The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have issued a final rule aimed at focusing bank examiners and institutions on material financial risks and compliance with banking laws and regulations. The rule establishes a uniform definition of the term “unsafe or unsound practice” for enforcement actions under 12 U.S.C. § 1818 and supervisory activities.
The agencies said the definition will promote greater clarity and certainty regarding enforcement and supervision standards, while ensuring that examiners prioritize concerns related to material financial risks over those involving policies, process, documentation, and other nonfinancial risks. The final rule also establishes uniform standards for issuing Matters Requiring Attention, or MRAs, and for communicating supervisory observations and other violations during examinations.
Alongside the rule, the OCC announced substantial revisions to its policies and procedures manuals. It revised PPM 5310-3 on bank enforcement actions and related matters, emphasizing escalation, tailoring, and corrective actions focused on specific deficiencies. The OCC also released PPM 5400-11 on MRAs publicly for the first time. In addition, the OCC proposed a rulemaking that would distinguish between “substantive violations” and “technical violations” of laws and regulations, with the goal of focusing supervisory attention on issues that have the greatest impact on an institution or its customers.
Comptroller of the Currency Jonathan V. Gould described the steps as historic and said the agency is codifying its return to risk-based supervision. The final rule explicitly limits its scope to institutions supervised by the agencies.
