Financial Institutions

On April 30, 2018, Pryor Cashman’s Financial Institutions Group submitted comments on behalf of the New York League of Independent Bankers (NYLIB) to the Board of Governors of the Federal Reserve System. The comments addressed proposed amendments to the Board’s Guidelines for Appeals of Material Supervisory Determinations, which allow for appeals of material supervisory determinations such as CAMELS and ROCA ratings.

Jeffrey Alberts, Co-Chair of the firm's Financial Institutions Group, explained, "Pryor Cashman is proud to support NYLIB in its efforts to comment on issues of critical importance to financial institutions. Given that the Board has not updated its Guidelines for Appeals of Material Supervisory Determinations in over 23 years, it was important that NYLIB offer an industry perspective on the proposed amendments."

NYLIB’s comments focused on aspects of the proposed amendments concerning filing deadlines, the record provided to the final review panel, the composition of the final review panel and the standard of review applied by the final review panel. Specifically, NYLIB recommended that:

• The Board should continue to acknowledge that extensions of the 30-day initial appeal deadline may be granted in appropriate circumstances, rather than eliminating the reference to extensions found in the current Guidelines;

• The Board should continue to allow 30 days to appeal from a decision of the initial review panel, rather than reducing the time period allowed for financial institutions to appeal from the decision of the initial review panel from 30 days to 14 days;  

• The Board should incorporate a method for the construction of time limits that addresses issues such as the consequences of filing deadlines falling on weekends and holidays;

• The Board should mandate that “the record upon which the initial appeal panel made its decision” that is provided to the final review panel will also be provided to the appealing financial institution;

• The Board should provide that the final level of review is performed by the Ombudsman or the Board, not a panel of staff hand-picked by the “director of the appropriate division of the Board” for the specific appeal; and

• The Board should provide that the final review panel’s review is de novo, rather than deferential to the decision of an initial review panel drawn from the Reserve Bank that made the material supervisory determination(s) being appealed.

Pinchus Raice, who also co-chairs the Financial Institutions Group, offered the following comments on NYLIB’s recommendations: "Some aspects of the Board’s proposed amendments took a step backwards, rather than a step forwards, from the perspective of financial institutions. The Board should not amend its Guidelines in a manner that makes it more difficult for financial institutions to file intra-agency appeals, nor should it seek to reduce the independence of the appeals process. Adopting NYLIB’s well-reasoned recommendations would enhance the effectiveness of the Board’s appeals process, lead to better decision-making and increase the confidence of financial institutions in the integrity and independence of the appeals process."

The Pryor Cashman Team

Alberts, Raice and Dustin N. Nofziger, an associate in the Financial Institutions Group, represented NYLIB in the submission of its comment letter on a pro bono basis.