Washington, D.C.— This week, Congressman Tom Emmer (MN-06) led his Republican colleagues on the House Financial Services Committee on a letter to Federal Deposit Insurance Corporation (FDIC) Acting Chairman Martin Gruenberg condemning the agency’s politicized and retaliatory examinational appeals process.
Emmer said, “The FDIC knew that their choice to revert to a partisan appeals process would be met with concern from legislators and stakeholders alike. Nevertheless, they chose to abandon an independent, apolitical body without even asking for public comment.”
“The American people deserve answers on how and why this previously nonpartisan body was abandoned, and how the FDIC made their decision to return to cronyism.”
Congressman Emmer serves as lead Republican on the Oversight and Investigations subcommittee. Emmer was joined on the letter by Representatives Blaine Luetkemeyer (MO-09), Warren Davidson (OH-08), William Timmons (SC-04), Ted Budd (NC-13), Andy Barr (KY-06), Bill Posey (FL-08), Alex Mooney (WV-02), Roger Williams (TX-25), French Hill (AR-02), Ann Wagner (MO-02), Bill Huizenga (MI-02), John Rose (TN-06), Lance Gooden (TX-04), Bryan Steil (WI-01), Trey Hollingsworth (IN-09), Van Taylor (TX-03), Pete Sessions (TX-17), Barry Loudermilk (GA-11), Lee Zeldin (NY-01), Anthony Gonzalez (OH-16), Frank Lucas (OK-03), and Ralph Norman (SC-05).
To ensure regulatory compliance, the FDIC conducts examinations of the financial institutions under its supervision. In 1994, Congress required the FDIC to establish an independent process to protect financial institutions from bias and retaliation by FDIC staff if the financial institution seeks to revisit an FDIC examination. Instead, the FDIC set up the Supervision Appeals Review Committee (SARC) and staffed it with political insiders. The SARC was underutilized by supervised entities for fear of retaliation from the FDIC examiners down the line.
Under the leadership of former FDIC Chairman Jelena McWilliams, the FDIC disbanded the politicized SARC and set up the OSA, a committee beyond the reach of the FDIC’s political appointees and composed of former, non-current FDIC employees with significant exam experience. The OSA was tasked with handling the appeals process for financial institutions who have issues with an FDIC exam. McWilliams opened this process up to public input before officially establishing the OSA and it was widely supported.
Late last year, however, Marty Gruenberg and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra conducted a hostile, partisan takeover of the FDIC, ousting McWilliams before the OSA could begin fulfilling its responsibility to independently and transparently review the appeals process.
As FDIC Acting Chairman, Mr. Gruenberg, just a few months after the OSA was established, eliminated the OSA and reinstated the shadowy, politicized SARC, effectively immediately. He did not open this process up to public comment beforehand.
You can read the letter in full here.