A complete substitute amendment. v2 fundamentally restructures the independent examination review process by replacing a single Director with a three-member Board and making the Board's appeal decisions final and binding. It also introduces new timeliness requirements for examinations and regulatory guidance, significantly altering the oversight framework for financial institutions.
FAIR Exams Act
- Sponsor
- Rep. Hill, J. French [R-AR-2]
- Committees
- Financial Services Committee (primary)
- Last action
- Jul 25, 2025
Bottom line
The FAIR Exams Act aims to increase transparency, accountability, and timeliness in the financial institution examination process by establishing new deadlines and creating an independent review body for supervisory determinations.
What it actually does
The bill amends the Federal Financial Institutions Examination Council Act of 1978 to establish new timelines for federal financial institution examinations and reports, create a formal process for financial institutions to request regulatory guidance, and establish an Office of Independent Examination Review (OIEC) within the Council. This new office would handle complaints, review examination procedures, conduct quality assurance, and provide an independent, de novo review process for material supervisory determinations, including the right to a hearing and judicial review.
Proponents argue
Proponents argue that the bill will improve fairness and efficiency in the regulatory examination process, reduce burdens on financial institutions by setting clear timelines, and provide a crucial independent avenue for institutions to challenge supervisory decisions, ultimately fostering a more predictable and transparent regulatory environment.
Opponents contend
Opponents might argue that the bill could undermine the authority and independence of financial regulators, potentially weakening supervisory oversight and introducing delays into critical enforcement actions, especially with the 'safety and soundness exception' potentially being a loophole. They might also raise concerns about the composition and funding of the new independent review board.
The bill is moderately complex due to its legal amendments and the establishment of new governmental structures, requiring focused attention to understand its full implications.
Section 2, adding new Section 1012 to FFIEC Act
Examination and Report Timelines
This provision requires federal financial regulators to complete any examination of a financial institution within 270 days, though this period can be extended with written notice. It also mandates that a final examination report be provided to the institution within 90 days of the exit interview or the provision of additional information. An exit interview must be conducted within 30 days of completing an examination, and agencies must include an appendix listing all factual information relied upon for material supervisory determinations upon request.
Supporters argue
Supporters contend these deadlines will reduce regulatory uncertainty and burden on financial institutions, allowing them to address issues promptly and plan more effectively.
Critics contend
Critics might argue that rigid deadlines could compromise the thoroughness of complex examinations or force agencies to rush reports, potentially missing critical issues.
Tradeoffs
Balances the desire for regulatory efficiency and predictability for institutions against the need for comprehensive and flexible regulatory oversight.
Section 3, adding new Section 1013 to FFIEC Act
Timely Regulatory Guidance and Determinations
This provision allows financial institutions to request written determinations from their applicable federal financial regulator regarding non-objection to activities, interpretation of laws/regulations, or accounting principles. Agencies must acknowledge requests within 30 days, identify any missing information, and provide a determination within 60 days of receiving a complete request. Summaries of these determinations, redacted for confidentiality, must be published publicly.
Section 4, adding new Section 1014 to FFIEC Act
Creation of Independent Examination Review Office
This section establishes an Office of Independent Examination Review (OIEC) within the Federal Financial Institutions Examination Council (FFIEC), to be led by a 3-member Board appointed by the President with Senate consent. Board members must meet specific qualification requirements, including experience from regulatory agencies, legal/accounting/consumer protection, and private sector financial services, with restrictions on recent employment by agencies or institutions. The OIEC is tasked with investigating complaints, holding meetings with institutions, reviewing examination procedures, conducting quality assurance, and independently reviewing supervisory appeals.
Section 5, adding new Section 1015 to FFIEC Act
Independent Appeal of Supervisory Determinations
This provision grants financial institutions the right to obtain an independent review by the Board of Independent Examination Review of 'material supervisory determinations' contained in final examination reports. Institutions must file a written notice within 60 days, outlining their reasons and providing supporting documents. The Board can determine the merits on the record or conduct a hearing, where institutions have the right to obtain testimony and evidence. The Board's review is de novo (not deferring to agency opinions), and its written decision is deemed final agency action, binding on both parties, and subject to judicial review in federal appeals courts. The bill prohibits retaliation against institutions for exercising these rights, but includes a 'safety and soundness exception' allowing agencies to enforce determinations during an appeal if deemed necessary.
