Joint Comment Letter to the FDIC on Amending FDIC Regulations to Conform with the Fair Hiring in Banking Act

Dear Mr. Sheesley:

The American Bankers Association and the Consumer Bankers Association (the Associations) are pleased at the opportunity to comment on the proposed Federal Deposit Insurance Corporation (FDIC) regulations, RIN 3064-AF92: Amending FDIC regulations to conform with the Fair Hiring in Banking Act (FHBA) (the Proposed Regulations). Section 19 of the Federal Deposit Insurance Act (Section 19) prohibits, without the prior written consent of the FDIC, employment by a bank of any person who has been convicted of a crime involving dishonesty or breach of trust or money laundering or who has agreed to enter into a pretrial diversion or similar program in connection with the prosecution for one of these offenses, among other prohibitions. The Proposed Regulations include potential amendments to the regulations issued under Section 19 to conform the FDIC's regulations with changes made in the FHBA. The Proposed Regulations also include several other amendments not required by the FHBA, including addressing the types of offenses covered by Section 19, the effect of the completion of sentencing or pretrial-diversion program requirements in the context of Section 19, and the FDIC's procedures for reviewing applications filed under Section 19.

The Associations' members understand the critical importance of the objectives of Section 19 and the Proposed Regulations. Our members must continually balance the need to attract and maintain an effective and talented workforce with the need to protect the security and integrity of bank operations, and also banks reputations in their communities, including for fair hiring practices. The Associations support the overall Proposed Regulations as striking an effective and reasonable balance between these objectives. 

The Associations also note that the FDIC's online publication, "Your Guide to Section 19" is an extremely useful resource for both individuals and institutions involved in hiring decisions related to Section 19. Because of this, the Associations urge the FDIC to issue an updated version of this guide upon completion of the rulemaking process.

In addition, the Associations acknowledge and appreciate that the FDIC must implement the statutory changes enacted via the FHBA into the FDIC’s Section 19 regulations. However, the Associations recommend that the FDIC should make several changes to the proposed regulations—most notably, (i) excluding criminal offenses prosecuted by foreign authorities from the scope of Section 19, (ii) carefully tailoring the exclusion of "certain crimes involving controlled substances" from Section 19 coverage, and (iii) providing much-needed certainty regarding Section 19 de minimis offenses. The Associations also (iv) recommend the FDIC interpret the definitions of "offense occurred" and "offense committed" to mean the date of the plea, conviction or program entry, and (v) support the FDIC’s proposed interpretation of "sentencing occurred" to be the date of the plea, conviction or program entry.

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