119-hr940

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 940 Reported in House

    (RH) ]

<DOC>

 Union Calendar No. 176
119th CONGRESS
 1st Session
 H. R. 940

 [Report No. 119-216]

To amend the Federal Financial Institutions Examination Council Act of 
 1978 to improve the examination of depository institutions, and for 
 other purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 February 4, 2025

 Mr. Hill of Arkansas (for himself, Mr. Meuser, Mrs. Wagner, Mr. 
Huizenga, Mr. Timmons, Mr. Moore of North Carolina, and Mr. Williams of 
 Texas) introduced the following bill; which was referred to the 
 Committee on Financial Services

 July 25, 2025

Additional sponsors: Mr. Haridopolos, Mr. Sessions, Mr. David Scott of 
 Georgia, and Mr. Fields

 July 25, 2025

 Reported with an amendment, committed to the Committee of the Whole 
 House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
 in italic]
 [For text of introduced bill, see copy of bill as introduced on 
 February 4, 2025]

_______________________________________________________________________

 A BILL

To amend the Federal Financial Institutions Examination Council Act of 
 1978 to improve the examination of depository institutions, and for 
 other purposes.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Fair Audits and Inspections for 
Regulators' Exams Act'' or the ``FAIR Exams Act''.

SEC. 2. TIMELINESS OF EXAMINATIONS AND EXAMINATION REPORTS.

 The Federal Financial Institutions Examination Council Act of 1978 
(12 U.S.C. 3301 et seq.) is amended by adding at the end the following:

``

SEC. 1012. TIMELINESS OF EXAMINATIONS AND EXAMINATION REPORTS.

 ``

    (a) Timeliness of Examinations.--A Federal financial institutions 
regulatory agency shall complete any examination of a financial 
institution within 270 days of commencing the examination, except that 
such period may be extended by the Federal financial institutions 
regulatory agency by providing written notice to the financial 
institution describing with particularity the reasons that a longer 
period is needed.
 ``

    (b) Final Examination Report.--A Federal financial institutions 
regulatory agency shall provide a final examination report to a 
financial institution not later than 90 days after the later of--
 ``

    (1) the exit interview for an examination of the 
 institution; or
 ``

    (2) the provision of additional material information by 
 the institution relating to the examination.
 ``
            (c) Exit Interview Requirement.--Within 30 days of completing an 
examination, a Federal financial institutions regulatory agency shall 
conduct an exit interview with the financial institution's senior 
management, except that such period may be extended by the Federal 
financial institutions regulatory agency by providing written notice to 
the institution and the Board describing with particularity the reasons 
that a longer period is needed to complete the exit interview.
 ``
            (d) Examination Materials.--Upon the request of a financial 
institution, the Federal financial institutions regulatory agency shall 
include with the final report an appendix listing all examination or 
other factual information relied upon by the agency in support of a 
material supervisory determination.''.

SEC. 3. TIMELINESS OF REQUIRED PERMISSION, REGULATORY, AND REPORTING 
 GUIDANCE.

 The Federal Financial Institutions Examination Council Act of 1978 
(12 U.S.C. 3301 et seq.), as amended by 

section 2, is further amended 
by adding at the end the following:

``

SEC. 1013. TIMELINESS OF REQUIRED PERMISSION, REGULATORY, AND 
 REPORTING GUIDANCE.

 ``

    (a) Request for Permission or Guidance.--With respect to an 
action that a financial institution is taking or is intending to take, 
the financial institution may request a written determination by the 
applicable Federal financial institutions regulatory agency of--
 ``

    (1) the agency's non-objection to the financial 
 institution conducting a particular activity;
 ``

    (2) the agency's interpretation of a law or regulation; 
 and
 ``

    (3) the agency's interpretation of generally accepted 
 accounting principles or accounting objectives, standards, and 
 requirements.
 ``

    (b) Contents of Request.--A request made under subsection

    (a) shall be in writing and contain--
 ``

    (1) the nature of the request;
 ``

    (2) applicable facts relating to the matter;
 ``

    (3) applicable law, regulation, or generally accepted 
 accounting principles relating to the matter; and
 ``

