[Federal Register Volume 59, Number 245 (Thursday, December 22, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31545]
[[Page Unknown]]
[Federal Register: December 22, 1994]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
[Docket No. 94-23]
Independent Regulatory Appeals Process
Agency: Office of the Comptroller of the Currency, Treasury.
Action: Notice and request for comments.
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SUMMARY: The Office of the Comptroller of the Currency (OCC) is
requesting comments on its guidelines that permit national banks to
appeal certain OCC decisions and actions. This Action is required by
the Riegle Community Development and Regulatory Improvement Act of
1994. The OCC intends to use the comments in evaluating whether changes
to the proposed guidelines are appropriate.
DATES: Comments must be received by January 23, 1995.
ADDRESSES: Comments may be submitted to Docket Number 94-23,
Communications Division, Ninth Floor, Office of the Comptroller of the
Currency, 250 E Street, SW., Washington, DC 20219. Comments will be
available for inspection and photocopying at that address.
FOR FURTHER INFORMATION CONTACT: Heidi Thomas, Legislative Counsel,
Legislative and Regulatory Activities Division, 202-874-5090, or P.
Michael Yuenger, Office of the Chief National Bank Examiner, 202-874-
5350, Office of the Comptroller of the Currency.
SUPPLEMENTARY INFORMATION:
Background
Section 309(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994, Pub. L. 103-325 (12 U.S.C. 4806) (the Act),
which was signed into law on September 23, 1994, requires the OCC, the
Office of Thrift Supervision, the Federal Deposit Insurance
Corporation, and the Federal Reserve Board (Federal banking agencies)
and the National Credit Union Administration to establish an
independent internal appellate process. This process must be available
to review material supervisory determinations made at insured
depository institutions or credit unions that the agency supervises.
Section 309(c) of the Act (12 U.S.C. 4806(c)) requires that each
Federal banking agency must provide public notice and opportunity for
comment on its proposed guidelines for this appellate process by
December 22, 1994, and establish this process by March 22, 1995.
The Act defines ``independent appellate process'' in section
309(f)(2) (12 U.S.C. 4806(f)(2)) as 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. In addition, this
Act defines ``material supervisory determinations'' in section
309(f)(1) (12 U.S.C. 4806(f)(1)) to include determinations relating to
(1) examination ratings, (2) the adequacy of loan loss reserve
provisions, and (3) loan classifications on loans that are significant
to an institution. This definition expressly excludes determinations to
appoint a conservator or receiver for an insured depository institution
or a decision to take prompt corrective action pursuant to section 38
of the Federal Deposit Insurance Act (FDI Act) (12 U.S.C. 1831o).
In addition, section 309(g) (12 U.S.C. 4806(g)) expressly provides
that the Act's requirement to establish an appeals process does not
affect the authority of the banking agencies to take enforcement or
supervisory actions against an institution. Finally, section 309(b) (12
U.S.C. 4906(b)) of the Act requires that appeals be heard and decided
expeditiously and that appropriate safeguards exist for protecting the
appellant from retaliation by agency examiners.
Existing OCC Appeals Process
The OCC's existing procedures for national banks to appeal agency
decisions and actions were published in Banking Circular No. 272, dated
June 11, 1993. These procedures have been modified and clarified in the
proposed guidelines to be consistent with the requirements of the Act.
Until these guidelines are published in final form in the Federal
Register, the current OCC appeals policy as set forth in Banking
Circular No. 272 remains in effect. The OCC's appeals policy does not
supersede any existing appeals procedures available under current law.
The OCC's appeals process provides that a national bank may file
its appeal either with the District Administrator or Deputy Comptroller
of the OCC District in which the bank is headquartered (or the Deputy
Comptroller for the appropriate program in Washington, D.C. if the bank
is a multinational bank or under special supervision), or directly with
the Ombudsman. The proposed guidelines clarify that the term national
bank includes a Federal branch or agency of a foreign bank.
The District Administrator or Deputy Comptroller normally does not
directly or indirectly participate in making reviewable supervisory
decisions nor report directly or indirectly to the agency official who
made the reviewable decision. In addition, the national bank may always
file its appeal with the Ombudsman who is outside the bank supervision
area, reporting only to the Comptroller. Therefore, the OCC believes
that its appeals process complies with the Act's requirement that
appeals be heard by an agency official who does not report directly or
indirectly to the agency official who made the material supervisory
determination under review.