Section 6(a), amending Section 309 of the Riegle Community Development and Regulatory Improvement Act of 1994
Streamlining Existing Appeals and Ombudsman Functions
This section removes the existing internal agency regulatory appeals process from the Riegle Act, effectively consolidating all material supervisory determination appeals under the new independent review process established by this bill. It renames the section to focus solely on the ombudsman function and strengthens anti-retaliation safeguards for institutions exercising their rights. It also expands the scope of issues an ombudsman can address to include matters requiring attention and suspensions of expedited processing status.
Section 6(c), amending Sections 1003, 1004(a)(4), and 1005 of the FFIEC Act
Expanded Scope and Funding for FFIEC and New Office
This section expands the definition of 'Federal financial institutions regulatory agencies' to include the Bureau of Consumer Financial Protection (BCFP) for the purposes of the new sections (1012-1015) related to examination timeliness, guidance, and independent review. It also clarifies that 'financial institution' for these new sections does not include credit unions that are not insured credit unions. Furthermore, it adjusts the funding mechanism for the FFIEC (and by extension, the new Office of Independent Examination Review) by changing 'One-fifth' to 'One-fourth' for the share paid by each of the specified regulatory agencies (OCC, Fed, FDIC, NCUA).
This section strikes subsections (a), (b), and (c) of Section 309 of the Riegle Act, which currently establish an independent intra-agency appellate process for material supervisory determinations. It effectively eliminates the existing internal agency appeal mechanism.
Section 6(a), amending Section 309 of the Riegle Community Development and Regulatory Improvement Act of 1994
Why it matters:This is standard legislative practice for amending existing statutes. The intent is to consolidate the appeals process under the newly created Office of Independent Examination Review, making the previous internal agency appeal redundant.
Case for: Supporters argue that consolidating all appeals under a truly independent body (the new OIEC) ensures greater impartiality and avoids the perception of agencies reviewing their own decisions, thereby strengthening due process for financial institutions.
Case against: Critics might contend that removing the internal agency appeal process eliminates a potentially faster and less formal avenue for resolving disputes, forcing all material supervisory determination challenges into a more formal and potentially slower independent review and judicial process.
Estimated impact: This change centralizes the appeal mechanism for all material supervisory determinations, shifting the workload and decision-making authority from individual agencies' internal processes to the new independent Board.
Section 6(c)(1)(B) clarifies that for the purposes of the new sections 1012 through 1015 (timeliness, guidance, independent review), the term 'financial institution' does not include credit unions that are not insured credit unions. Section 6(c)(3) amends the FFIEC Act's funding mechanism, changing the share paid by each regulatory agency from 'One-fifth' to 'One-fourth' and specifying these agencies are those 'described under section 1003(1)(A)' (OCC, Fed, FDIC, NCUA).
Section 6(c)(1)(B) and Section 6(c)(3) of the bill, amending Section 1003 and 1005 of the FFIEC Act
Why it matters:The exclusion of non-insured credit unions is likely due to their distinct regulatory structure and often smaller scale, where the new, more formal processes might be deemed less appropriate or necessary. The funding adjustment is a technical correction to account for the inclusion of BCFP in the scope of the new provisions, ensuring the costs of the FFIEC and the new office are distributed among the relevant agencies.
Case for: Supporters would argue that excluding non-insured credit unions appropriately tailors the new regulatory burdens to institutions with broader public impact and that the funding adjustment is a fair and necessary rebalancing of costs among the expanded set of relevant agencies.
Case against: Critics might argue that excluding non-insured credit unions creates an uneven playing field or that some of the benefits of the new provisions (like timely guidance) should extend to all financial institutions, regardless of insurance status. The funding change could be seen as an increased burden on the existing FFIEC members.
Estimated impact: Non-insured credit unions will not benefit from or be subject to the new examination timelines, guidance request processes, or independent review rights. The four core FFIEC agencies (OCC, Fed, FDIC, NCUA) will see a slight increase in their proportional contribution to FFIEC and OIEC funding.