Revised Manuals Replace Prior Versions and Align with Final Rule
On August 27, 2026, the OCC published two updated Policies and Procedures Manuals (PPMs). The Revised Enforcement Action PPM (5310-3) supplants the May 25, 2023 version, and the Revised MRA PPM (5400-11) replaces the previously unpublished February 27, 2026 edition. These updates implement the framework established by a joint final rule issued on the same date with the FDIC, which defines "unsafe or unsound practice" for section 8 of the Federal Deposit Insurance Act and revises the supervisory framework for MRAs and related communications. The revisions apply across all OCC-supervised banks, including national banks, federal savings associations, and federal branches and agencies of foreign banks.
Enforcement Approach Emphasizes Escalation, Tailoring, and Focus
The Revised Enforcement Action PPM establishes three guiding principles to frame OCC enforcement: escalation, tailoring, and focus. Enforcement responses typically escalate progressively, affording banks opportunities to correct deficiencies before formal enforcement actions and before more severe enforcement escalations. Enforcement and supervisory actions are customized based on bank-specific financial risk factors such as capital structure, complexity, asset size, and activities—reflecting heightened expectations for larger or more complex institutions. Enforcement actions focus on specific deficiencies, containing only those corrective measures necessary for remediation. Importantly, the OCC will generally not initiate enforcement under section 8 without first allowing remediation through supervision, though legally supportable enforcement actions can be taken at any time as circumstances warrant.
Clarifications on Compliance and Capital Ratios
The manual clarifies that noncompliance with safety and soundness standards under 12 CFR Part 30 is not treated as a violation of law for enforcement purposes under 12 USC 1818. It also revises the criteria for instituting and terminating individual minimum capital ratios and removes the former guidance concerning "Actions Against Banks With Persistent Weaknesses." Additionally, the OCC will terminate enforcement actions once a bank has achieved "substantial compliance," defined as satisfying the order’s essential requirements even if minor items remain outstanding.
Matters Requiring Attention (MRAs) Framework Updated
The Revised MRA PPM incorporates the final rule’s uniform standard, limiting MRAs to practices, acts, or failures to act that are contrary to generally accepted prudent operation standards and that, if continued, could reasonably be expected to cause material financial harm or materially risk the Deposit Insurance Fund, or that have already caused such harm. MRAs also cover actual violations of banking laws or regulations. Issuance is risk-based and tailored, requiring objective facts and sound reasoning. The manual differentiates MRAs from "other violations" and supervisory observations, the latter two being less formal supervisory communications without prescribed remediation or reporting requirements. Supervisory observations do not compel corrective action, nor must they be reported to boards or tracked for follow-up.
Practical Implications Underlying OCC Supervisory Strategy
These revised policies underscore a supervisory strategy that prioritizes material financial risks and a risk-based supervisory posture. Examiners and banks should expect enforcement and supervisory actions to be purposeful, escalatory, and calibrated to the institution’s risk profile rather than driven by process or documentation shortcomings alone. The frameworks also formalize procedures for drafting, communicating, validating, and documenting MRAs, reflecting a more structured approach to supervisory communications consistent with the final rule.