However, to further assure that the appeals process remains
completely independent, the OCC has added a provision to require the
District Administrator or Deputy Comptroller to transfer an appeal to
the Ombudsman if the District Administrator or Deputy Comptroller
directly or indirectly participated in making the decision under review
or reports directly or indirectly to the agency official who made the
decision under review. In addition, the OCC has added a provision to
require the Ombudsman to transfer an appeal to the Senior Deputy
Comptroller for Bank Supervision Policy if the Ombudsman should be
recused from reviewing the decision under appeal.
The OCC also is proposing to extend the period of time in which the
District Administrator, Deputy Comptroller, or Ombudsman must make a
decision on an appeal. Currently, the OCC's policy requires that the
District Administrator or the Deputy Comptroller, in the absence of any
extenuating circumstances, issue a written response within 20 calendar
days of the filing of an appeal, and that the Ombudsman issue a written
response within 30 calendar days of the filing of an appeal. In
addition, the Ombudsman must issue a written response to a second-tier
appeal, which is an appeal by a national bank of an appeal decision
made by a District Administrator or Deputy Comptroller, within 15
calendar days of the filing of that second-tier appeal. The OCC is
proposing to extend the time period for deciding all first-tier appeals
to 45 days, and all second-tier appeals to 30 days. Based on the OCC's
current experience with the appeals process, it has found that some
additional time may be necessary. The OCC believes that the time
periods in the proposed guidelines complies with the Act's requirement
that an appeal be heard and decided expeditiously.
The Act also requires that the appeals process contain appropriate
safeguards for protecting the appellant from retaliation by agency
examiners. Currently, the OCC takes steps to ensure that banks are not
unfairly treated because of their appeal, although these steps are not
part of the OCC's written appeals process. Specifically, the Ombudsman
makes periodic informal inquiries after a decision on an appeal is made
to determine whether the bank believes the OCC has taken action against
it in retaliation for its appeal. If a bank indicates that such
retaliatory action has occurred, the Ombudsman initiates an
investigation.
To ensure that these procedures are followed for each appeal, the
OCC proposes to include the Ombudsman's follow-up-inquiries in its
guidelines. Specifically, the OCC proposes that the Ombudsman contact
the appellant bank to inquire whether the bank believes that OCC
examiners have taken actions against it in retaliation for its appeal
within (1) six months after the date the Ombudsman, Deputy
Administrator or Deputy Comptroller issues a final written response to
an appeal, and (2) six months after the date of completion of the first
examination following an appeal. In addition, national banks that
believe they are the subject of retaliation because of their appeal
may, at any time, seek redress with the Ombudsman.
Finally, the OCC proposes to change its definition of appealable
matters to expressly comply with the definition of ``material
supervisory determinations'' as provided in section 309(f)(1) of the
Act (12 U.S.C. 4806(f)(1)). The OCC's current process permits national
banks to seek review of all agency decisions and actions except those
involving the appointment of receivers and conservators. Also expressly
excluded are preliminary examination conclusions communicated to the
national bank prior to the issuance of either a Final Report of
Examination or other written communication from the OCC. The OCC
believes that, until these preliminary conclusions become final, they
are not ``material supervisory determinations'' for purposes of the
appellate procedures. Also, consistent with the Act, the OCC proposes
to continue to exclude enforcement-related actions or decisions from
actions covered by the guidelines. The OCC proposes to clarify that
enforcement-related actions include decisions to take prompt corrective
action pursuant to section 38 of the FDI Act (12 U.S.C. 1831o) and,
thus, are not appealable under these guidelines.
To be consistent with the Act, the OCC proposes to add the
definition of ``material supervisory determination'' to its discussion
of appealable matters. The OCC appeals policy still includes decisions
and actions in addition to those specifically identified by the Act as
material supervisory determinations, unless otherwise excluded.
Issues for Comment
The OCC requests comments on all aspects of its appeals process. In
particular, the OCC requests comments on the following issues:
1. Do the guidelines adequately provide independence in the appeals
process?
2. Do the guidelines adequately provide that appeals are heard and
decided expeditiously?
3. Do the guidelines adequately protect appellant banks from
retaliation by OCC examiners?
4. Is the scope of appealable matters appropriate?
5. To what extent should the Ombudsman be bound by existing OCC
policies?
National Bank Appeals Process
The following is the OCC's Proposed Appeals Process:
I. Policy
The OCC is responsible for fostering the safety and soundness of
the national banking system, monitoring, and enforcing national banks'
compliance with laws, and encouraging competitiveness, integrity, and
stability of financial services. In fulfilling this mission, it is the
OCC's policy to maintain open and ongoing communication with the
institutions it supervises and to foster the fair and equitable
administration of the supervisory process.
