Coming to grips with digital communications (such as websites), the three federal banking agencies are proposing a new policy statement to assure their coordination of enforcement actions after the regulators’ umbrella group dropped a requirement for written notices, according to filings with the Federal Register.
In a coordinated action, the Federal Reserve, Federal Deposit Insurance Corp. (FDIC), and the Office of the Comptroller of the Currency (OCC) are proposing the joint statement to take the place of a 21-year-old coordination policy of the Federal Financial Institutions Examination Council (FFIEC), which the exam council is withdrawing. That policy required written notification between the three banking regulators whenever they took an enforcement action against a federally regulated financial institution or its affiliate.
But times they are a-changin’, according to the FFIEC. “It should be noted that the 1997 policy statement was created at a time when electronic communication was much less common than it is today and no longer reflects the current practices of the federal banking agencies in coordinating formal enforcement actions,” the exam council stated in its notice, to be published in coordination with the banking agencies’ proposal.
“Importantly, the formal enforcement actions taken by the federal banking agencies are now published on the individual agencies’ public websites, making it no longer necessary for the agencies to provide written notice of all such actions to each other,” the exam council notice states.
According to the new, proposed policy of the banking regulators (scheduled to be published in the Federal Register Tuesday), when one of them determines formal enforcement action is needed against any federally insured depository institution or affiliated organization, the agency should evaluate the impact of that action on the interests of another federal banking agency.
“If it is determined that one or more other FBAs [federal banking agencies] have an interest in the enforcement action, the FBA proposing the enforcement action should notify the other FBA(s),” the proposal states. “Notification should be provided at the earlier of the FBA’s written notification to the federally insured depository institution, depository institution holding company, non-bank affiliate, or institution-affiliated party against which the FBA is considering an enforcement action or when the appropriate responsible agency official, or group of officials, determines that formal enforcement action is expected to be taken.”
The new statement replaces the existing policy statement “to incorporate and reflect current practices and is not intended as a substitute for informal communication that routinely occurs among the FBAs in advance of an enforcement action, including verbal notification of pending enforcement matters to officials and staff with supervisory and enforcement responsibility for the affected institution,” the notice states.
The policy statement will be effective upon publication in the Register.