The Federal Deposit Insurance Corporation announced on January 26, 2026, the adoption of revised Guidelines for Appeals of Material Supervisory Determinations. This update replaces the Supervision Appeals Review Committee with a standalone Office of Supervisory Appeals, an independent entity within the FDIC designed to handle appeals from insured depository institutions. Effective upon the office becoming fully operational, the guidelines stem from requirements under Section 309(a) of the Riegle Community Development and Regulatory Improvement Act of 1994, which mandates an independent appellate process for reviewing supervisory decisions. The move addresses ongoing concerns about the independence and expertise in the appeals process, building on prior iterations of the guidelines and incorporating public input from a July 2025 proposal. This development is significant as it seeks to balance regulatory oversight with fair recourse for banks, potentially influencing how supervisory disputes are resolved amid evolving financial sector challenges.
Background and Legislative Foundation
The guidelines originate from the Riegle Act, enacted in 1994, which requires federal banking agencies to establish an independent intra-agency appellate process for material supervisory determinations. As defined in the act, this process must involve reviewers who do not report to those making the initial determinations and ensure expeditious decisions with protections against retaliation. The FDIC first implemented this in 1995 by creating the Supervision Appeals Review Committee, composed of board members and senior officials. Subsequent revisions occurred in 2021 and 2022, briefly establishing an independent office before reverting to the committee structure. The latest guidelines, detailed in Federal Register Volume 91, Number 16, reinstate and refine this independent office model, responding to feedback that emphasized the need for greater separation from supervisory divisions.
Key players include the FDIC Board of Directors, which approved the revisions, and staff from divisions such as Risk Management Supervision and Depositor and Consumer Protection. The proposal drew eight comment letters from trade organizations, a law firm, a public interest group, and a financial holding company, most supporting the changes but suggesting enhancements like diverse panel compositions.
Relevant precedents include the FDIC's 2021 guidelines, which introduced a similar office but were reversed in 2022 before handling appeals. The current revisions align with the act's emphasis on independence, as noted in the Federal Register: 'The FDIC is revising the Guidelines to replace the SARC with an independent, standalone office within the FDIC, known as the Office of Supervisory Appeals.' This evolution reflects broader regulatory trends toward transparency in banking oversight.
Structure and Operations of the New Office
The Office of Supervisory Appeals operates independently from supervisory divisions, reporting directly to the FDIC Chairperson's Office with delegated authority to resolve appeals. It is staffed by reviewing officials on fixed-term appointments, requiring bank supervisory or examination experience. Panels of three officials handle each appeal, with at least one having supervisory experience and one with industry experience, such as prior work at banks or related service providers. This composition addresses commenter suggestions for diverse perspectives, as the FDIC noted in the Federal Register: 'The final Guidelines provide that each three-member panel will include at least one reviewing official with bank supervisory or examination experience and at least one reviewing official with industry experience.' Background information on officials will be published on the FDIC's website to promote transparency.
The office's scope covers material supervisory determinations like CAMELS ratings, loan classifications exceeding 10 percent of capital, and compliance with informal enforcement actions. Exclusions include formal enforcement actions and decisions on resolution plans. Appeals proceed first to the relevant division director, then to the office if unresolved. The standard of review emphasizes consistency with FDIC policies and reasonableness, without deference to either party, as outlined: 'The panel makes its own supervisory determination without deferring to the judgments of either party.'
Legal support comes from the FDIC's Legal Division, which advises on policies but does not opine on merits, ensuring decisions align with laws like the Federal Deposit Insurance Act.
Interactions with Enforcement Actions and Procedural Enhancements
A notable revision addresses overlaps between appeals and formal enforcement actions, responding to commenter concerns about piecemeal reviews. The guidelines now allow appeals of facts underlying certain proposed enforcement actions, excluding those based on unsafe practices or anti-money laundering violations, with expedited review. If the FDIC fails to advance an enforcement action within specified timelines (120 or 90 days), appeal rights are reinstated. This balances urgency in safety-and-soundness cases with due process, as the Federal Register explains: 'The FDIC will allow the facts and circumstances underlying a proposed formal enforcement action to be in scope for appeals to the Office if the proposed enforcement action is not based, in whole or in part, on unsafe or unsound practices.'
Other enhancements include provisions for sharing appeal materials, prohibiting ex parte communications, and allowing new evidence with panel approval. The Ombudsman monitors for retaliation, a key safeguard under the Riegle Act, and can submit views on appeals.
Potential Implications and Perspectives
Short-term implications include smoother transitions for ongoing appeals, with the FDIC committing to public notification once operational. Institutions may benefit from perceived greater independence, potentially increasing appeal filings and fostering consistent supervision across regions. Long-term, this could enhance trust in FDIC oversight, though some commenters worried about constraints from adherence to existing policies, viewing it as limiting true independence.
Different perspectives emerge: trade groups praised the expertise requirements, while one commenter suggested excluding non-examiners entirely. The FDIC balanced these by favoring diverse panels without overly restricting applicant pools. Broader debates touch on legislative reforms to the Riegle Act, with some seeing the guidelines as an interim step.
In summary, these guidelines represent a procedural refinement aimed at fairness in bank supervision. Potential next steps include staffing the office and monitoring its effectiveness through annual reports. Ongoing challenges involve ensuring timely decisions and addressing any unintended overlaps with enforcement, while debates may continue on expanding appealable determinations to further align with due process principles.