If a disagreement arises during the supervisory process, the OCC
will resolve the dispute fairly and expeditiously in an informal,
amicable manner. If disagreements cannot be resolved through informal
discussions, national banks and Federal branches and agencies of
foreign banks (collectively referred to as ``national banks'' for
purposes of these guidelines) are encouraged, and the examiner involved
in the dispute should specifically encourage the national bank, to seek
a further review of the OCC decisions or actions that are in dispute.
These guidelines establish a mechanism through which a national
bank can seek such a review. A critical element in this appeals process
is the Ombudsman. The Ombudsman is outside the bank supervision area
and reports directly to the Comptroller of the Currency. With the prior
consent of the Comptroller, the Ombudsman may supersede any agency
decision or action during the resolution of an appealable matter.
The procedures established in these guidelines provide national
banks a fair and expeditious review of agency decisions and actions
while ensuring that no one is disadvantaged by the filing of an appeal.
If a national bank has a question as to whether it should make use of
this appeal authority, it should contact the Ombudsman.
II. Procedures
A. Filing An Appeal
A national bank may seek review of appealable matters by filing an
appeal with either its immediate supervisory office or with the OCC's
Ombudsman. All communications with the Ombudsman may be sent to 1000
Louisiana Street, Suite 950, Houston, Texas 77002-5008. The choice of
where to file is a matter within the sole discretion of the bank,
except as indicated below; all appealable matters can be received in
either location. However, in cases where the District Administrator or
Deputy Comptroller directly or indirectly participated in making the
decision under review or directly or indirectly reports to the agency
official who made the decision under review, the District Administrator
or Deputy Comptroller must transfer the appeal to the Ombudsman. In
addition, in cases where the Ombudsman should be recused from reviewing
the decision under appeal, the Ombudsman shall transfer the appeal to
the Senior Deputy Comptroller for Bank Supervision Policy in the OCC's
Washington DC Office. The procedures for filing an appeal under the two
options are outlined below.
1. Supervisory Office Appeals. If a disagreement concerning an OCC
supervisory decision or action cannot be resolved informally, a
national bank may file an appeal with its immediate supervisory office.
Community banks and regional banks seeking appeal under this option
should file such appeals with the District Administrator or Deputy
Comptroller of the OCC District in which the bank is headquartered.
Banks in the Multinational Banking or Special Supervision programs
using this option should file appeals with the Deputy Comptroller for
the program in the Washington Office. In cases where the District
Administrator or Deputy Comptroller directly or indirectly participated
in making the decision under review or directly or indirectly reports
to the agency official who made the decision under review, the District
Administrator or Deputy Comptroller must transfer the appeal to the
Ombudsman after advising the appellant.
An appellant national banks must submit information in writing
fully describing the matter in dispute and setting forth its basis for
requesting an appeal. Upon receipt of an appeal, the appropriate
District Administrator or Deputy Comptroller, or a designee who has not
directly or indirectly participated in making the decision in dispute
nor is directly or indirectly responsible to the agency official who
made the decision under review, will contact the OCC employee(s)
involved in the matter under appeal. The OCC employee(s) shall submit
written or oral information concerning the basis of the appeal. If
requested by a senior official of the national bank filing the appeal,
the appropriate District Administrator or Deputy Comptroller shall
arrange a meeting or a telephone call to more fully discuss the appeal
and related issues.
In the absence of any extenuating circumstances, the appropriate
District Administrator or Deputy Comptroller shall issue a written
response within 45 calendar days of the filing of the appeal.
Immediately after the response is issued, the District Administrator or
Deputy Comptroller shall forward to the Ombudsman copies of all
relevant materials considered in the preparation of the response,
including all written submissions by the bank.
If the national bank disagrees with the response from the District
Administrator or Deputy Comptroller, a senior official of the bank may
further appeal the matter to the Ombudsman. The bank must file written
notice of this second-tier appeal within 15 calendar days of receiving
the response from the appropriate District Administrator or Deputy
Comptroller.
After receipt of a second-tier appeal, the Ombudsman shall review
all materials considered by the appropriate District Administrator or
Deputy Comptroller in the preparation of the initial response. The
Ombudsman shall contact the national bank to ensure that the OCC is in
possession of all relevant materials. If requested by either OCC
management involved in the dispute or a senior official of the national
bank filing the appeal, the Ombudsman shall arrange a meeting or a
telephone call to more fully discuss the appeal and related issues. In
the absence of any extenuating circumstances, the Ombudsman shall issue
a written response to the second-tier appeal within 30 calendar days of
the filing of that appeal.
