TOPIC: Reaction To Workplace of Inspector General Report No. OIG-16-001

Many thanks for the possibility to review and react to the last Report of Inquiry (Final Report) into The FDIC’s Supervisory way of Refund Anticipation Loans therefore the Involvement of FDIC Leadership and Personnel, made by the FDIC’s Office of Inspector General (OIG). This response addresses the matters raised by the OIG for consideration while the FDIC’s response to the Draft Report of Inquiry on February 17, 2016, addressed the factual record.

FDIC Board breakdown of Policy Matters Raised into the Final Report

The OIG asked for that FDIC look at the presssing problems within the Final Report and apprise the OIG of any actions FDIC will require because of this. In reaction, the FDIC Board of Directors (FDIC Board or Board) will undertake overview of the key dilemmas raised into the Final Report for consideration. As being a starting place, the FDIC Board reiterates its commitment to the Mission, Vision, and business Values of this FDIC. Furthermore, the FDIC Board commits to review and think about the following things:

• the quality and sufficiency of parameters put on the application of ethical suasion, or its equivalents;

• the adequacy of current cars for examiners along with other workers to report whatever they think become actions that are inappropriate way;

• the effectiveness and timeliness of avenues of redress offered to banks that think supervisory capabilities aren’t utilized accordingly; and

• the governance and procedures for the Board and its own committees.

Interim Actions in reaction to your Final Report

The FDIC has identified a number of interim actions that may be taken now to be responsive to the OIG’s concerns and further strengthen the FDIC’s supervision programs in addition to this Board-level review.

Issuance of Internal Guidance Regarding Communication with Bankers

To help reinforce expectations that interaction with bankers be clear and balanced, the Division of danger Management Supervision (RMS) will issue a Regional Director Memorandum (RD Memo) recommendations: correspondence and Coordination with Bank Management in Carrying Out Forward-Looking, Risk-Based Supervision. The RD Memo will:

• set forth interaction objectives and greatest techniques for every stage associated with the supervisory cycle: pre-examination preparation, on-site assessment activity, post-examination report review, as well as the duration between exams;

• reinforce the importance of interacting issues policy that is involving tips written down on FDIC letterhead or through a study of assessment and documenting all such communications in FDIC documents; and

• provide expanded guidelines for report of assessment content and magnificence, the main focus that will be that fact-based, diplomatic and language that is objective ordinarily more efficient than criticism in achieving corrective action or use of suggested improvements.

Enhancement of Appeals Processes

The FDIC agrees that banking institutions need to have significant avenues of redress when they think supervisory capabilities aren’t utilized accordingly, including if the appeals procedure is certainly not available. The Supervision Appeals Review Committee (SARC) instructions had been amended in 2008, after notice and comment, to change the supervisory determinations qualified to receive appeal and align the FDIC’s appeal procedures with those associated with the other federal banking agencies. Just before 2008, the FDIC ended up being the actual only real federal banking agency that expressly permitted breakdown of determinations that underlie formal enforcement actions, that are susceptible to a split due procedure.

The FDIC Board will review and reconsider the changes produced in 2008 to your SARC eligibility needs included in the review that is board-level of quality and appropriateness regarding the functions and obligations of current Board committees therefore the effectiveness and timeliness of avenues of redress open to banks that think supervisory abilities aren’t utilized properly. Also, RMS as well as the Division of Depositor and customer Protection (DCP) will establish an activity for the overview of appeals which can be gotten but they are considered ineligible for the formal review procedure to make sure that any things into the appeal that require FDIC management’s attention, including worker behavior, are addressed. The method will need that such reviews be completed in a timely manner, just like that afforded those appeals entitled to the formal procedure.

Issuance of exterior Guidance Regarding Expectations for Communication and Handling of Disagreements

RMS and DCP will upgrade and reissue lender Letter (FIL) 13-2011, Reminder on FDIC Examination Findings. This FIL:

• reinforces FDIC’s expectations for communications between FDIC and bankers;

• encourages banking institutions to deliver feedback on supervisory programs also to look for quality on FDIC findings and guidelines as necessary;

• encourages institutions with issues about assessment findings to talk about those issues utilizing the examiner-in-charge or to get hold of industry workplace or office that is regional;

• offers a opportunity for organizations to allure assessment findings by way of an appeals that are formal; and

• offers a private, basic and sounding that is independent through the FDIC workplace regarding the Ombudsman.

Issuance of Industry Help With Lending Through Third Parties

In reaction towards the findings associated with the Final Report and previous OIG audits, the FDIC has started developing guidance to deal with the potential risks related to banking institutions making loans through 3rd events along with danger administration practices that might be anticipated of banking institutions doing these tasks to mitigate the potential risks. This guidance that is new augment and expand from the guidance found in FIL-44-2008, Guidance for Managing Third-Party danger, and certainly will particularly deal with the potential risks connected with banking institutions making loans through rent-a-charter relationships, agent relationships, as well as other third-party relationships. FDIC staff will provide the guidance into the FDIC’s Board of Directors for consideration. As new items and distribution stations emerge, the FDIC commits to fully think about perhaps the issuance of certain regulatory guidance is warranted.

The FDIC has employed outside counsel to conduct a review that is independent of Final Report and supporting materials to advise whether there was a foundation for workers action or modifications to workers policies.

We appreciate the chance to provide an answer into the Final Report. The FDIC will give you a status upgrade regarding the efforts outlined above by June 30, 2016.