On May 14, the OCC entered into a formal agreement with a New York-based bank after determining that the institution is in “troubled condition.” In its findings, the OCC cited alleged unsafe or unsound practices tied to the bank’s strategic planning and earnings performance.
The agreement does not cite specific statutory violations and imposes no monetary penalties. Instead, it places the bank under heightened supervisory scrutiny and requires extensive corrective action. Specifically, the bank must develop and implement two core remediation plans:
- Three-year strategic plan. By September 30, the bank must submit a plan that sets measurable goals for risk management, earnings, growth, capital, and product strategy. A board-level compliance committee will oversee implementation and submit quarterly progress reports to the OCC.
- Earnings improvement program. Also due by September 30, the bank must identify expense-reduction and revenue-generation opportunities, including branch and technology optimization, compensation review, and strategies to grow non-interest income while remaining compliant with consumer-protection laws.
- Operations and succession. The bank’s plan must include an evaluation of its internal operations, staffing levels, management-information systems, policies, and procedures, and incorporate a management employment and succession plan to ensure adequate staffing and leadership continuity.
The board must create a compliance committee of independent directors within 15 days to oversee implementation and provide quarterly progress reports to the OCC. The agreement will remain in force until the OCC verifies that all corrective actions are fully and sustainably completed.
Putting It Into Practice: While the CFPB continues to scale back its regulatory and enforcement efforts, other federal and state agencies are continuing their oversight. What is notable here however, is that the OCC entered into a consent order without requiring the bank to pay a civil money penalty. This approach raises questions about the OCC’s enforcement posture—particularly when compared to the often-penalty-driven actions of the CFPB in recent years. The absence of a monetary penalty may signal a more collaborative or rehabilitative stance by federal regulators. Only time will tell.