Fair Audits and Inspections for Regulators' Exams Act
- Sponsor
- Sen. Moran, Jerry [R-KS]
- Committees
- Banking, Housing, and Urban Affairs Committee (primary)
- Last action
- Aug 6, 2026
Bottom line
The bill aims to increase transparency, accountability, and fairness in the financial regulatory examination and enforcement process by imposing strict timelines, creating an independent review body, and offering judicial review options.
What it actually does
This bill amends the Federal Financial Institutions Examination Council Act of 1978 to establish new requirements for the timeliness of financial institution examinations and reports, create a formal process for financial institutions to obtain timely written advice from regulators, and establish an independent Office of Independent Examination Review within the Council. It also grants financial institutions the right to an independent review of material supervisory determinations and allows them to elect a federal district court forum for certain supervisory enforcement actions instead of an agency administrative hearing.
Proponents argue
Supporters argue that the current regulatory examination and enforcement processes lack sufficient transparency, consistency, and due process, leading to arbitrary decisions and undue burdens on financial institutions, particularly community banks and credit unions. They contend that this bill will ensure more timely feedback, provide clear guidance, and establish an impartial mechanism for dispute resolution, fostering a more predictable and equitable regulatory environment.
Opponents contend
Opponents might argue that these changes could undermine the effectiveness and independence of financial regulators, potentially slowing down critical supervisory actions and making it harder to address emerging risks in the financial system. They might also contend that expanding judicial review for supervisory actions could lead to increased litigation, diverting resources and expertise from essential regulatory oversight functions.
The bill is moderately complex due to its technical nature and amendments to existing law, requiring a focused read to grasp the new processes and their implications.
Section 2(a), adding new Section 1012 to the FFIEC Act
Examination Timeliness and Reporting Requirements
This provision mandates that federal financial regulators must complete examinations of most financial institutions within 270 days of commencement and provide a final examination report within 90 days of the exit interview or receipt of additional information. It also requires an exit interview within 30 days of completing an examination and, upon request, an appendix listing all factual information relied upon for material supervisory determinations.
Supporters argue
Supporters argue that these deadlines will prevent prolonged examinations that create uncertainty and burden for financial institutions, allowing them to address issues more quickly and efficiently. The requirement for listing relied-upon information enhances transparency and due process.
Critics contend
Opponents might argue that strict deadlines could compromise the thoroughness of complex examinations, potentially leading to overlooked risks or rushed assessments by regulators.
Tradeoffs
Balances the desire for regulatory efficiency and certainty for institutions against the need for comprehensive and flexible supervisory oversight.
Section 2(b), adding new Section 1013 to the FFIEC Act
Timely Regulatory Guidance and Interpretations
This section requires federal financial regulatory agencies to establish procedures for covered financial institutions to obtain written advice on specific actions, interpretations of laws/regulations, accounting principles, or supervisory guidance. It sets strict deadlines for agencies to acknowledge requests and provide a written response (60 days after receipt of complete information), making the advice binding on the agency for that specific institution and matter.
Section 2(c), adding new Section 1014 to the FFIEC Act
Creation of Independent Examination Review Office
This section establishes an Office of Independent Examination Review (OIEC) within the FFIEC, headed by a 3-member Board appointed by the President with Senate consent. The Board will investigate complaints, hold meetings with institutions, review examination procedures for consistency, conduct quality assurance, and independently review supervisory appeals. It is funded by assessments on the regulatory agencies.
Section 2(d), adding new Section 1015 to the FFIEC Act
Independent Review of Supervisory Determinations
This provision grants financial institutions the right to an independent review by the new Board of Independent Examination Review (under Sec. 1014) of any 'material supervisory determination' in a final examination report. The review is de novo (without deference to examiners), and the Board's decision is final and binding. Institutions can elect a hearing with testimony under oath and document discovery.
Section 2(f), amending Section 8 of the Federal Deposit Insurance Act (FDIA) and Section 206 of the Federal Credit Union Act (FCUA)
Judicial Review Option for Enforcement Actions
This provision grants depository institutions and institution-affiliated parties the option to have hearings for certain supervisory enforcement actions (e.g., cease and desist orders, removal/prohibition orders, civil money penalties) heard in an appropriate U.S. district court instead of before the appropriate federal banking agency. These court hearings would be governed by the Federal Rules of Civil Procedure and Evidence.
For the purposes of the new Sections 1012 through 1015 (timeliness, private letter rulings, independent review office, independent review of determinations), the term 'financial institution' does not include a credit union that is not an insured credit union.
Section 2(e)(3)(A)(ii), amending Section 1003(3) of the FFIEC Act
Why it matters:This is standard legislative practice for defining scope, but it's consequential as it limits the applicability of the new protections.
Case for: Supporters might argue that uninsured credit unions operate under different regulatory structures or have less systemic importance, making their inclusion in these specific provisions unnecessary or overly burdensome for the new review mechanisms.
Case against: Critics might argue that all credit unions, regardless of insurance status, should benefit from enhanced examination fairness and review processes, especially if they are subject to similar regulatory oversight.
Estimated impact: Excludes a specific subset of credit unions from the new examination and review protections.
Changes the cost-sharing for general FFIEC expenses from 'One-fifth' to 'One-fourth' and specifies that these costs are shared by the 'agencies described under section 1003(1)(A)'. Section 1003(1)(A) lists OCC, Fed, FDIC, and NCUA, effectively excluding the CFPB from general FFIEC cost-sharing, even though it's included for the new sections 1012-1015.
Section 2(e)(3)(C), amending Section 1005 of the FFIEC Act
Why it matters:Could be a technical correction or a deliberate policy choice to shift financial burden, potentially evasive if it's a significant cost shift without clear rationale.
Case for: Proponents might argue that the CFPB's mission is distinct enough that it shouldn't bear the same proportion of general FFIEC costs as the prudential regulators, especially if its involvement in FFIEC's core activities is more limited.
Case against: Critics might argue that if the CFPB benefits from FFIEC's overall coordination and standards, it should contribute proportionally to the general costs, and this change represents an unfair burden shift to the other agencies.
Estimated impact: Shifts a portion of FFIEC's general operating costs from the CFPB to the other four federal financial institutions regulatory agencies.