OCC issues two revised policies and procedures manuals; proposes amendments to Violations of Laws and Regulations framework
WASHINGTON—The Office of the Comptroller of the Currency (OCC) today announced additional actions to focus supervisory attention on the most significant risks and violations and to provide banks greater clarity, consistency and certainty in how Matters Requiring Attention (MRA) and enforcement actions are issued.
In connection with the final rule regarding unsafe or unsound practices and MRAs issued jointly today with the Federal Deposit Insurance Corporation, the OCC has substantially revised its policies and procedures manuals (PPMs) regarding enforcement actions and MRAs.
“Today, the OCC is taking a number of historic steps to codify the agency’s return to risk-based supervision, helping to ensure that its more reasonable, intentional approach to bank supervision endures,” said Comptroller of the Currency Jonathan V. Gould. “It is critical that examiners and institutions prioritize material financial risks and substantive violations of law over concerns related to policies, process, documentation, and other nonfinancial risks, and that the agencies’ supervision and enforcement standards further that prioritization.”
Revisions to PPM 5310-3, “Bank Enforcement Action and Related Matters,” emphasize material financial risks, and highlight OCC’s three guiding principles when considering bank enforcement actions—escalation, tailoring, and focusing corrective actions on those essential to address specific deficiencies.
In addition to focusing banks’ and examiners’ attention on issues that materially affect safety, soundness, and compliance with laws and regulations, these revisions also ensure enforcement tools are used proportionately and predictably. Under the revision, the OCC may escalate to an enforcement action against a large or complex bank based on practices that would not trigger a similar response against a community bank – reflecting the increased regulatory and supervisory expectations for large or complex banks in the revised enforcement approach.
Additionally, the OCC is releasing PPM 5400-11, “Matters Requiring Attention,” publicly for the first time to provide greater clarity and transparency regarding its supervisory standards.
Revisions to this PPM reflect the supervisory framework in the joint final rule and clarify the OCC will only issue an MRA for practices, acts, or failures to act that meet the listed standard. The PPM also directs that MRAs must be tailored based on financial risk-related factors.
Along with the revised PPMs, the OCC released for public comment a notice of proposed rulemaking to codify its supervisory framework for the issuance of MRAs in response to violations of laws or regulations.
The proposed rule would establish and define two categories of violations of laws or regulations: “substantive violations” and “technical violations.” The proposed distinction intends to focus supervisory attention on violations that have the greatest impact on an institution or its customers. For those not substantive in nature, the proposed rule would provide a mechanism to address the violations outside of an MRA.
The OCC remains committed to addressing the challenges for its regulated institutions of all sizes and has taken a series of actions to rightsize regulatory burden and tailor supervisory activities to deliver the Administration’s vision of Parallel Prosperity for Main Street and Wall Street. Previous actions include:
Comments on the proposal are due 30 days after publication in the Federal Register.
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