(1) Issuance of notice of proposed reclassification.
(i) Grounds for reclassification. Pursuant
to section 208.43(c) of Regulation H, 12 CFR 208.43(c), the Board
may reclassify a well-capitalized bank as adequately capitalized or
subject an adequately capitalized or undercapitalized institution
to the supervisory actions applicable to the next lower capital category
if—
(A) the Board determines that the bank is
in unsafe or unsound condition; or
(B) the Board deems the bank to be engaged
in an unsafe or unsound practice and not to have corrected the deficiency.
Any action pursuant to this paragraph shall hereinafter
be referred to as “reclassification.”
(ii) Prior
notice to institution. Prior to taking action pursuant to section
208.33(c) of this part, the Board shall issue and serve on the bank
a written notice of the Board’s intention to reclassify the bank.
8-095
(2) Contents of notice. A notice of intention
to reclassify a bank based on unsafe or unsound condition shall include—
(i) a statement of the bank’s capital measures and capital levels
and the category to which the bank would be reclassified;
(ii) the reasons for reclassification
of the bank;
(iii)
the date by which the bank subject to the notice of reclassification
may file with the Board a written appeal of the proposed reclassification
and a request for a hearing, which shall be at least 14 calendar days
from the date of service of the notice unless the Board determines
that a shorter period is appropriate in light of the financial condition
of the bank or other relevant circumstances.
(3) Response to notice of proposed reclassification. A bank may
file a written response to a notice of proposed reclassification within
the time period set by the Board. The response should include—
(i) an explanation of why the bank is not in unsafe or unsound condition
or otherwise should not be reclassified;
(ii) any other relevant information,
mitigating circumstances, documentation, or other evidence in support
of the position of the bank or company regarding the reclassification.
8-095.1
(4) Failure to file response. Failure by a bank to file, within
the specified time period, a written response with the Board to a
notice of proposed reclassification shall constitute a waiver of the
opportunity to respond and shall constitute consent to the reclassification.
(5) Request for hearing and presentation of oral
testimony or witnesses. The response may include a request for
an informal hearing before the Board or its designee under this section.
If the bank desires to present oral testimony or witnesses at the
hearing, the bank shall include a request to do so with the request
for an informal hearing. A request to present oral testimony or witnesses
shall specify the names of the witnesses and the general nature of
their expected testimony. Failure to request a hearing shall constitute
a waiver of any right to a hearing, and failure to request the opportunity
to present oral testimony or witnesses shall constitute a waiver of
any right to present oral testimony or witnesses.
(6) Order for
informal hearing. Upon receipt of a timely written request that
includes a request for a hearing, the Board shall issue an order directing
an informal hearing to commence no later than 30 days after receipt
of the request, unless the bank requests a later date. The hearing
shall be held in Washington, D.C. or at such other place as may be
designated by the Board, before a presiding officer(s) designated
by the Board to conduct the hearing.
8-095.2
(7) Hearing procedures.
(i) The bank shall have the right to
introduce relevant written materials and to present oral argument
at the hearing. The bank may introduce oral testimony and present witnesses only
if expressly authorized by the Board or the presiding officer(s).
Neither the provisions of the Administrative Procedure Act governing
adjudications required by statute to be determined on the record nor
the Uniform Rules of Practice and Procedure in subpart A of this part
apply to an informal hearing under this section unless the Board orders
that such procedures shall apply.
(ii) The informal hearing shall be recorded,
and a transcript shall be furnished to the bank upon request and payment
of the cost thereof. Witnesses need not be sworn, unless specifically
requested by a party or the presiding officer(s). The presiding officer(s)
may ask questions of any witness.
(iii) The presiding officer(s) may order
that the hearing be continued for a reasonable period (normally five
business days) following completion of oral testimony or argument
to allow additional written submissions to the hearing record.
8-095.3
(8) Recommendation
of presiding officers. Within 20 calendar days following the
date the hearing and the record on the proceeding are closed, the
presiding officer(s) shall make a recommendation to the Board on the
reclassification.
(9) Time for decision. Not later than 60 calendar
days after the date the record is closed or the date of the response
in a case where no hearing was requested, the Board will decide whether
to reclassify the bank and notify the bank of the Board’s decision.
