On Thursday, U.S. Sens. Jerry Moran (R-KS) and Joe Manchin (D-WV) re-introduced legislation that would make bank examinations more fair and more transparent.
The Fair Audits and Inspections for Regulators’ (FAIR) Exams Act would provide banks with an appeals process to resolve disputes between banks and their regulators, as well as bring about more transparency in the bank examination process. Officials said the legislation would provide small lenders with more representation and allow them to serve their communities by getting examination results faster and more transparently.
“The bank examination process should be free from bias and fair to bankers,” Moran said. “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.”
The legislation would require the appropriate regulatory agencies to issue timely responses to bankers during the examination process, and require the Federal Financial Institutions Examinations Council (FFIEC) to make the information it relies on in making determinations available on request. The legislation would also create an Independent Examination Review Director within the FFIEC to address examination complaints and procedures and give financial institutions with the right to review determinations with that director.
“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,” Manchin said. “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.”
The legislation is co-sponsored by U.S. Sens. Thom Tillis (R-NC) and Bill Hagerty (R-TN).