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Financial Services Law Insights and Observations

FDIC reinstates SARC as final review in supervisory appeals

Bank Regulatory Federal Issues FDIC Of Interest to Non-US Persons Supervision Appeals

On May 17, the FDIC adopted revised Guidelines for Appeals of Material Supervisory Determinations to reinstate the Supervision Appeals Review Committee (SARC) as the final level of review in the agency’s supervisory appeals process. The SARC’s restoration appears to eliminate the independent Office of Supervisory Appeals, which was created and staffed in 2021. The Office of Supervisory Appeals was designed to have final authority to resolve appeals by a panel of reviewing officials and be independent from other divisions within the FDIC that have authority to issue material supervisory determinations (covered by InfoBytes here).

According to the revised guidelines, the SARC will include one inside member of the FDIC’s Board of Directors (serving as chairperson); a deputy or special assistant to each of the other inside board members; and the general counsel as a non-voting member. The guidelines provide a list of material supervisory determinations, including CAMELS, IT, trust, and CRA ratings; consumer compliance ratings; loan loss reserve provision determinations; TILA restitutions; and decisions to initiate informal enforcement actions (such as memoranda of understanding).

The guidelines apply to all FDIC-supervised financial institutions, including state nonmember banks, industrial banks, and insured U.S. branches of non-U.S. banks.

While public comments from industry had supported an independent supervisory appeals process, the revised guidelines are posted in final (not draft) form on the FDIC’s website, with the FIL asserting that the guidelines take effect May 17 (before the comment period concludes on June 21). The notice and request for comments was published in the Federal Register on May 20.

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