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

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today announced revisions to its policies and procedures manual on bank enforcement actions to reflect its consideration of actions against banks that exhibit or fail to correct persistent weaknesses.

Policies and Procedures Manual (PPM) 5310-3, “Bank Enforcement Actions and Related Matters,” now includes “Appendix C: Actions Against Banks With Persistent Weaknesses,” which provides greater transparency and clarity about how the OCC determines if a bank has persistent weaknesses and the possible additional actions the agency may take to address them. The policy is focused on larger and more complex banks the OCC supervises.

“This revised policy promotes strong management by making clear that a bank’s inability to correct persistent weaknesses will result in proportionate, fair, and appropriate consequences, including growth restrictions and divestitures when warranted,” said Acting Comptroller of the Currency Michael J. Hsu. “These guardrails are especially important today, as banks grow to better serve their communities, improve their competitiveness, and achieve economies of scale. Well-managed banks provide invaluable support to our economy, and this revised policy promotes this result.”

The PPM describes actions the OCC may take against banks that exhibit persistent weaknesses. This could include additional requirements and restrictions, such as requirements that a bank improve its capital or liquidity position, as well as restrictions on the bank’s growth, business activities, or payments of dividends. As warranted, the OCC also may require a bank to simplify or reduce its operations, including that the bank reduce its assets, divest subsidiaries or business lines, or exit from one or more markets of operation.

Related Links

• Bulletin 2023-16, “OCC Enforcement Actions: Revised Policies and Procedures Manual for Bank Enforcement Actions and Related Matters”
• PPM 5310-3, “Bank Enforcement Actions and Related Matters,” dated May 25, 2023 (PDF)
• Acting Comptroller of the Currency Michael J. Hsu, Remarks at Brookings, “Detecting, Preventing, and Addressing Too Big to Manage,” dated January 17, 2023 (PDF)