H.R.940 - Fair Audits and Inspections for Regulators’ Exams Act; FAIR Exams Act (119th Congress)
Summary
H.R.940, the FAIR Exams Act, aims to amend the Federal Financial Institutions Examination Council Act of 1978 to improve the examination process of depository institutions. The bill focuses on enhancing the timeliness and transparency of examination reports and establishing an independent review process for material supervisory determinations.
Key provisions include setting deadlines for final examination reports, requiring agencies to list information relied upon in supervisory determinations, and creating an Office of Independent Examination Review. This office would investigate complaints, review examination procedures, and conduct quality assurance.
Additionally, the bill grants financial institutions the right to an independent review of material supervisory determinations, including a potential hearing and judicial review, while also prohibiting retaliation against institutions exercising these rights.
Expected Effects
The likely effect of H.R. 940 is to provide financial institutions with greater recourse and transparency in the examination process. This could lead to more consistent and fair regulatory oversight.
The establishment of the Office of Independent Examination Review would create a new avenue for addressing grievances and ensuring adherence to examination policies. The specified timelines for reports and reviews aim to expedite the resolution of supervisory issues.
Ultimately, the bill intends to reduce regulatory burden and improve the relationship between financial institutions and their regulators.
Potential Benefits
- Increased Transparency: Requires regulatory agencies to provide a list of all examination information relied upon, promoting transparency.
- Expedited Examination Process: Sets specific timelines for examination reports and reviews, potentially speeding up the resolution of supervisory issues.
- Independent Review: Establishes an Office of Independent Examination Review to investigate complaints and ensure consistent examination practices.
- Right to Appeal: Grants financial institutions the right to an independent review of material supervisory determinations, including a hearing and judicial review.
- Protection Against Retaliation: Prohibits regulatory agencies from retaliating against financial institutions that exercise their appellate rights.
Potential Disadvantages
- Increased Bureaucracy: The creation of a new office and review process could add to bureaucratic overhead and costs.
- Potential for Delays: While aiming for timeliness, the review process could introduce additional steps that delay final resolutions in some cases.
- Cost to Regulatory Agencies: Funding the Office of Independent Examination Review will require assessments on the regulatory agencies, potentially diverting resources from other areas.
- Complexity for Smaller Institutions: Smaller financial institutions may find the appeal process complex and costly to navigate.
- Potential for Frivolous Appeals: The right to independent review could lead to an increase in appeals, some of which may be without merit, straining the resources of the review office.
Constitutional Alignment
The bill appears to align with the principles of due process by providing financial institutions with avenues for appeal and independent review of regulatory decisions. This aligns with the Fifth Amendment's guarantee that no person shall be deprived of property without due process of law.
Furthermore, the establishment of an independent review process could be seen as promoting accountability and limiting the potential for arbitrary government action, consistent with constitutional principles of limited government.
The bill's focus on improving regulatory oversight and transparency could also be viewed as promoting the general welfare, as mentioned in the Preamble of the Constitution.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).