2. Appeals to the Ombudsman When disagreements concerning OCC
supervisory decisions and actions cannot be resolved informally and a
national bank chooses not to file an appeal with its immediate
supervisory office, a national bank may file an appeal directly with
the Ombudsman. In cases where the Ombudsman should be recused from
reviewing the decision under appeal, the Ombudsman shall transfer the
appeal to the Senior Deputy Comptroller for Bank Supervision Policy in
the OCC's Washington DC office. In such cases, the procedures outlined
below will apply.
National banks filing appeals with the Ombudsman must submit
information in writing fully describing the matter in dispute. After
receipt of an appeal, the Ombudsman shall contact the OCC management
official involved in the dispute. That management official shall submit
written materials and relevant OCC documents pertaining to the bases of
the appeal within 10 calendar days of the notice from the Ombudsman.
The Ombudsman shall contact the national bank to ensure that the OCC is
in possession of all relevant materials. If requested by either OCC
management involved in the dispute or a senior official of the national
bank filing the appeal, the Ombudsman shall arrange a meeting or a
telephone call to more fully discuss the appeal and related issues. In
the absence of any extenuating circumstances, the Ombudsman shall issue
a written response to the appeal within 45 calendar days of the filing
of the appeal by a national bank.
B. Follow-up by Ombudsman
After the Ombudsman receives a decision on an appeal, the Ombudsman
shall contact every appellant bank to inquire whether the bank believes
OCC examiners have taken actions against the bank in retaliation for
its appeal. The Ombudsman shall make these contacts (1) six months
after the date the Ombudsman, Deputy Administrator or Deputy
Comptroller issues a final written response to an appeal, and (2) six
months after the date of completion of the first examination of the
appellant bank following its appeal. A national bank may, of course,
contact the Ombudsman at any time during or after the appeal if the
bank reasonably believes that an OCC examiner is taking action against
it in retaliation for its appeal. Upon identifying or learning of any
possible retaliatory actions, the Ombudsman shall investigate the
complaint; such investigations must be completed within 30 days. If the
Ombudsman determines that retaliation has occurred, the Ombudsman shall
forward the complaint to the District Administrator, Deputy
Comptroller, or Inspector General for appropriate action.
C. Appealable Matters
Except as otherwise provided, a national bank may seek a review of
any agency decision or action, including a material supervisory
determination. A material supervisory determination includes a
determination relating to:
Examination ratings;
The adequacy of loan loss reserve provisions; and
Loan classifications on loans that are significant to an
institution.
A national bank may not appeal:
Appointments of receivers and conservators;
Preliminary examination conclusions communicated to the
national bank prior to the issuance of either a final Report of
Examination or other written communication from the OCC; and
Enforcement-related actions or decisions, including
decisions to take prompt corrective action pursuant to section 38 of
the Federal Deposit Insurance Act (12 U.S.C. Sec. 1831o).
An enforcement-related action or decision commences, and therefore
becomes unappealable, when the national bank receives notice from the
OCC indicating its intention to pursue available remedies under
applicable statutes or published enforcement-related policies of the
OCC. Such policies include OCC's Policy for Corrective Action (PPM
5310-3)(REV), Civil Money Penalty Policy (PPM 5000-7)(REV), and
Securities Enforcement Policy (PPM 5310-5). These policies are
available on request from the OCC's Communications Division, 250 E.
Street, SW., Washington DC 20219-0001, 202-874-4700. For purposes of
these guidelines only, remarks in a Report of Examination do not
constitute notice of intent to pursue enforcement remedies.
The appeals process established by these guidelines does not
supersede any existing appeals procedures available under current law.
Matters which are subject to an existing appeals process designed
specifically for the issue in dispute, such as re-review of Shared
National Credit findings (Banking Circular 189), and reconsideration of
decisions on corporate applications (12 CFR 5.13(d)), are appealable to
the Ombudsman when the agency decision is final under the specifically
designed procedures.
III. Effect of Filing An Appeal
As a general rule, the filing of an appeal with either the national
bank's immediate supervisory office or with the Ombudsman serves to
stay all agency decisions and actions until the appeal is resolved. In
the appropriate circumstances, however, the Ombudsman may put the
disputed agency decision or action into effect while the appeal is
still pending.
Dated: December 19, 1994.
Eugene A. Ludwig
Comptroller of the Currency.
[FR Doc. 94-31545 Filed 12-21-94; 8:45 am]
BILLING CODE 4810-33-P
