Legislation seeks to reform bank exam process

On Thursday, U.S. Reps. French Hill (R-AR) and David Scott (D-GA) introduced legislation to provide greater transparency in bank exams.

The legislation, the Fair Audits and Inspections for Regulators’ (FAIR) Exams Act would provide fairness, accountability and transparency to the bank exam process, officials said. Additionally, the bill, if passed, would establish an appeals process to resolve disagreements between banks and regulators.

“Banks deserve to experience a fair and efficient supervisory examination process,” Hill said. “The Fair Exams Act will allow any bank – including our community and rural banks in Arkansas – to appeal a supervisory determination through a third-party, independent director for review. My legislation is a win for the banking industry and greatly increases the transparency and fairness in the bank examination process.”

The legislation would authorize financial institutions to seek a prompt, independent review of a “material supervisory determination from a regulatory examination that can be referred to the U.S. Court of Appeals. Additionally, the legislation would require bank examiners to conduct and complete examinations no later than 60 days after the exam exit interview and share materials used in the determination with banks; as well as establish an Office of Independent Examination Review to adjudicate appeals, and prohibit federal financial regulators from retaliating against a financial institution for exercising their appellate rights under the bill.

A companion bill was introduced in the Senate by U.S. Sens. Jerry Moran (R-KS) and Joe Manchin (D-WV). The bills are supported by the American Bankers Association, the Independent Community Bankers of America, and American Fintech Council.

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