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Our review of the Board's Guidelines for Appeals of Material Supervisory Determinations and FRB Richmond's Policy Statement on Appeals of Material Supervisory Determination revealed that both policies discuss standards and procedures Reserve Banks should follow when reviewing appeals of material supervisory determinations. In addition, both policies address the composition and appointment of the appeals panel and the appeals review process, including the evaluation of evidence and applicable time frames for resolution of appeals. Further, both policies outline the process for filing a subsequent appeal to the Reserve Bank President and the Board of Governors. Nevertheless, neither policy outlines a standard procedural framework for conducting a subsequent appeal. For example, both policies remain silent on key procedural aspects of the second- and third-level appeal, including (1) the standard for the review; (2) the allocation of the burden of proof; (3) the scope of the record to be reviewed and whether additional evidence may be gathered; and (4) the appellant's right to review and rebut the evidence that resulted in the material supervisory determination, even if confidential supervisory information protections apply. In our opinion, these illustrative omissions may lead to variations in the approach to the procedural aspects of an appeal.
We recommend that the Director of the Division of Banking Supervision and Regulation
The Director of the Division of Banking Supervision and Regulation agreed with our recommendation. In his response to recommendation 4, the Director stated that Banking Supervision and Regulation staff agree that the Board's Guidelines for Appeals of Material Supervisory Determinations should be updated to address the elements listed in the OIG's draft report. The Director noted that Banking Supervision and Regulation staff are developing revised guidance that will address the OIG's recommended changes and are making other enhancements to this process.
The actions described by the Director of Banking Supervision and Regulation appear to be responsive to our recommendation. We plan to follow up on the Board's actions to ensure that the recommendation is fully addressed.