WASHINGTON – U.S. Senators Jerry Moran (R-Kan.) and Joe Manchin (D-W.V.) today introduced legislation to help create a fair appeals process for banks and increase transparency for the bank examination process.

A fair and effective supervisory examination process for banks is important for maintaining a healthy and transparent financial system. The Fair Audits and Inspections for Regulators’ (FAIR) Exams Act would bring more accountability to bank examinations by establishing an appeals process to resolve disagreements between banks and regulators by hiring an independent director to review appeals. This legislation would provide small lenders with more clarity and representation – allowing them to continue serving their communities efficiently by receiving results faster and more transparently.

“The bank examination process should be free from bias and fair to bankers,” said Sen. Moran. “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.”

“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’m proud to reintroduce the bipartisan FAIR Exams Act, which would ensure any bank or financial institution that undergoes a supervisory exam has an impartial third party that reviews these exam findings before regulatory agencies can take action against them. I encourage my colleagues on both sides of the aisle to support this commonsense bill to strengthen transparency in our financial institutions and increase accountability on agencies.”

This legislation was also co-sponsored by Sens. Thom Tillis (R-N.C.) and Bill Hagerty (R-Tenn.).

The FAIR Exams Act would:

• Require the appropriate regulatory agencies to issue timely responses to bankers during the examinations process;
• Require the Federal Financial Institutions Examinations Council (FFIEC) to make available upon request the information relied upon for determinations;
• Create an Independent Examination Review Director within the FFIEC to address examination complaints and procedures;
• Provide financial institutions with the right to seek review of supervisory determinations with the Independent Examination Review Director; and
• Authorize the director to review the examination record and, at the institution’s request, refer the appeal to an administrative law judge.

“ICBA and the nation’s community banks strongly support policy reforms that will ensure due process for banks appealing supervisory decisions to promote trust and accountability in the appeals process,” said Rebeca Romero Rainey, ICBA President and CEO. “Following the FDIC’s disbandment of its independent appeals office less than six months after it became operational, we thank Sen. Moran for introducing the FAIR Exams Act to provide for a fair and effective supervisory bank examination process, which will help maintain a healthy and transparent financial system.” 

“ABA applauds Sen. Moran and his cosponsors on their introduction of the FAIR Exams Act, a bipartisan bill that will bring clarity to the examination process and provide due process for community banks,” said Rob Nichols, President and CEO of American Bankers Association. “By ensuring greater transparency for banks and greater accountability for examiners, this bill will make the examination process fairer and our financial system stronger.”

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