Alert March 15, 2011

FDIC Issues Financial Institution Letter Concerning Steps and Procedures Available to Financial Institutions That Wish to Voice Concerns Regarding FDIC Examination Findings

The FDIC issued a financial institution letter (FIL-13-2011, the “Letter”) in which the FDIC reminds FDIC-supervised financial institutions (“FIs”) that they “can voice their concerns about an examination or other supervisory determination through informal and formal channels.”  The Letter states that if an FI disagrees with examination findings, it should communicate the disagreement through the FDIC examiner-in-charge, field office management or the appropriate regional office staff.  The FDIC notes that, should informal efforts to resolve disagreements fail to be successful, an FI may file a formal supervisory appeal with respect to a “material supervisory determination.”

The FDIC states in the Letter that “material supervisory determinations” can include, but are not limited to:

  • CAMELS ratings under the Uniform Financial Institutions Rating System
  • IT ratings under the Uniform Interagency Rating System for Data Processing Operations
  • trust ratings under the Uniform Interagency Trust Rating System
  • CRA ratings under the Revised Uniform Interagency Community Reinvestment Act Assessment Rating System
  • consumer compliance ratings under the Uniform Interagency Consumer Compliance Rating System
  • registered transfer agent examination ratings
  • government securities dealer examination ratings
  • municipal securities dealer examination ratings
  • determinations relating to the adequacy of loan loss reserve provisions
  • classifications of loans and other assets in dispute, the amount of which, individually or in the aggregate, exceed 10% of an FI’s total capital
  • determinations relating to violations of a statute or regulation (unless specifically excluded because the determination is the basis for a formal enforcement action or referral) that may affect the capital, earnings or operations of an FI, or otherwise affect supervisory oversight accorded an FI
  • Truth in Lending (Regulation Z) restitution
  • 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, if the filing was originally denied by the director, deputy director or associate director of the Division of Supervision and Consumer Protection, and
  • any other supervisory determination (unless otherwise not eligible for appeal or specifically excluded because the determination is the basis for a formal enforcement action or referral) that may affect the capital, earnings, operations, or prompt corrective actions, or otherwise affect the supervisory oversight accorded an FI.

The Letter also provides that material supervisory determinations do not include:

  • decisions to appoint a conservator or receiver for an FI
  • decisions to take prompt corrective action pursuant to Section 38 of the FDI Act
  • determinations for which other appeals procedures exist (such as determinations of deposit insurance assessment risk classifications and payment calculations)
  • formal enforcement-related actions and decisions, and
  • decisions to initiate informal enforcement actions (such as a memorandum of understanding).

The Letter states that FDIC policy prohibits any retaliation by the FDIC or an FDIC examiner against an FI that has formally or informally expressed disagreement with an FDIC examination finding or has filed an appeal.  The Letter also notes that FIs with concerns about their interactions with the FDIC may also contact the FDIC Office of the Ombudsman, which is charged with providing a “confidential, neutral and independent source of information and assistance to anyone affected by the FDIC in its regulatory role.”