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Compliance Part 1: Exam Processes, Report Prep, and CMS_COLOMBO > Communicating Findings; Documenting the Exam; Investigations and Visitations; Appeals_AC > Flashcards

Communicating Findings; Documenting the Exam; Investigations and Visitations; Appeals_AC Flashcards

1
Q

COMMUNICATING FINDINGS

A
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2
Q

At the conclusion of an FDIC risk-focused, consumer compliance and CRA examination or review, compliance examination staff communicates supervisory findings to institutions describing what (3)?

A
  • Strengths and weaknesses of an institution’s CMS
  • Assessing adherence to the consumer protection laws and regulations
  • Potential or actual consumer harm.
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3
Q

When do examiners communicate Matters Requiring Board Attention (MRBAs)?

A

when significant issues are identified requiring an institution’s Board and management to take prompt corrective action on behalf of the institution and elevated supervisory attention is necessary

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4
Q

When do examiners provide recommendations?

A

when issues are identified that have a lower risk of consumer harm and are correctable by management in the normal course of business

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5
Q

I. EXIT MEETING

A
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6
Q

When is an exit meeting held with management?

A

at the conclusion of a consumer compliance and CRA examination or review

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7
Q

During concurrent examinations with Risk Management Supervision (RMS), how do we handle exit meetings?

A

DCP’s EIC coordinates with RMS examiners to schedule the exit and Board meetings in an effort to ensure that all necessary attendees are present and that the bank’s and FDIC staff’s time is used efficiently.

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8
Q

T or F:

Exam findings, including consumer compliance and CRA ratings, are not final until the appropriate reviews are conducted by review staff, and/or the Regional or Washington Offices, as applicable.

A

TRUE

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9
Q

What is the exit meeting used to do (i.e. the purpose (6)?

A
  • Summarize review or examination findings.
  • Discuss, when appropriate, positive findings to acknowledge the effectiveness of the institution’s consumer compliance or CRA efforts.
  • Provide recommendations to address noted weaknesses or deficiencies.
  • Recommend actions to strengthen or enhance the CMS, as applicable.
  • Obtain management’s response(s) and commitment(s) for corrective action for deficiencies identified in the CMS, including recommendations, and for cited violations and the resulting consumer harm.
  • Advise management of recommended consumer compliance and CRA ratings, as well as any recommendations for formal or informal enforcement actions.
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10
Q

T or F:

At the exit meeting, examiners also provide management with a copy of the Level 1 violations, if applicable.

A

TRUE

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11
Q

II. BOARD MEETING

A
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12
Q

What is the purpose of Board meeting?

A

to convey the pertinent findings of the examination directly to persons ultimately responsible for the operating policies and procedures of the institution.

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13
Q

When are Board meetings conducted?

A

After the exit meeting with management

Planned for regularly scheduled Board meetings, whenever possible

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14
Q

Board meetings must be attended by who at the bank? Who at FDIC?

A

BANK: A least a quorum of Directors/Trustees

FDIC: EIC, FS, SE, and/or RE or senior member of Regional Office, as appropriate

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15
Q

When is a Board meeting required post-exam (4)?

A
  • An informal or formal enforcement action is recommended
  • The proposed consumer compliance rating is “3,” “4,” or “5”
  • The proposed composite CRA rating, state rating, or multi-state rating is “Needs to Improve” or “Substantial Noncompliance”
  • Meeting requested by management/Board
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16
Q

When is a Board meeting NOT required?

A

Visitations

Complaint investigations

Other Special Reviews

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17
Q

III. Report of Examination (ROE)

A
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18
Q

What is the ROE?

A

A consumer compliance examination’s principal document of record.

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19
Q

What is a transmittal letter?

A

Accompanies a ROE to a Board

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20
Q

What does the transmittal letter require?

A

Requires follow- up on the exam with the regional office, notifying the office (in detail) of the actual resolution of:

  • MRBAs
  • Recommendations
  • L3 and L2 violations
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21
Q

IV. CONTENT OF THE ROE

A
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22
Q

What is a guiding principle for completing the ROE?

A

It contains all information that is necessary/useful for the Board and management to understand the scope and conclusions of the examination and any corrective actions that may be necessary to achieve compliance or address consumer harm.

