Summary of HR 940 - FAIR Exams Act

Bill Overview

• Bill Number: HR 940
• Title: Fair Audits and Inspections for Regulators’ Exams Act (FAIR Exams Act)
• Status: Reported (Amended) by the Committee on Financial Services (H. Rept. 119-216)
• Introduced: February 4, 2025
• Classification: Bill

Purpose and Intent

The FAIR Exams Act aims to amend the Federal Financial Institutions Examination Council Act of 1978 to enhance the timeliness and transparency of examinations conducted by federal financial regulatory agencies on depository institutions. The legislation seeks to ensure that financial institutions receive timely feedback and guidance during regulatory examinations, thereby improving the overall regulatory process.

Key Provisions

The bill introduces several significant changes to the examination process:

1. Timeliness of Examinations

• Examination Completion: Regulatory agencies must complete examinations within 270 days of commencement, with extensions allowed only through written notice detailing the reasons for the delay.
• Final Examination Reports: Agencies are required to deliver final reports to financial institutions within 90 days following the exit interview or the submission of additional information by the institution.

2. Exit Interview Requirement

• Agencies must conduct an exit interview with the senior management of the financial institution within 30 days of completing an examination, with similar provisions for extensions.

3. Examination Materials

• Upon request, agencies must include an appendix with the final report that lists all materials relied upon for supervisory determinations.

4. Timeliness of Guidance Requests

• Financial institutions can request written determinations regarding permissions, regulatory interpretations, and accounting principles.
• Agencies must acknowledge receipt of these requests within 30 days and provide a determination within 60 days if the request is complete.

Impact

The FAIR Exams Act is expected to affect:
- Depository Institutions: Banks and credit unions will benefit from clearer timelines and expectations regarding regulatory examinations and guidance.
- Federal Regulatory Agencies: Agencies will need to adapt their processes to comply with the new timelines and reporting requirements.

Procedural Timeline

• February 4, 2025: Bill introduced and referred to the House Committee on Financial Services.
• May 21, 2025: Committee consideration and mark-up session held; reported out with amendments (Vote: 35 - 17).
• July 25, 2025: Bill placed on the Union Calendar and reported (Amended) by the Committee on Financial Services.

Conclusion

The FAIR Exams Act represents a significant reform in the regulatory examination process for financial institutions, aiming to enhance efficiency, transparency, and accountability in federal oversight. By establishing clear timelines and communication protocols, the legislation seeks to foster a more cooperative relationship between regulators and the institutions they oversee.