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Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices
on which notice was given to provide the IDI with a draft consent order. If the FDIC failed to provide a draft consent order within this 120-day period, the IDIs supervisory appeal rights would be made available.
Once the FDIC provides an IDI with a draft consent order, the parties would have an opportunity to negotiate the details of a potential settlement. The proposal did not include a fixed time limit on such negotiations. At any time, the IDI could notify the Division in writing that it believes further negotiation would not be productive, and the Division would then have 90
days to issue a notice of charges or assessment or to open an order of investigation. If the Division failed to issue such a notice or open an order of investigation within that time, the IDI
would have 60 days to file an appeal of the material supervisory determination, consistent with the standard timeline following a material supervisory determination. If the IDI agrees to the consent order, then the matter would be resolved, and the need for an appeal would be obviated.

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II. Final Guidelines and Discussion of Comments The FDIC received fifteen comments from a variety of interested parties, including banks, trade associations, law firms, and a consultant. Commenters generally supported the proposal, with most asserting that the changes would enhance the supervisory appeals process. In particular, commenters supported the steps taken to promote the independence of the Office, suggesting that this would bolster the industrys confidence in the supervisory appeals process.
The FDICs proposal solicited feedback on particular aspects of the supervisory appeals process. Comments on these matters and the FDICs responses are summarized below.
Review of Office Decisions The FDIC asked whether commenters believed that the Chairperson or the Board should have an opportunity to review Office decisions before issuance.
While a few commenters asserted that the FDICs senior management should review Office decisions, most commenters believed that review by the Chairperson or the Board would undermine the independence of the Office. In particular, two commenters suggested that review by the Chairperson or Board could deter banks from availing themselves of the process.
A trade association also noted that if an appeal relates to an enforcement action, review of the appeal by the Board
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members could compromise the spirit of the Boards review of the administrative law judges recommended decision.
Consistent with the proposal, the final Guidelines provide for review of material supervisory determinations by the Division Director and then by the Office. The FDIC proposed to establish the Office with authority to consider and resolve appeals of material supervisory determinations in order to promote independence. Additional levels of review also could delay the resolution of appeals, and the FDIC is mindful of the need to decide appeals expeditiously. For these reasons, the final Guidelines do not provide for additional levels of review beyond the Office.
Qualifications To Serve in the Office The FDIC proposed staffing the Office with reviewing officials who have bank supervisory or examination experience, such as retired bank examiners. The FDIC asked whether bank supervisory or examination experience would constitute appropriate qualifications and experience for these positions.
Commenters expressed a range of views on this topic. Some commenters supported staffing the Office with individuals with bank supervisory or examination experience. On the other hand, several trade associations, a bank, and a law firm stated that the Office should not be limited to staff with supervisory experience, and should also include retired bank officers, bank board members, consultants, or banking law attorneys. Some of these commenters suggested that each review panel include one or more members with industry experience.
The FDIC appreciates the perspective and expertise that bankers and other industry professionals could bring to the process. At the same time, the FDIC
acknowledges that, because of the Offices role in making final decisions on appeals of material supervisory determinations on behalf of the agency, supervisory experience and training provides a firm foundation for exercising that responsibility and helps ensure a thorough understanding of the supervisory process. With this in mind, the FDIC will, as proposed, deem bank supervisory or examination experience as required background for panelists.
However, the FDIC appreciates that industry perspective can be valuable and accordingly will generally view relevant industry experience favorably.
Staffing A number of commenters made suggestions with respect to the staffing of the Office. A trade association
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recommended that reviewing officials serve staggered terms, with no official serving more than five years. Another trade association suggested that terms should not be renewable. Two commenters recommended that reviewing officials selected for the Office should not have been employed by the FDIC for at least the two years prior, thereby promoting separation between the Office and existing staff.
The FDIC believes some of these recommendations will be beneficial to promoting the Offices independence, and will consider others carefully as it prepares to hire reviewing officials.
Reviewing officials will be hired for terms, and only former, rather than current, government officials will be eligible to serve as reviewing officials.
Role of the Ombudsman A few commenters recommended changes with respect to the Ombudsmans role in the process to promote the Offices independence. In particular, a bank encouraged the FDIC
to include the Ombudsman as a nonvoting member on the panel. The Ombudsman serves as a neutral liaison between the FDIC and institutions, as provided by section 309 of the Riegle Act.20 The FDIC believes including the Ombudsman as a member of the panel could undermine this role, because as a member of the panel, the Ombudsman would be expected to serve in a decision-making capacity. In addition, institutions that might feel free to share confidential information with the Ombudsman in its role as liaison may be reluctant to do so if the Ombudsman would later be deciding a supervisory appeal.21 In light of these concerns, and because the FDIC sees value in the Ombudsmans perspective, the final Guidelines allow the Ombudsman to submit views to the panel.
Administrative and Legal Support for the Office Two commenters recommended resourcing the Office with independent administrative and legal support. The Office will share administrative support with the Legal Division, which also will provide counsel to the Office. To promote independence, legal staff that were involved in making the material 20 See
12 U.S.C. 4806d.
tension between the Ombudsmans statutory role and acting as a decision maker with respect to material supervisory determinations was among the reasons the FDIC removed the Ombudsman from the SARC when it was reconstituted in 2004. The FDIC also considered making the Ombudsman a non-voting member of the SARC, but concluded that also would not resolve this tension. See 69 FR 41479, 41481 July 9, 2004.
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