HR 3461: Fair and Consistent

From the time my daughter and son were old enough to play board games and card games, I made sure there was adequate time for me to play along with them. Not only are these games fun, they also teach kids about rules. In my opinion, when I was playing these games with my children, I was teaching them about life. Life has a lot of rules. What we want is for the rules to be fair and consistent.

All bankers know that the rules imposed recently on banks by various federal examiners have been anything but fair and consistent. Perhaps help is on the way! Congresswomen Shelley Moore Capito, R, W.Va., and Carolyn Maloney, D, N.Y., have introduced the Financial Institutions Examination Fairness and Reform Act. Both congresswomen sit on the House Committee on Financial Services (a.k.a. House Banking Committee), so they have the power to move this issue forward.

The bill requires that examiners provide banks with timely examination reports. It requires full documentation by examiners to support their determinations and sets new standards for examinations that:

  1. Restrict the placement of commercial loans on nonaccrual status, solely because collateral has deteriorated in value;
  2. Would not require new appraisals, unless new funds are being advanced.

My favorite part of this bill, though, would establish a new, independent interagency ombudsman operating within the Federal Financial Institutions Examination Council to ensure consistency and quality of all examinations. The bill also would create a timely, independent and fair process for banks to appeal examination reports without fear of reprisal.

Wow, this means that bankers might actually win an appeal—instead of the current system where the appeals process is a joke, and bankers never win. This legislation may be the most important bill for bankers in the offing. All bankers who have to deal with examiners should contact their U.S. representatives and ask them to sign HR 3461 as a co-sponsor.

This bill could put the rules back to fair and consistent that my kids were taught so many years ago.

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