FAIR Exams Act
- Bill Number
- H.R. 940
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2025-07-25: Placed on the Union Calendar, Calendar No. 176.
- Last Updated
- 2026-05-21T20:20:27Z
AI-Generated Summary
Purpose of the Legislation
The FAIR Exams Act (H.R. 940) aims to enhance the efficiency, transparency, and fairness of federal examinations of financial institutions, such as banks and credit unions. It seeks to ensure timely regulatory processes, provide clearer guidance, and establish independent oversight to resolve disputes over supervisory decisions, ultimately improving accountability in the oversight of depository institutions.
Key Provisions
- Timeliness of Examinations and Reports (Section 2):
- Federal regulators must complete examinations within 270 days of starting, with extensions allowed only via written notice explaining the need.
- An exit interview with the institution's senior management must occur within 30 days of exam completion (extendable with notice).
- Final examination reports must be delivered within 90 days after the exit interview or receipt of additional institution-provided information.
- Institutions can request an appendix listing all factual materials used by regulators to support key supervisory findings (called "material supervisory determinations," which are significant decisions affecting the institution's operations or compliance).
- Timeliness of Regulatory Guidance (Section 3):
- Financial institutions can submit written requests for regulators' non-objection to proposed activities, interpretations of laws/regulations, or accounting standards.
- Requests must include details on the issue, facts, relevant laws, and a summary.
- Regulators must acknowledge receipt within 30 days and identify any missing information; institutions have 30 days to provide it.
- A written determination must follow within 60 days of acknowledgment or receipt of missing info.
- Anonymized summaries of determinations must be published on agency websites within 120 days, protecting confidential details.
- Office of Independent Examination Review (Section 4):
- Establishes an independent Office within the Federal Financial Institutions Examination Council (FFIEC), led by a 3-member Board appointed by the President with Senate confirmation.
- Board members represent diverse backgrounds: one with regulatory experience, one with consumer protection expertise (not recently employed by regulators), and one with private-sector financial leadership (nominated by institutions or trade groups).
- Prohibitions ensure independence (e.g., no recent employment by regulators or institutions).
- Duties include investigating complaints, holding public meetings, reviewing exam procedures for consistency, conducting quality assurance, handling appeals, and reporting annually to Congress and the FFIEC.
- Funded by equal contributions from major regulators (OCC, Fed, FDIC, NCUA); maintains strict confidentiality for sensitive information.
- Right to Independent Review of Material Supervisory Determinations (Section 5):
- Institutions can appeal key supervisory findings in final exam reports to the new Board within 60 days (extendable for good cause).
- Appeals must detail the issue, reasons for disagreement, facts, arguments, and supporting documents.
- Institutions can request underlying exam materials within 7 days of receiving the report (provided within 14 days).
- The Board conducts a fresh ("de novo") review, without deferring to the original regulator, and may hold a hearing (within 60 days) with testimony and evidence, following simplified procedures (no cross-examination or formal discovery rules).
- Decisions are issued within 60 days of closing the record, are binding on all parties, and can be appealed to federal courts.
- Prohibits regulator retaliation (e.g., delaying approvals) against institutions using this process.
- If violations are found, the Board refers them to the regulator; appeals do not halt enforcement if needed for institution safety.
- Additional Amendments (Section 6):
- Updates the Riegle Community Development and Regulatory Improvement Act to strengthen the ombudsman role, expand appealable issues (e.g., matters requiring management attention), and prohibit retaliation.
- Includes the Bureau of Consumer Financial Protection (CFPB) in relevant definitions and processes.
- Adjusts FFIEC funding to account for four core agencies (excluding CFPB for general purposes).
Significant Changes to Existing Law
- Introduces strict timelines for exams, reports, and guidance requests, which were previously undefined or flexible, promoting predictability.
- Creates a new independent Office and appeal process within the FFIEC, replacing or supplementing fragmented existing appeals (e.g., under the Riegle Act), with de novo reviews and judicial access— a shift from regulators' self-review.
- Expands "financial institution" definitions to include insured credit unions and CFPB oversight for specific sections, while clarifying exclusions.
- Enhances ombudsman protections and adds retaliation bans, broadening appeal rights to non-criminal supervisory concerns.
- Requires public anonymized reporting, increasing transparency without compromising confidentiality.
Potential Impacts
- On Government Agencies: Regulators (e.g., OCC, Federal Reserve, FDIC, NCUA, CFPB) face mandated deadlines, shared funding costs for the new Office (~20% each), and binding independent reviews, potentially increasing administrative burdens but improving procedural consistency and reducing disputes.
- On Citizens: Indirect benefits through more efficient, fairer oversight of banks and credit unions, which could enhance financial stability, consumer protection, and access to reliable services; no direct impact on individuals unless they interact with these institutions.
- On International Relations: Minimal, as the bill focuses on domestic U.S. financial regulation; it could indirectly support U.S. financial competitiveness by streamlining oversight for institutions with global ties.
Main Stakeholders Affected
- Financial Institutions: Banks, insured credit unions, and their trade associations benefit from clearer timelines, guidance, and appeal rights, reducing uncertainty and potential overreach.
- Regulatory Agencies: OCC, Federal Reserve, FDIC, NCUA, and CFPB must adapt processes, contribute to the new Office, and adhere to non-retaliation rules, affecting their operational autonomy.
- Congress and Oversight Bodies: Receives annual reports on reviews and compliance, enabling better legislative monitoring.
- Consumers and Industry Experts: Indirectly involved via the consumer protection-qualified Board member and potential for more accountable regulation.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens due process for institutions by mandating timely responses and independent, non-deferential reviews, aligning with administrative law principles (e.g., referencing Administrative Procedure Act hearing standards). Binding decisions and court appeals could lead to more litigation but ensure accountability; confidentiality provisions protect trade secrets.
- Constitutional: Supports equal protection and property interests of institutions by curbing arbitrary regulatory delays, without infringing on agencies' core safety-and-soundness authority (appeals explicitly do not block urgent enforcement).
- Political: Bipartisan board composition (no more than two from the same party) and presidential appointments with Senate advice/consent promote balance; industry nominations for one seat could foster collaboration but raise independence concerns. Annual congressional reporting enhances oversight, potentially influencing future regulatory reforms.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (10)
Rep. Meuser, Daniel [R-PA-9], Rep. Wagner, Ann [R-MO-2], Rep. Huizenga, Bill [R-MI-4], Rep. Timmons, William R. [R-SC-4], Rep. Moore, Tim [R-NC-14], Rep. Williams, Roger [R-TX-25], Rep. Haridopolos, Mike [R-FL-8], Rep. Sessions, Pete [R-TX-17], Rep. Scott, David [D-GA-13], Rep. Fields, Cleo [D-LA-6]
Recent Actions
- 2025-07-25: Placed on the Union Calendar, Calendar No. 176.
- 2025-07-25: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-216.
- 2025-07-25: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-216.
- 2025-05-21: Ordered to be Reported (Amended) by the Yeas and Nays: 35 - 17.
- 2025-05-21: Committee Consideration and Mark-up Session Held
- 2025-02-04: Referred to the House Committee on Financial Services.
- 2025-02-04: Introduced in House
- 2025-02-04: Introduced in House
Bill Versions
- Fair Audits and Inspections for Regulators’ Exams Act — issued 2025-02-04 — PDF (14 pages)
- Fair Audits and Inspections for Regulators’ Exams Act — issued 2025-07-25 — PDF (26 pages)