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23
Q

How are violations categorized?

A

Level 3/High Severity

Level 2/Medium Severity

Level 1/Low Severity

**Only L2 and L3 discussed in the ROE

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24
Q

What are MRBAs intended to convey to the Board and management?

A

issues of the highest degree of supervisory concern

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25
Q

What can MRBAs include?

A
  • violations of consumer protection laws
  • CMS weaknesses that, if left unaddressed, could adversely affect the institution
  • activities that resulted in consumer harm; or
  • emerging issues that impact the institution and require proactive attention to mitigate risks.
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26
Q

How are L3 and L2 violations organized/ordered in the ROE?

A

In order of severity!

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27
Q

T or F:

Violations that have been self-identified by a bank and fully corrected before the start of the examination (including remedial action, if appropriate) generally are not cited on the violations pages or recorded in SOURCE

A

TRUE

28
Q

L3/Highest severity violation

A

Highest concern

Resulted in significant harm to consumers or members of a community

Typically result in a request or a requirement that the institution provide restitution in excess of $10,000 (in aggregate), or include, for example, pattern or practice violations of anti-discrimination provisions, including redlining or widespread discouragement

29
Q

L2/medium severity violation

A

moderate concern

Reflect systemic, recurring, or repetitive errors that represent a failure of the bank to meet a key purpose of an underlying regulation or statute

May have had a small, but negative impact on consumers or have the potential to have a negative impact if uncorrected.

Level 2 violations may also include those resulting in potential restitution in an amount below the Level 3 threshold.

30
Q

L1/Low severity violation

A

Lowest concern

Isolated or sporadic, or systemic violations that are unlikely to affect consumers or the underlying purposes of an applicable regulation or statute

Typically due to individual instances of failure to follow established procedures or minor errors in the implementation of reasonable procedures to comply with the obligations of a regulation or statute (i.e. one-offs)

31
Q

T or F:

The Compliance-Supervisory Section is not included in the ROE transmitted to the institution.

A

TRUE

Note: This page is omitted when there are no issues to discuss, or all information is accessible in SOURCE, or the examination workpapers.

32
Q

What does a RE do during the review process?

A

identify any gaps, inconsistencies, or unsupported or unexplained conclusions contained in the ROE or any other document informing the institution of an FDIC material supervisory determination.

33
Q

When does the FDIC communicate with the bank DURING the review process?

A
  • Examiner’s recommended rating is downgraded, or

- Examiner’s conclusions are changed in a way that adversely affects the bank

34
Q

After the ROE is signed, who is it delivered to?

A

The Board

35
Q

DOCUMENTING THE EXAM

A
36
Q

What should be prepared for each area selected for TT?

A

An Examiner Summary

37
Q

What should examiner summaries include (2)?

A

(1) significant findings and their impact on the CMS rating and
(2) any deficiencies or violations noted during the examination that are not contained in the ROE.

38
Q

How long do we need to retain workpapers for?

A

Retain workpapers for a period of at least two years or until the next examination, whichever is later.

LONGER PERIODS FOR SOME CASES:
• Truth in Lending violations requiring reimbursement;

• Fair lending violations resulting in referrals to the
Department of Justice or Department of Housing and
Urban Development;

• Any type of enforcement action that has been placed on
or remains outstanding against the financial institution;

• A criminal referral has been made regarding the
institution or any of its directors, trustees, management,
or employees; and

• Other reasons, at the discretion of the Regional Director
or Field Supervisor, for which the retention of
documents and workpapers is required

39
Q

INVESTIGATIONS AND VISITATIONS

A
40
Q

What types of investigations take place (2)?

A
  1. Consumer Complaint investigations

2. Enforcement Action

41
Q

Who are consumer complaint investigations typically handled by?

A

Consumer Response Unit staff

Examiners will be requested to assist if deemed necessary.

42
Q

Why would a formal investigation (pursuant to Section 10(c) of the FDI Act) be completed for an enforcement action?

A

To obtain information or evidence necessary to support an enforcement action

43
Q

What are visitations?

A

Usually targeted events aimed at specific operational or regulatory areas, but can also focus on CMSs that require more than the normal level of supervisory attention.