    (4) a summary of the request.
 ``
            (c) Response to Request.--A Federal financial institutions 
regulatory agency receiving a request under subsection

    (a) shall, not 
later than 30 days after receiving the request--
 ``

    (1) provide the financial institution making the request 
 with written notification that the agency received the request 
 and stating whether the request contains all of the information 
 required under subsection

    (b) ; and
 ``

    (2) if the request does not contain all of the 
 information required under subsection

    (b) , provide the 
 financial institution with an explanation of what information 
 is missing.
 ``
            (d) Providing Missing Information.--If a Federal financial 
institutions regulatory agency informs the financial institution under 
subsection
            (c) that the request does not contain all the information 
required under subsection

    (b) , the financial institution may provide 
the missing information to the Federal financial institutions 
regulatory agency during the 30-day period beginning on the date the 
financial institution receives the explanation of the missing 
information under subsection
            (c) .
 ``

    (e) Determination.--A Federal financial institutions regulatory 
agency receiving a request under subsection

    (a) shall make a 
determination on the request and provide the financial institution with 
a written notice of such determination--
 ``

    (1) if the initial request contains the information 
 required under subsection

    (b) , not later than the end of the 
 60-day period beginning on the date the Federal financial 
 institutions regulatory agency notifies the financial 
 institution of the receipt of the request under subsection
            (c) ; 
 or
 ``

    (2) if the initial request does not contain the 
 information required under subsection

    (b) , but the financial 
 institution provides the missing information during the 30-day 
 period described under subsection
            (d) , not later than the end 
 of the 60-day period beginning on the date such missing 
 information is provided; or
 ``

    (3) if the initial request does not contain the 
 information required under subsection

    (b) , and the financial 
 institution does not provide the missing information during the 
 30-day period described under subsection
            (d) , not later than 
 the end of the 60-day period beginning on the end of such 30-
 day period.
 ``

    (f) Reports and Publication.--Each Federal financial institutions 
regulatory agency shall, within 120 days after making a determination 
under paragraph

    (5) , publish a summary of the determination on the 
public website of the Federal financial institutions regulatory agency. 
Each Federal financial institutions regulatory agency shall redact any 
confidential supervisory information about the financial institution, 
any identifying facts about the financial institution, and any 
sensitive personally identifiable information, and anonymize any un-
redacted information that could, individually or in the aggregate, 
identify the financial institution.''.

SEC. 4. OFFICE OF INDEPENDENT EXAMINATION REVIEW.

    (a) In General.--The Federal Financial Institutions Examination 
Council Act of 1978 (12 U.S.C. 3301 et seq.), as amended by 

section 3, 
is further amended by adding at the end the following:

``

SEC. 1014. OFFICE OF INDEPENDENT EXAMINATION REVIEW.

 ``

    (a) Establishment.--There is established in the Council an Office 
of Independent Examination Review (the `Office').
 ``

    (b) Board of Independent Examination Review.--
 ``

    (1) In general.--The head of the Office shall be the 
 Board of Independent Examination Review, which shall be 
 comprised of 3 members, appointed by the President, by and with 
 the advice and consent of the Senate.
 ``

    (2) Qualifications.--The President shall appoint the 1 
 member of the Board from each of the following classes of 
 individuals:
 ``
        (A) Individuals who have been employed by a 
 Federal financial institutions regulatory agency.
 ``
        (B) Individuals who--
 ``
            (i) are a licensed attorney or a 
 certified public accountant authorized to 
 practice under the laws of a State, the 
 District of Columbia, or a territory of the 
 United States;
 ``
            (ii) have either academic or private 
 sector experience;
 ``
            (iii) have relevant work-related 
 experience in consumer affairs or compliance 
 with consumer protection laws with respect to 
 financial institutions; and
 ``
            (iv) are not, and were not during the 
 previous 10-year period, employed by a Federal 
 banking agency, a Federal reserve bank, or the 
 National Credit Union Administration.
 ``
            (C) Individuals--
 ``
            (i) with at least 10 years private sector 
 financial services senior management-level 
 experience; and
 ``
            (ii) recommended by--
 ``
            (I) an insured depository 
 institution;
 ``
            (II) an insured credit union; or
 ``
            (III) a trade association for 
 such institutions or credit unions.
 ``

