HR4437-119

What This Bill Does

This bill amends Federal Deposit Insurance Act examination rules for smaller insured depository institutions. A well-managed and well-capitalized insured depository institution with $6 billion or less in consolidated assets receives alternating limited-scope examinations after a full-scope on-site examination. If the institution is otherwise subject to separate safety and soundness, consumer compliance, and information technology or cybersecurity examinations, the appropriate federal banking agency must combine two or three of those examinations when the institution requests it.

The bill also requires examination practices for insured depository institutions with less than $6 billion in total assets. Agencies must, to the maximum extent practicable, use an examiner with significant experience to lead on-site examinations, minimize the number of examiners and time spent at the institution, schedule exams at convenient times, and give advance notice of issues expected to be covered. Each federal banking agency must include information and aggregate data on compliance in its annual report to Congress.

Who Benefits and How

Community bank executives benefit from alternating limited-scope exams and combined examinations that reduce disruption. Well-capitalized insured depository institutions under $6 billion benefit from more predictable and lighter examination cycles. Bank compliance officers benefit from advance notice and fewer overlapping safety, consumer, and cybersecurity exam teams. Rural bank managers and small-bank staff benefit from scheduling rules that reduce time spent away from customers. Federal banking agency annual-report readers benefit from aggregate data on examination practices.

Who Bears the Burden and How

Federal bank examiners must adjust schedules, scope, staffing, and issue notices for smaller institutions. FDIC, Federal Reserve, and OCC supervision offices must implement the alternating limited-scope and combined examination requirements. Consumer compliance advocates may bear risk if limited-scope or combined exams miss issues that separate full exams would have found. Agency reporting staff must add annual report information on examination compliance and aggregate practices.

Key Provisions

• Provides alternating limited-scope examinations for well-managed and well-capitalized insured depository institutions with $6 billion or less in assets.
• Requires combined safety, consumer compliance, information technology, or cybersecurity exams when eligible institutions request them.
• Requires experienced lead examiners for smaller-bank on-site examinations where practicable.
• Requires agencies to minimize examiner count, exam duration, and inconvenient scheduling.
• Requires annual reports to Congress on compliance and aggregate examination practices.