The Office of the Comptroller of the Currency (OCC) today announced significant actions to enhance transparency and consistency in bank enforcement and supervisory standards, aiming to focus attention on the most critical risks and violations.
These actions include the revision of two key policies and procedures manuals (PPMs) concerning enforcement actions and Matters Requiring Attention (MRAs). Comptroller of the Currency Jonathan V. Gould said, "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."
Revisions to PPM 5310-3, "Bank Enforcement Action and Related Matters," emphasize material financial risks and introduce three guiding principles: escalation, tailoring, and focusing corrective actions on essential deficiencies. The updated approach allows for tailored enforcement, potentially escalating actions against large banks for practices that might not trigger a similar response for community banks.
For the first time, PPM 5400-11, "Matters Requiring Attention," has been made public, providing clarity on supervisory standards. This PPM clarifies that MRAs will only be issued for practices meeting a specific standard and must be tailored based on financial risk factors.
Additionally, the OCC released a notice of proposed rulemaking for public comment, seeking to codify its supervisory framework for MRA issuance related to violations of laws or regulations. This proposal aims to distinguish between "substantive violations" and "technical violations," directing supervisory focus to those with the greatest impact on institutions or customers, and providing alternative mechanisms for non-substantive issues.
The OCC stated its commitment to addressing challenges for regulated institutions of all sizes, aligning with the Administration's vision of Parallel Prosperity.