    (3) Prohibition on certain individuals serving as a board 
 member.--The President may not appoint an individual as a 
 member of the Board if the individual--
 ``
        (A) is, or was during the previous 2-year period, 
 employed by a Federal financial institutions regulatory 
 agency or a Federal reserve bank;
 ``
        (B) is, or was during the previous 2-year period, 
 employed by a financial institution; or
 ``
            (C) is reporting, or was reporting in the past 5 
 years, directly or indirectly to a Federal financial 
 institutions regulatory agency official who makes 
 material supervisory determinations.
 ``

    (4) Consultation.--In appointing members of the Board, 
 the President shall consult with the Federal financial 
 institutions regulatory agencies and financial institutions.
 ``

    (5) Term.--
 ``
        (A) In general.--Each member of the Board shall 
 serve for a term of 3 years.
 ``
        (B) Term limitation.--No individual may serve 
 more than 2 full terms on the Board.
 ``

    (6) Political affiliation.--Not more than 2 members of 
 the Board shall be members of the same political party.
 ``

    (7) Quorum.--
 ``
        (A) In general.--3 members of the Board shall 
 constitute a quorum.
 ``
        (B) Initial quorum.--During the 6-month period 
 beginning on the date of enactment of this section, 1 
 member of the Board shall constitute a quorum until the 
 Board has 3 members.
 ``
            (c) Staffing.--The Board is authorized to hire staff to support 
the activities of the Office of Independent Examination Review. One-
fifth of the costs and expenses of the Office, including the salaries 
of its employees, shall be paid by each of the Federal financial 
institutions regulatory agencies. Annual assessments for such share 
shall be levied by the Council based upon its projected budget for the 
year, and additional assessments may be made during the year if 
necessary.
 ``
            (d) Duties.--The Board shall--
 ``

    (1) receive and, at the discretion of the Board, 
 investigate complaints from financial institutions, their 
 representatives, or another entity acting on behalf of such 
 institutions, concerning examinations, examination practices, 
 or examination reports;
 ``

    (2) hold meetings, at least once every three months and 
 in locations designed to encourage participation from all 
 sections of the United States, with financial institutions, 
 their representatives, or another entity acting on behalf of 
 such institutions, to discuss examination procedures, 
 examination practices, or examination policies;
 ``

    (3) review examination procedures of the Federal 
 financial institutions regulatory agencies to ensure that the 
 written examination policies of those agencies are being 
 followed in practice and adhere to the standards for 
 consistency;
 ``

    (4) conduct a continuing and regular program of 
 examination quality assurance for all examination types 
 conducted by the Federal financial institutions regulatory 
 agencies;
 ``

    (5) carry out an independent review of any supervisory 
 appeal initiated under 

section 1015; and
 ``

    (6) report annually to the Committee on Financial 
 Services of the House of Representatives, the Committee on 
 Banking, Housing, and Urban Affairs of the Senate, and the 
 Council, on the reviews carried out pursuant to paragraphs

    (3) and

    (5) , including compliance with the requirements set forth 
 in 

section 1013 regarding timeliness of examination reports, 
 and the Board's recommendations for improvements in examination 
 procedures, practices, and policies.
 ``

    (e) Confidentiality.--The Board and the Council shall keep 
confidential--
 ``

    (1) all meetings, discussions, and information provided 
 by financial institutions and Federal financial institutions 
 regulator agencies that involve confidential supervisory 
 information or privileged information;
 ``

    (2) all information and communications exchanged between 
 a financial institution and the Office of Independent 
 Examination Review; and
 ``

    (3) all information and communications exchanged between 
 a Federal financial institutions regulator agency and the 
 Office of Independent Examination Review.''.

