Patrick McHenryChairman

Washington, January 31, 2012 -

The Financial Institutions and Consumer Credit Subcommittee will meet on Wednesday to review bipartisan legislation that aims to improve the clarity, consistency and fairness of federal regulatory examinations on financial institutions.

H.R. 3461, the Financial Institutions Examination Fairness and Reform Act, was introduced by Subcommittee Chairman Shelley Moore Capito and Ranking Member Carolyn Maloney.

The bill is the culmination of work the Financial Services Committee began last year to address the disconnect smaller banks say exists between regulators in Washington and bank examiners in the field. 

In hearings held in Washington and around the country, the Financial Services Committee has heard testimony from small community bankers about how overzealous examiners in the field are inhibiting their ability to lend at the same time the guidance coming from Washington regulators is to lend more.  The problem has become so widespread among community banks it is referred to as the “mixed messages” problem.

Committee Chairman Spencer Bachus, a co-sponsor of H.R. 3461, said, “Every member of Congress has heard concerns from small, community banks about overzealous regulators.  No one wants regulators to allow unsafe practices, but we also do not want regulators to stifle a potential economic recovery.  The uncertainty caused by conflicting demands from examiners in the field and regulators in Washington is a roadblock to recovery.  Our bill will result in a fairer, more consistent and more reasonable examination process.”

Subcommittee Chairman Capito said, “Over the last year, the Financial Institutions and Consumer Credit Subcommittee has heard a growing chorus of concern about fairness in the federal examination process.   The legislation that Ranking Member Maloney and I have introduced seeks to address many of these concerns by providing a new avenue of appeal for institutions.   We look forward to a productive hearing where members can engage with our witnesses about the merits of the legislation.    Now is the time for all parties to come together to work on a substantive solution.”

H.R. 3461 improves the bank examination process by providing financial institutions with timely examination reports, ensuring consistency in examinations, creating an independent ombudsman within the Federal Financial Institutions Examination Council, and establishing an independent and fair process for appeals.

The hearing will take place on Wednesday, February 1 at 2 p.m. in room 2128 Rayburn.

Click here to view the memo for this hearing.

Witnesses scheduled to testify:

Panel I:

Kevin M. Bertsch, Associate Director of the Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System

Sandra L. Thompson, Director of the Division of Risk Management Supervision, Federal Deposit Insurance Corporation

David M. Marquis, Executive Director, National Credit Union Administration

Jennifer Kelly, Senior Deputy Comptroller for Mid-Size/Community Bank Supervision, Office of the Comptroller of the Currency

Panel II: