If enacted, S. 3541 would require the appropriate regulatory agencies to issue timely responses to bankers during the examinations process, and require the Federal Financial Institutions Examinations Council (FFIEC) to make available upon request the information relied upon for determinations, the summary says.
Additionally, the bill would create an Independent Examination Review Director within the FFIEC to address examination complaints and procedures, and provide financial institutions with the right to seek review of supervisory determinations with this director.
The director also would be authorized to review the examination record and, at the institution’s request, refer the appeal to an administrative law judge, according to the summary.
The Independent Community Bankers of America and the American Bankers Association endorsed the bill.