The Federal Reserve Board Adopts Several NYLIB Recommendations in Its Final Intra-Agency Appeals Guidelines

On April 30, 2018, the New York League of Independent Bankers submitted comments through Pryor Cashman LLP to the Board of Governors of the Federal Reserve System (“Board”). The comments regarded proposed amendments to the Board’s Guidelines for Appeals of Material Supervisory Determinations, which allow for appeals of material supervisory determinations such as CAMELS and ROCA ratings. NYLIB’s comments focused on aspects of the proposed amendments concerning filing deadlines, the record provided to the final review panel, the composition of the final review panel, and the standard of review applied by the final review panel.

The Board issued its final appeals guidelines on March 17, 2020. The final guidelines adopt several of NYLIB’s recommendations.  Specifically, the final guidelines include the following changes responsive to NYLIB’s comments: 

• The final guidelines acknowledge that financial institutions can request extensions of appeals deadlines in appropriate circumstances; 

• The final guidelines provide greater specificity regarding the calculation of appeals deadlines (i.e., days are calendar days and a final deadline cannot fall on a weekend or federal holiday); 

• The final guidelines require the initial review panel to precisely identify the information upon which it relied in reaching its conclusion, and also require it to promptly provide such information to the institution upon the institution’s request to the extent permitted by law.

Pinchus Raice, the co-founder of NYLIB and one of the Pryor Cashman co-authors of NYLIB’s submission, offered the following comments on the final guidelines:

“Given that the Board’s deadline for submitting an intra-agency appeal is extremely short (30 days from the date of the relevant material supervisory determination), it was critical that the Board allow financial institutions to request extensions of appeals deadlines in appropriate circumstances. Equally important, the Board’s decision to allow appealing financial institutions to review and respond to the evidence relied upon by the initial appeals panel in their second-level appeals to the final review panel will greatly strengthen the integrity of the appeals process and lead to better and more informed decision-making by the final review panel.”

NYLIB President Ed Lutz offered the following comments: 

“It is gratifying to see that the Federal Reserve Board thoughtfully considered and responded to NYLIB’s comments on its proposed appeals guidelines. The Board’s intra-agency appeals process offers financial institutions an avenue to challenge material supervisory determinations, such as CAMELS and ROCA ratings (and, as the Board has clarified in its final appeals guidelines, MRAs and MRIAs).  NYLIB would like to thank Pryor Cashman for submitting a strong comment letter on NYLIB’s behalf that resulted in industry-friendly changes. The Board’s thoughtful response to NYLIB’s comment letter demonstrates that NYLIB fulfills an important role in giving a collective voice to independent financial institutions.”