Fair Audits and Inspections for Regulators' Exams Act

This bill, titled the "Fair Audits and Inspections for Regulators' Exams Act," seeks to improve the fairness and efficiency of financial institution examinations conducted by federal regulatory agencies. It introduces new requirements for the timeliness of examinations and examination reports . Specifically, federal agencies must complete examinations within 270 days and provide final reports within 90 days of the exit interview or receipt of additional information, with provisions for written extensions. Financial institutions can also request an appendix listing all factual information relied upon for material supervisory determinations. The bill further mandates that federal financial institutions regulatory agencies establish procedures for providing timely written advice to financial institutions. This advice can cover agency non-objection to proposed activities, interpretations of laws or regulations, application of accounting principles, or supervisory guidance. Agencies must confirm receipt of requests within 30 days and provide a written response within 60 days, ensuring a structured and predictable process for obtaining regulatory clarity. This advice is binding on the agency for the specific facts and institution, though it does not set precedent for others. A significant provision of the bill is the establishment of an Office of Independent Examination Review within the Federal Financial Institutions Examination Council. This Office will be led by a three-member Board, appointed by the President with Senate consent, with specific qualification requirements to ensure diverse expertise and independence. The Board's duties include investigating complaints from financial institutions regarding examinations, reviewing agency examination procedures for consistency, and conducting quality assurance on examination samples. It also plays a crucial role in the independent review process for supervisory determinations. The bill grants financial institutions the right to an independent review of material supervisory determinations contained in final examination reports. This review is conducted by the newly established Board of Independent Examination Review. Institutions must file a written notice within 30 days, providing reasons why the determination is incorrect and all relevant supporting information. The Board will conduct a de novo review , meaning it will not defer to the opinions of examiners but will independently assess the appropriateness of the determination based on relevant statutes, regulations, and evidence. The Board's final decision, issued within 60 days, will be binding on both the agency and the institution, and the bill explicitly prohibits retaliation against institutions for exercising this right. Finally, the legislation amends existing laws to provide financial institutions and institution-affiliated parties with an election of forum for certain supervisory enforcement actions . For actions such as cease and desist orders, removal or prohibition orders, and civil money penalties, institutions can choose to have a hearing either before the appropriate federal banking agency or in a U.S. District Court. If a District Court is chosen, it will have jurisdiction to adjudicate all claims and remedies, with proceedings governed by the Federal Rules of Civil Procedure and Evidence. This provision aims to offer an alternative judicial avenue for challenging significant enforcement actions.