Financial Institutions Examination Fairness and Reform Act

Floor Speech

BREAK IN TRANSCRIPT

Mr. DUFFY. Mr. Speaker, I thank the chairman for yielding.

Mr. Speaker, I would just note that the Orderly Liquidation Authority is an authority to bail out big banks, consistent with the bailout that the ranking member voted for in, I believe, 2008, that the chairman, I believe, voted against.

When we talk about those who use rhetoric to say they don't support big banks, but then actually vote for them, I think that is a hard note to take.

But I rise today to support H.R. 4545, the Financial Institutions Examination Fairness and Reform Act, a bipartisan measure introduced by Mr. Tipton.

This bill would amend the Federal Financial Institutions Examination Council Act of 1978, a long time ago, by updating the definition of financial institutions, establishing new requirements for the final examination report process, and creating an office of independent examination review, giving some independence here, some common sense.

These updates are critical because, in 1994, Congress directed Federal regulators to establish an independent intra-agency appellate process for institutions to seek the review of examination ratings, adequacy of loan loss reserve, and clarifications on loans.

I agree that these entities should be reviewed to ensure that they are financially sound. We want to make sure that we prevent failure so we don't have folks across the aisle voting for bailouts. However, we are hearing from our community financial institutions, the ones that serve most of my district in Wisconsin, that the avenues needed to appeal these determinations are limited. The process is secretive, and the regulators are overempowered.

The intra-agency review process has also been criticized as not being independent because the regulatory determinations are reviewed, not by a third party, but by the employees of the same regulator handing down the verdict. So this is the judge, the jury, and the executioner.

I was a prosecutor, and when I presented a case to a jury and they found someone guilty, I didn't make the defendant appeal the verdict to the same jury that found him guilty. They have got to go to a third- party appellate process, independent reviewers. That is the way the American system works and should work in this scenario as well.

Our community bankers explained that they feel victimized. They feel retribution for challenging the outcomes of these exams, and that is a bad thing. Add to the fear the fact that these examinations lack transparency, and now we have real problems to contend with which is why the solution is so bipartisan. The chairman mentioned 16 Democrats on the committee voted for this commonsense piece of legislation.

That is why the bill is so important. It will embolden our community banks by creating an independent auditor to ensure fairness and transparency.

BREAK IN TRANSCRIPT

Mr. DUFFY. Mr. Speaker, this bill ensures that there is an open forum for these institutions to discuss the examination procedures, practices, and policies without fear of reprisals. It gives them a little bit of freedom.

Importantly, the office would also review regulators' procedures to make sure that their written examination policies are being followed and adhered to.

Lastly, the bill would provide a right to a hearing upon appeal. The decision as to whether the appeal is heard on the record will be left to the petitioner. Again, you are getting due process. We want due process. That is something we all fight for. No one disagrees on that. Why can't we offer that to our small community banks and credit unions that oftentimes feel victimized? This is a bipartisan bill.

This is common sense, and I would encourage my good friend, the ranking member--who I like so much--to join us and let's get something done for small community banks.

BREAK IN TRANSCRIPT

Source