    (b) 

=== Definitions. ===
-

Section 1003 of the Federal Financial 
Institutions Examination Council Act of 1978 (12 U.S.C. 3302) is 
amended--

    (1) in paragraph

    (2) , by striking ``and'' at the end; and

    (2) by adding at the end the following:
 ``

    (4) the term `Board' means the Board of Independent 
 Examination Review established under 

section 1014

    (b) ;
 ``

    (5) the term `material supervisory determination' has the 
 meaning given such term in 

section 309
            (c) of the Riegle 
 Community Development and Regulatory Improvement Act of 1994;
 ``

    (6) the term `insured depository institution' has the 
 meaning given that term in 

section 3 of the Federal Deposit 
 Insurance Act; and
 ``

    (7) the term `insured credit union' has the meaning given 
 that term in 

section 101 of the Federal Credit Union Act.''.

SEC. 5. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SUPERVISORY 
 DETERMINATIONS.

 The Federal Financial Institutions Examination Council Act of 1978 
(12 U.S.C. 3301 et seq.), as amended by 

section 4, is further amended 
by adding at the end the following:

``

SEC. 1015. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SUPERVISORY 
 DETERMINATIONS.

 ``

    (a) In General.--A financial institution shall have the right to 
obtain an independent review, as described in this section, of a 
material supervisory determination contained in a final report of 
examination.
 ``

    (b) Notice.--
 ``

    (1) Timing.--A financial institution seeking review of a 
 material supervisory determination under this section shall 
 file a written notice with the Board within 60 days after 
 receiving the final report of examination that is the subject 
 of such review.
 ``

    (2) Extension.--The institution may file a written 
 request with the Board for an extension of the 60-day time 
 period described under paragraph

    (1) , which shall state good 
 cause for granting the extension. Such request shall be granted 
 in the sole discretion of the Board.
 ``

    (3) Identification of determination.--The written notice 
 shall--
 ``
        (A) identify the material supervisory 
 determination that is the subject of the requested 
 independent examination review;
 ``
        (B) state the reasons why the institution 
 believes that the material supervisory determination is 
 incorrect or should otherwise be modified; and
 ``
            (C) include--
 ``
            (i) a clear and complete statement of all 
 relevant facts and issues;
 ``
            (ii) all arguments that the institution 
 wishes to present; and
 ``
            (iii) all relevant and material documents 
 in the possession of the institution that the 
 institution wishes to be considered.
 ``

    (4) Information made available to institution.--An 
 institution seeking an appeal of a material supervisory 
 determination may, not later than 7 days after receiving the 
 final examination report, request that the Federal financial 
 institutions regulatory agency that made the material 
 supervisory determination provide the institution with all 
 examination and factual information relied upon by the agency 
 in making the material supervisory determination. The agency 
 shall provide that information to the institution not later 
 than 14 days after receiving the request.
 ``
            (c) Determination; Right to Hearing.--
 ``

    (1) In general.--The Board shall--
 ``
        (A) determine the merits of the appeal on the 
 record, including whether the material supervisory 
 determination being appealed should be upheld, 
 canceled, or modified; or
 ``
        (B) at the election of the financial institution, 
 conduct a hearing, which shall take place not later 
 than 60 days after the petition for review is received 
 by the Board.
 ``

    (2) Right to obtain testimony.--A financial institution 
 electing for a hearing under paragraph

    (1)
        (B) shall have the 
 right the obtain testimony under oath from agency employees and 
 obtain documents and other evidence at the hearing, or in 
 advance of the hearing, according to procedures instituted by 
 the Board consistent with those set forth under sections 556 
 and 557 of title 5, United States Code.
 ``

    (3) Basis of decision.--The Board shall issue a written 
 decision based upon the record of the examination, supplemented 
 by the record established at any hearing.
 ``

    (4) Standard of review.--The Board's review of a material 
 supervisory determination being appealed under this subsection 
 shall be de novo, and the Board shall not defer to the opinions 
 of the examiner or agency, but shall independently determine 
 the appropriateness of the agency's material supervisory 
 determination based upon the relevant statutes, regulations, 
 other appropriate guidance, and the evidentiary record.
 ``
            (d) Final Decision.--A decision by the Board on an independent 
review under this section shall--
 ``

