Richard Cordray, Director (Director regarding the customer Finance Protection Bureau) /S/

Richard Cordray, Director (Director regarding the customer Finance Protection Bureau) /S/

TOPIC: Reaction To Office of Inspector General Report No. OIG-16-001

Many thanks for the chance to review and answer the last Report of Inquiry (Final Report) into The FDIC’s Supervisory method of Refund Anticipation Loans while the Involvement of FDIC Leadership and Personnel, served by the FDIC’s Office of Inspector General (OIG). Although the FDIC’s reaction to the Draft Report of Inquiry on February 17, 2016, addressed the factual record, this reaction addresses the issues raised by the OIG for consideration.

FDIC Board report on Policy Matters Raised when you look at the Final Report

The OIG requested that FDIC look at the dilemmas within the Final Report and apprise the OIG of every actions FDIC will need because of this. In reaction, the FDIC Board of Directors (FDIC Board or Board) will undertake overview of the issues that are key into the Final Report for consideration. As being a starting point, the FDIC Board reiterates its dedication to the Mission, Vision, and business Values regarding the FDIC. Furthermore, the FDIC Board commits to review and look at the matters that are following

• the quality and sufficiency of parameters put on the application of moral suasion, or its equivalents;

• the adequacy of current automobiles for examiners as well as other workers to report whatever they think become actions that are inappropriate way;

• the effectiveness and timeliness of avenues of redress offered to banks that believe supervisory capabilities aren’t utilized properly; and

• the governance and procedures regarding the Board and its committees.

Interim Actions as a result to your Final Report

The FDIC has identified a number of interim actions that may be taken now to be responsive to the OIG’s concerns and further strengthen the FDIC’s supervision programs in addition to this Board-level review.

Issuance of Internal Guidance Regarding Communication with Bankers

To help reinforce expectations that interaction with bankers be clear and balanced, the Division of danger Management Supervision (RMS) will issue a Regional Director Memorandum (RD Memo) guidelines: correspondence and Coordination with Bank Management in Carrying Out Forward-Looking, Risk-Based Supervision. The RD Memo will:

• set forth interaction objectives and greatest techniques for every stage associated with the supervisory cycle: pre-examination preparation, on-site examination activity, post-examination report review, while the period between exams;

• reinforce the significance of communicating issues policy that is involving guidelines on paper on FDIC letterhead or through a study of assessment and documenting all such communications in FDIC documents; and

• provide expanded directions for report of assessment content and design, the main focus that would be that fact-based, diplomatic and objective language is ordinarily more beneficial than critique in attaining corrective action or use of suggested improvements.

Enhancement of Appeals Processes

The FDIC agrees that banking institutions needs to have significant avenues of redress when they think supervisory abilities aren’t utilized accordingly, including whenever appeals procedure just isn’t available. The Supervision Appeals Review Committee (SARC) instructions had been amended in 2008, after notice and remark, to change the supervisory determinations qualified to receive appeal and align the FDIC’s appeal procedures with those associated with the other federal banking agencies. Ahead of 2008, the FDIC had been the sole federal banking agency that expressly permitted summary of determinations that underlie formal enforcement actions, that are susceptible to a different process that is due.

The FDIC Board will review and reconsider the changes produced in 2008 into the SARC eligibility demands included in the Board-level report on the quality and appropriateness of this functions and obligations of current Board committees in addition to effectiveness and timeliness of avenues of redress accessible to banks that think supervisory capabilities aren’t utilized accordingly. Furthermore, RMS in addition to Division of Depositor and customer Protection (DCP) will establish a procedure for the report on appeals which can be received but they are considered ineligible for the review that is formal to make sure that any things within the appeal that require FDIC management’s attention, including worker behavior, are addressed. The method will need that such reviews be completed on time, much like that afforded those appeals qualified to receive the formal procedure.

Issuance of exterior Guidance Regarding Expectations for Communication and Handling of Disagreements

RMS and DCP will upgrade and reissue lender Letter (FIL) 13-2011, Reminder on FDIC Examination Findings. This FIL:

• reinforces FDIC’s objectives for communications between FDIC and bankers;

• encourages banking institutions to supply feedback on supervisory programs also to look for clarity on FDIC findings and guidelines as necessary;

• encourages institutions with issues about assessment findings to talk about those issues using the examiner-in-charge or to contact industry workplace or office that is regional;

• provides a opportunity for organizations to attract assessment findings via a formal appeals procedure; and

• offers a private, basic and separate sounding board through the FDIC workplace regarding the Ombudsman.

Issuance of Business Help With Lending Through Third Parties

In reaction towards the findings associated with the Final Report and previous OIG audits, the FDIC has started developing guidance to deal with the potential risks connected with banks making loans through 3rd events along with danger administration techniques that might be anticipated of banking institutions doing these tasks to mitigate the potential risks. This guidance that is new augment and expand regarding the guidance found in FIL-44-2008, Guidance for Managing Third-Party danger, and will especially address the potential risks connected with banking institutions making loans through rent-a-charter relationships, agent relationships, as well as other third-party relationships. FDIC staff will provide the guidance towards the FDIC’s Board of Directors for consideration. As new services and distribution networks emerge, the FDIC commits to fully start thinking about whether or not the issuance of certain guidance that is regulatory warranted.

The FDIC has employed outside counsel to conduct a separate writeup on the Final Report and supporting materials to advise whether there was a foundation for personnel action or modifications to workers policies.

We appreciate the chance to offer an answer towards the Final Report. The FDIC will offer a status enhance of this efforts outlined above by 30, 2016 june.