44
Q

Visitations are conducted by the FDIC to review (

A
  • The compliance posture of a bank that is newly chartered bank, involved in a recent or proposed merger, or recently converted to state nonmember status
  • A bank’s progress on corrective actions since its LX
  • To ascertain a bank’s compliance with an enforcement action;
  • To investigate problems brought to the FDIC’s attention.
45
Q

T or F:

Visitations may be expanded to a regular consumer compliance/CRA examination with the Examiner-in-Charge’s recommendation and Regional Office management’s concurrence.

A

TRUE

This recommendation should be considered in situations where:

  • Significant deficiencies are noted in the CMS or CRA policies or procedures;
  • Significant noncompliance is noted particularly regarding previously criticized areas; or
  • Significant noncompliance with an informal or formal enforcement action is noted.
46
Q

T or F:

Regional Office management may change an institution’s compliance rating if interim events, visitations, investigations, or similar situations result in finding that the assigned rating is no longer suitable and that a different level of supervisory concern is warranted

A

TRUE

47
Q

T or F:

Ratings can only be down- not up.

A

FALSE

Ratings may be moved up or down.

48
Q

APPEALS

A
49
Q

What act required the FDIC to establish an independent intra-agency appellate process to review material supervisory determinations made at insured depository institutions that it supervises?

A

Section 309(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 (Public Law 103-325, 108 Stat.2160) (Riegle Act)

50
Q

Who reviews appeals?

A

Supervision Appeals Review Committee (“SARC”)

51
Q

Who does the FDIC supervise?

A

Insured depository institutions (insures state nonmember banks, insured branches of foreign banks, and state savings associations)

52
Q

A bank may appeal any _______ determination pursuant to the procedures set forth in these guidelines.

A

material supervisory

53
Q

Material supervisory determinations that apply to DCP?

A
  • CRA ratings
  • Consumer compliance ratings
  • TIL restitution
  • Decisions to initiate informal enforcement actions (such as MOU)
  • Determinations regarding the bank’s level of compliance with formal enforcement action; however, if the FDIC determines that the lack of compliance with an existing formal enforcement action requires additional enforcement action, the proposed new enforcement action
    is not appealable
  • MRBAs
54
Q

Are formal enforcement-related actions and decisions, including determinations and the underlying facts and circumstances that form the basis of a recommended or pending formal enforcement action, appealable?

A

NO

This includes
- written notice of a referral to the Attorney General pursuant to ECOA

  • Notice to the Secretary of Housing and Urban Development (“HUD”) for violations of the ECOA or the FHA

-

55
Q

An institution may file a request for review of a material supervisory determination with the Director, DCP within how many calendar days following the bank’s receipt of a ROE containing a material supervisory determination or other written communication of a material supervisory determination?

A

60 calendar days

56
Q

The Division Director issues a written determination, including the grounds for that determination, within ___ days of receipt of the request

A

45

57
Q

T or F:

No appeal to the SARC will be allowed unless a bank has first filed a timely request for review with the appropriate Division Director.

A

TRUE

58
Q

What does a bank do when they disagree with the written determination rendered by the Division Director?

A

Must appeal that determination to the SARC

59
Q

How many calendar days does the bank have to appeal the Division Director determination to the SAR?

A

30 calendar days from the date of the Director’s determination

60
Q

T or F:

Failure to file within the 30-day time limit may result in denial of the appeal by the SARC.

A

TRUE

61
Q

When will the SARC notify the bank (in writing) of its decision concerning the disputed material supervisory determination(s)?

A

45 days from the date the SARC meets to consider the appeal; SARC meeting held within 90 days from the date of the filing of the appeal

62
Q

EXAMINATIONS AND VISITATION FREQUENCY

A
63
Q

Generally, newly chartered insured institutions or institutions that changed charters and are newly supervised by the FDIC receive a
visitation within the first _____ months of operation/conversion and a full-scope examination within the first ____ months.

A

12;24

64
Q

Exam intervals are based on what (2)?

A
  1. Asset size

2. Ratings assigned at most recent Compliance exam and CRA evaluation

65
Q

What is the exam interval measured as?

A

The period between the date one exam report was transmitted to the bank and the start date of the subsequent exam at the same
institution.

Compliance Part 1: Exam Processes, Report Prep, and CMS_COLOMBO (6 decks)

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