    (1) be made not later than 60 days after the record has 
 been closed; and
 ``

    (2) be deemed final agency action and shall bind the 
 agency whose supervisory determination was the subject of the 
 review and the financial institution requesting the review.
 ``

    (e) Right to Judicial Review.--A financial institution shall have 
the right to petition for review of a Board determination made under 
subsection
            (d) by filing a petition for review not later than 60 days 
after the date on which the decision is made in the United States Court 
of Appeals for the District of Columbia Circuit or the Circuit in which 
the financial institution is located.
 ``

    (f) Referral of Violations.--If the Board, in carrying out this 
section, determines that a financial institution has violated a law or 
regulation, the Board shall refer such determination to the applicable 
Federal financial institutions regulatory agency.
 ``

    (g) Annual Report.--
 ``

    (1) In general.--The Board shall report annually to the 
 Committee on Financial Services of the House of 
 Representatives, the Committee on Banking, Housing, and Urban 
 Affairs of the Senate, and the Council on actions taken under 
 this section, including the types of issues that the Board has 
 reviewed and the results of those reviews, including 
 information on each final determination with respect to a 
 material supervisory determination.
 ``

    (2) Confidentiality.--In reporting under paragraph

    (1) , 
 the Board shall redact information about individual financial 
 institutions and any confidential or privileged information 
 shared by financial institutions, and shall anonymize any un-
 redacted information that could, in the aggregate, identify a 
 financial institution.
 ``

    (h) Retaliation Prohibited.--
 ``

    (1) In general.--A Federal financial institutions 
 regulatory agency may not--
 ``
        (A) retaliate against a financial institution, 
 including service providers, or any institution-
 affiliated party, for exercising appellate rights under 
 this section; or
 ``
        (B) delay or deny any agency action that would 
 benefit a financial institution or any institution-
 affiliated party on the basis that an appeal under this 
 section is pending under this section.
 ``

    (2) Retaliation.--For purposes of this subsection, 
 retaliation includes delaying consideration of, or withholding 
 approval of, any request, notice, or application that otherwise 
 would have been approved, but for the exercise of a financial 
 institution's rights under this section.
 ``
            (i) Rulemaking.--The Board shall issue rules to establish 
procedures for hearings described under this section, including that--
 ``

    (1) a financial institution may appear at the hearing 
 personally or through counsel;
 ``

    (2) a financial institution may provide an oral and 
 written presentation at the hearing;
 ``

    (3) the Board may ask questions of any person 
 participating in the hearing;
 ``

    (4) the hearing may not involve--
 ``
        (A) a cross-examination; or
 ``
        (B) discovery;
 ``

    (5) the hearing shall not be governed by the Federal 
 Rules of Evidence; and
 ``

    (6) the Board shall have a verbatim transcript of the 
 hearing prepared.
 ``

    (j) Safety and Soundness Exception.--The appeal of a material 
supervisory determination by a financial institution under this section 
shall not affect the authority of a Federal financial institutions 
regulatory agency to enforce the material supervisory determination or 
to take an action based on such material supervisory determination, if 
the Federal financial institutions regulatory agency determines that 
such enforcement or action is necessary to ensure the safety and 
soundness of the financial institution.''.

SEC. 6. ADDITIONAL AMENDMENTS.

    (a) Regulator Appeals Process, Ombudsman, and Alternative Dispute 
Resolution.--

    (1) In general.--

Section 309 of the Riegle Community 
 Development and Regulatory Improvement Act of 1994 (12 U.S.C. 
 4806) is amended--
        (A) in the heading, by striking ``regulatory 
 appeals process, ombudsman,'' and inserting 
 ``ombudsman'' (and by conforming the item relating to 
 such section in the table of contents accordingly);
        (B) by striking subsections

    (a) ,

    (b) , and
            (c) ;
            (C) by redesignating subsections
            (d) ,

    (e) ,

    (f) , and

    (g) as subsections

    (a) ,

    (b) ,
            (c) , and
            (d) , 
 respectively;
            (D) in subsection

