OCC, FDIC Finalize New Bank Supervision and Enforcement Standards
Two major US bank regulators will now require a link to material financial harm before citing an 'unsafe or unsound practice' or issuing a formal matter requiring attention.
The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have issued a joint final rule changing how they supervise and discipline regulated banks. Effective November 2, 2026, the rule formally defines an 'unsafe or unsound practice' for the first time, requiring a link to likely or actual material financial harm. It also raises the standard for issuing formal 'matters requiring attention' (MRAs), which must now be tied to conduct that could reasonably be expected to cause such harm.
This development is significant for financial institutions because it aims to focus regulatory scrutiny on tangible financial risks rather than on deficiencies in policies or procedures alone. The rule creates a new, less formal category of 'supervisory observation' that does not require a formal board-level response. Updated examiner manuals also signal key operational shifts, including greater reliance on a bank's internal audit to validate corrective actions, new limitations on costly lookbacks, and a focus on 'substantive' over 'technical' violations of law. The FDIC has reportedly begun closing outstanding MRAs that do not meet the new, higher standards. The Federal Reserve did not join the rulemaking. A related OCC proposal distinguishing substantive from technical violations is open for comment.