State banks have a new way to challenge decisions made by their examiners.
The Federal Deposit Insurance Corp. and the Federal Reserve Board are following the lead of the Comptroller of the Currency, which hired an ombudsman in September 1993 to handle national bank complaints.
While all the regulators have the same goal - to provide banks an objective avenue for appealing examiner decisions - each is going about it differently.
The FDIC will review appeals through a committee in its Washington headquarters headed by Vice Chairman Andrew C. Hove and staffed by the agency's director of supervision, director of compliance and consumer affairs, general counsel, and ombudsman.
Appeals must be filed within 60 days of an examiner's decision. The committee will answer complaints within 60 days, and the decisions are final.
The Fed's time line is shorter. Appeals must be filed within 30 days of an examiner's decision. Answers will be given in 30 days.
Presidents of the 12 Federal Reserve banks will appoint review committees of independent staffers to consider individual appeals.
At the Fed, if a bank is dissatisfied with the review panel's decision, it has 30 days to appeal to the Reserve Bank president. If the bank still doesn't agree with that ruling, it can file another appeal with a Fed governor who has oversight in the area in question. The governors get 60 days to make a decision.
The Comptroller's appeals process is much less structured. Ombudsman Samuel P. Golden reports directly to Comptroller Eugene Ludwig, meeting with him monthly. Decisions by the ombudsman's office are final.
"We have the authority to change any decision within the agency," said Mr. Golden.
The timetable for OCC appeals also is more flexible. A national bank can appeal decisions made anytime since its last exam. The OCC makes most decisions in 45 days, but sometimes takes up to 2#1/2 months.
While Mr. Golden does not require banks' boards of directors to approve the appeal, as the FDIC and Fed do, the OCC sends copies to the members to make sure they know what is going on.
Neither the FDIC nor the Fed have hired an ombudsman yet.
Banks may appeal examination ratings, findings on loan-loss reserve provisions, and disputed asset classifications that exceed 10% of total capital. Community Reinvestment Act ratings, compliance grades, and violations of laws or rules also can be appealed.
But some regulatory decisions are off limits. Banks can't use the program to complain about prompt corrective actions covered by the FDIC Act, preliminary exam conclusions, or enforcement actions.
While bankers have been clamoring for new ways to dispute examiner rulings, few follow through for fear of retaliation. Mr. Golden has received only 33 appeals in a year and a half.
The agencies are aware of this problem. At the FDIC, the ombudsman will handle charges of retribution. The Fed's ombudsman will periodically contact banks after their appeals have been decided to make sure angry examiners are not avenging the appeal.
At the OCC, Mr. Golden also contacts banks after their appeal and after their next exam. The OCC has had three banks accuse examiners of retaliating. One bank later admitted it was overreacting, but Mr. Golden found examiners of the other two banks were "too inflexible and on a mission."
Those examiners received counseling, he said. More serious cases could warrant firing, Mr. Golden said.
Congress required the agencies to develop appeals programs and set up ombudsman offices under the Riegle Community Development and Regulatory Improvement Act of 1994.