    (b) , as so redesignated--
            (i) in paragraph

    (2) --
            (I) in subparagraph
        (B) , by 
 striking ``and'' at the end;
            (II) in subparagraph
            (C) , by 
 striking the period and inserting ``; 
 and''; and
            (III) by adding at the end the 
 following:
 ``
            (D) ensure that appropriate safeguards exist for 
 protecting any party from retaliation by any agency for 
 exercising rights under this subsection.''; and
            (ii) by adding at the end the following:
 ``

    (6) Retaliation.--For purposes of this subsection, 
 retaliation includes delaying consideration of, or withholding 
 approval of, any request, notice, or application that otherwise 
 would have been approved, but for the exercise of a financial 
 institution's rights under this section.''; and
        (E) in paragraph

    (1)
        (A) of subsection
            (c) , as so 
 redesignated--
            (i) in clause
            (ii) , by striking ``; and'' 
 and inserting a semicolon;
            (ii) in clause
            (iii) , by striking ``; and'' 
 and inserting a semicolon; and
            (iii) by adding at the end the following:
 ``
            (iv) any issue specifically listed in an 
 exam report as a matter requiring attention by 
 the institution's management or board of 
 directors; and
 ``
            (v) any suspension or removal of an 
 institution's status as eligible for expedited 
 processing of applications, requests, notices, 
 or filings on the grounds of a supervisory or 
 compliance concern, regardless of whether that 
 concern has been cited as a basis for a 
 material supervisory determination or matter 
 requiring attention in an examination report, 
 provided that the conduct at issue did not 
 involve violation of any criminal law; and''.

    (2) Effect.--Nothing in this subsection affects the 
 authority of an appropriate Federal banking agency or the 
 National Credit Union Administration Board to take enforcement 
 or other supervisory action.

    (b) Federal Credit Union Act.--

Section 205

    (j) of the Federal Credit 
Union Act (12 U.S.C. 1785

    (j) ) is amended by inserting ``the Bureau of 
Consumer Financial Protection,'' before ``the Administration'' each 
place that term appears.
            (c) Federal Financial Institutions Examination Council Act.--The 
Federal Financial Institutions Examination Council Act of 1978 (12 
U.S.C. 3301 et seq.), as amended by sections 2 through 4 of this Act, 
is further amended--

    (1) in 

section 1003 (12 U.S.C. 3302)--
        (A) by striking paragraph

    (1) and inserting the 
 following:
 ``

    (1) the term `Federal financial institutions regulatory 
 agencies'--
 ``
        (A) means the Office of the Comptroller of the 
 Currency, the Board of Governors of the Federal Reserve 
 System, the Federal Deposit Insurance Corporation, and 
 the National Credit Union Administration; and
 ``
        (B) includes the Bureau of Consumer Financial 
 Protection for purposes of sections 1012 through 
 1015;''; and
        (B) in paragraph

    (3) , by striking the semicolon at 
 the end and inserting ``, except that for purposes of 
 sections 1012 through 1015, the term `financial 
 institution' does not include a credit union that is 
 not an insured credit union;'';

    (2) in 

section 1004

    (a)

    (4) (12 U.S.C. 3303), by striking 
 ``Consumer Financial Protection Bureau'' and inserting ``Bureau 
 of Consumer Financial Protection''; and

    (3) in 

section 1005 (12 U.S.C. 3304)--
        (A) by striking ``One-fifth'' and inserting ``One-
 fourth''; and
        (B) by inserting ``described under 

section 1003

    (1)
        (A) '' after ``agencies''.
 Union Calendar No. 176

119th CONGRESS

 1st Session

 H. R. 940

 [Report No. 119-216]

_______________________________________________________________________

 A BILL

To amend the Federal Financial Institutions Examination Council Act of 
 1978 to improve the examination of depository institutions, and for 
 other purposes.

_______________________________________________________________________

 July 25, 2025

 Reported with an amendment, committed to the Committee of the Whole 
 House on the State of the Union, and ordered to be printed