Enforcement actions
Enforcement actions taken against institutions or individuals can be either informal and private or formal and public.*
Informal enforcement actions
Bank and thrift supervisors have a variety of informal tools that can be used in less serious situations. These informal actions include commitment letters, board resolutions and memoranda of understanding. These actions are not public and are not enforceable in a court. The analysis in this article does not include these informal enforcement actions.
Formal enforcement actions
These actions are referred to as "formal" actions because they are enforceable under section 8 of the Federal Deposit Insurance Act. The primary formal actions against institutions discussed in this article include the following:
Cease and desist orders (temporary and permanent)
Cease and desist orders are typically the most severe and can be issued either with or without consent. When cease and desist orders are issued without consent, they are done so after issuance of a Notice of Charges and an administrative hearing. If actions proceed to this level, the Notice of Charges, hearing and agency decision are also available to the public.
Written agreement
A written agreement is enforceable just like a cease and desist order, but is a contract signed by both the institution/individual and the supervisor. A written agreement usually contains the same types of provisions found in a cease and desist order, but does not include a Notice of Charges-type recitation of facts. Supervisors who use written agreements refer to them by a variety of names, including "written agreements," "formal agreements" or "supervisory agreements."
Civil money penalties
Civil money penalties are not corrective in nature, but instead simply assess a fine for various types of infractions. The amount of the penalty that can be assessed by a regulator will typically be higher if the individual's or institution's conduct was knowing or reckless, caused a loss to a financial institution or resulted in gain to the wrongdoer.
Actions against individuals: Institution-affiliated party
Formal actions can also be taken against individuals who meet the statutory definition of "institution-affiliated party." Most institution-affiliated parties are employees, officers, directors or shareholders of the financial institution or its holding company. However, under certain circ*mstances, accountants, attorneys or other consultants can meet the definition of an institution-affiliated party. Actions against individuals include cease and desist orders; written agreements; civil money penalty assessments; and removal, suspension and prohibition orders.
* Data reflected in this article deal only with formal enforcement actions. Also excluded from this review are conditions imposed in writing in connection with approval of an application filed by a banking organization. Finally, this review does not include actions taken by agencies other than the federal bank and thrift supervisors that are not joint with the action of the supervisors.
Return to: Supervisory Enforcement Actions Since FIRREA and FDICIA
FAQs
The three (3) main categories of enforcement action are: (1) corrective actions, (2) sanctions and (3) other supervisory actions. These enforcement actions may be imposed singly or in combination with others.
What are the formal enforcement actions of the Federal Reserve? ›
Formal actions include cease and desist orders, written agreements, PCA Directives, removal and prohibition orders, and orders assessing civil money penalties. Informal enforcement actions are used when circ*mstances warrant a less severe form of action than a formal action.
What are the types of regulatory enforcement actions? ›
Formal enforcement actions include cease and desist orders, written agreements, prompt corrective action directives, removal and prohibition orders, and orders assessing civil money penalties.
What are the actions of the Federal Reserve System? ›
It is responsible for managing monetary policy and regulating the financial system. It does this by setting interest rates, influencing the supply of money in the economy, and, in recent years, making trillions of dollars in asset purchases to boost financial markets.
What are enforcement actions? ›
Enforcement Action: Is when a problem has been discovered, usually by the FDA or some other. federal agency, and an official report of the problem has been given to the study.
What is a bank enforcement action? ›
Enforcement actions against IAPs reinforce the accountability of individuals for their conduct regarding the affairs of a bank. The term “institution-affiliated party,” or IAP, is defined in 12 USC 1813(u) and includes bank directors, officers, employees, and controlling shareholders.
What is a formal enforcement action FDIC? ›
Section 8 of the FDI Act authorizes the FDIC to take certain formal enforcement actions when: (1) an institution or IAP: violates any law, regulation, or final order, (2) an IAP breaches a fiduciary duty; (3) an institution or IAP engages in an unsafe or unsound practices; or (4) where unsafe or unsound conditions are ...
What do the Federal Reserve police do? ›
Controls pedestrian and vehicle access to the Bank facility, patrols building, grounds and reports unusual situations or unauthorized individuals. Proficiency in Weapons (lethal and non-lethal), first aid, CPR, fire suppression techniques, and public relations achieved through training.
What are 3 things the Federal Reserve is responsible for regulating? ›
How the Fed Helps the Economy. The Federal Reserve acts as the U.S. central bank, and in that role performs three primary functions: maintaining an effective, reliable payment system; supervising and regulating bank operations; and establishing monetary policies.
What are OCC enforcement actions? ›
The OCC uses enforcement actions against an institution-affiliated party (IAP) to deter, encourage correction of, or prevent violations, unsafe or unsound practices, or breaches of fiduciary duty.
Formal enforcement actions
Cease and desist orders are typically the most severe and can be issued either with or without consent.
What are the two types of legal enforcement that the EPA uses? ›
Civil enforcement involves EPA or state-initiated legal action to compel compliance with federal law and may involve fines or penalties leveled against private parties. Criminal enforcement involves criminal investigation and prosecution of deliberate and/or severe violations of federal environmental law.
What are the 7 functions of the Federal Reserve? ›
The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system.
- Federal Open Market Committee. ...
- Institution Supervision. ...
- Financial Stability Assessments. ...
- Regulations & Statutes. ...
- Working Papers and Notes. ...
- Bank Assets and Liabilities. ...
- Regulations.
The primary tools used by the Fed include interest rate setting and open market operations (OMO). The Fed can also change the mandated reserves requirements for commercial banks or rescue failing banks as lender of last resort, among other less common tools.
How do the actions of the Federal Reserve affect your life? ›
The Fed has a major influence on your purchasing power
The Fed's interest rate decisions are bigger than just influencing the price you pay to borrow money and the amount you're paid to save. All of those factors have a prevalent influence on your purchasing power as a consumer.
What are the three main levels of public law enforcement? ›
So whether someone is an officer, detective, marshal, or an agent, they are part of law enforcement. In the United States, there are three general levels of law enforcement: federal, state, and local. Let's take a closer look at each one.
What are the three main functions of law enforcement in the community? ›
The purpose of law enforcement is to protect communities, hold individuals accountable, and ensure justice.
What are the types of OCC enforcement action? ›
Securities Enforcement Actions (SEC): The OCC has the power to institute enforcement proceedings, including civil money penalties, cease and desist orders, injunctions, censures, suspensions, bars, removals, limitations, and other remedies, under the federal securities and banking laws for violations of law, including ...
What are the 3 major functions of police quizlet? ›
the functions of the police can be classified into three groups: (1) order maintenance, (2) law enforcement, and (3) service.
