WASHINGTON — One day after the defeat of House legislation aimed at reining in bank examiners, a related bill emerged that would appear to have a better chance of becoming law.
On Thursday, the House subcommittee on financial institutions defeated a measure sponsored by Rep. Bill Posey, R-Fl., that would have allowed banks to treat non-accrual loans as accrual for capital purposes if they were current, amortizing, not paid from an interest reserve account and were not more than 30-days delinquent within six months.
The bill's supporters, including the Independent Community Bankers of America, argued that the measure was necessary because examiners have gone overboard in declassifying loans, forcing bankers to hold higher capital than necessary.
But Posey's bill was opposed by federal bank regulators, who said that it undermined examiners' ability to ensure the safety and soundness of banks.
In a vote on Thursday, the measure was defeated by a 10-8 margin. Three Republicans, including subcommittee chairwoman Rep. Shelley Moore Capito, joined the subcommittee's Democrats to ensure the bill's demise.
Then on Friday, Capito and Democratic Rep. Carolyn Maloney, the subcommittee's top Democrat, introduced their own legislation.
The bipartisan bill would establish a process to allow banks to appeal decisions made by bank examiners. It would also establish an ombudsman who would take complaints from banks about examination practices.
"I have heard from banks in my district who feel that there is a disconnect between guidance coming out of Washington and exams that are being done in the field," Maloney said in a press release. "I am hopeful that this bill, which codifies existing guidance, will help ensure that the examination process is being conducted consistently and will offer banks an impartial outlet when they feel wrong determinations have been made."
In the same press release, Capito complimented her fellow Republican Posey for his work on the issue.
"We have heard significant concerns about the fairness of the examination process for financial institutions and their ability to effectively appeal regulator decisions," Capito said. "This legislation provides financial institutions with a fair and impartial process to appeal examination reports for federal financial regulators and providing further clarity to regulators."
