The FDIC Earns an F
The FDIC recently returned to its historically restrictive policy on internal appeals filed by banks, blotting out the due process protections previously afforded to banks and their directors and officers.
On May 20, the FDIC suddenly announced its policy of denying the basic due process right of banks to review submissions by the FDIC’s supervisory office in response to banks’ appeals to SARC even though the supervisory office will continue to review all of the banks’ submissions.
On top of that, the FDIC has retained the odious policy of placing the burden of proof to overturn a material supervisory determination on the appealing bank rather than treating the bank and the supervisory office as equal parties.
The FDIC also has reconstituted the reviewing body to be dominated by FDIC directors, politically appointed by the ruling political party subject to ratification by the Senate. This increases the chances that politics could influence or have the appearance of influencing supervisory decisions.
These changes were made without prior public comment, a stark contrast to the previous policy that was subject to exhaustive public comment and rigorous review and had just been put into effect in December 2021.
AABD has joined the ABA, ICBA, BPI, and CBA in a letter to the FDIC asking that the FDIC reconsider its rash decision.
A fair right to appeal is essential for banks to question the results of examinations and other material supervisory determinations. The recent Sixth Circuit Federal Court of Appeals decision in the Calcutt case centers around a flawed examination that served as the basis for a ban and removal action against a bank chairman and CEO. Strong evidence of possible examiner personal bias against the chairman and CEO and its impact on the results of the examination was not allowed to be fully explored.