OCC Revises Bank Enforcement Manual to Address Actions Against Banks with Persistent Weaknesses

The Office of the Comptroller of the Currency, OCC, has published a revised Policy and Procedures Manual (PPM 5310-3) as regards enforcement actions with respect to supervised institutions. The manual generally describes
(1) the various types of enforcement action the OCC may take such as the issue of cease and desist orders or the implementation of „capital directives“;
(2) the factors the OCC will take into account to determine a suitable enforcement action (e.g. risk profile of an institution, the length of persistence of deficiencies, previous shortcomings, etc.);
(3) the responsibilities of OCC staff members in this context;
(4) issues to be considered by OCC staff when taking enforcement actions (e.g. timeliness of the action, the issue of a formal written communication to outline the observed deficiencies, follow-up action to monitor progress made by institutions);
(5) the steps involved in the termination of enforcement action (compliance assessment, letter of compliance, etc.); and
(6) the obligations of financial institutions as regards cooperation and disclosure of information relating to the enforcement action.
In this revised version, the OCC introduces a new section, Appendix C, which generally applies to banks that are subject to heightened standards under 12 CFR Part 30, Appendix D. This new appendix contains information about the OCC’s evaluation of supervisory and enforcement actions against banks with persistent weaknesses, particularly those with highly complex operations that have failed to address these weaknesses in the past. Appendix C thereby outlines the enforcement actions that the OCC will consider which may entail additional capital or liquidity requirements, involve restrictions on the payment of dividends, or require operational down-sizing, to name a few.
The revised PPM also includes additional clarifications, such as updated legal and regulatory references.