Agencies Issue Proposal to Focus Supervision on Material Financial Risks

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Federal Register / Vol. 90, No. 208 / Thursday, October 30, 2025 / Proposed Rules

(c) The FDIC will not require, instruct,

or encourage an institution, or any

employee of an institution, to terminate

a contract with, discontinue doing

business with, sign a contract with,

initiate doing business with, modify the

terms under which it will do business

with a person or entity, or take any

action or refrain from taking any action

on the basis of the person’s or entity’s

political, social, cultural, or religious

views or beliefs, constitutionally

protected speech, or solely on the basis

of the person’s or entity’s involvement

in politically disfavored but lawful

business activities perceived to present

reputation risk.

(d) The prohibitions in paragraphs (a)

through (c) of this section only apply to

actions taken on the bases described in

paragraphs (a) through (c) of this

section, and the prohibition in

paragraph (c) of this section shall not

apply with respect to persons, entities,

or jurisdictions sanctioned by the Office

of Foreign Assets Control.

(e) Nothing in this section shall

restrict the FDIC’s authority to

implement, administer, and enforce the

provisions of subchapter II of chapter 53

of title 31, United States Code.

(f) The FDIC will not take any

supervisory action or other adverse

action against an institution, a group of

institutions, or the institution-affiliated

parties of any institution that is

designed to punish or discourage an

individual or group from engaging in

any lawful political, social, cultural, or

religious activities, constitutionally

protected speech, or, for political

reasons, lawful business activities that

the supervisor disagrees with or

disfavors.

(g) The following definitions apply in

this section:

Adverse action includes:

parties of any institution that is

designed to punish or discourage an

individual or group from engaging in

any lawful political, social, cultural, or

religious activities, constitutionally

protected speech, or, for political

reasons, lawful business activities that

the supervisor disagrees with or

disfavors.

(g) The following definitions apply in

this section:

Adverse action includes:

(i) Any negative feedback delivered by

or on behalf of the FDIC to the

supervised institution, including in a

report of examination or a formal or

informal enforcement action;

(ii) A downgrade, or contribution to a

downgrade, of any supervisory rating,

including, but not limited to:

(A) Any rating under the Uniform

Financial Institutions Rating System (or

any comparable rating system);

(B) Any rating under the Uniform

Interagency Consumer Compliance

Rating System;

(C) Any rating under the Uniform

Rating System for Information

Technology;

(D) Any rating under any other rating

system;

(iii) A denial of a filing pursuant to 12

CFR part 303 of the FDIC’s regulations;

(iv) Inclusion of a condition on a

deposit insurance application or other

approval;

(v) Imposition of additional approval

requirements;

(vi) Any other heightened

requirements on an activity or change;

(vii) Any adjustment of the

institution’s capital requirement; and

(viii) Any action that negatively

impacts the institution, or an

institution-affiliated party, or treats the

institution differently than similarly

situated peers.

Doing business with means:

(i) The bank providing any product or

service, including account services;

(ii) The bank contracting with a third

party for the third party to provide a

product or service;

(iii) The bank providing discounted or

free products or services to customers or

third parties, including charitable

activities;

(iv) The bank entering into,

maintaining, modifying, or terminating

an employment relationship; or

providing any product or

service, including account services;

(ii) The bank contracting with a third

party for the third party to provide a

product or service;

(iii) The bank providing discounted or

free products or services to customers or

third parties, including charitable

activities;

(iv) The bank entering into,

maintaining, modifying, or terminating

an employment relationship; or

(v) Any other similar business activity

that involves a bank client or a third

party.

Institution means an entity for which

the FDIC makes or will make

supervisory determinations or other

decisions, either solely or jointly.

Institution-affiliated party means the

same as in section 3 of the Federal

Deposit Insurance Act (12 U.S.C.

1813(u)).

Reputation risk means any risk,

regardless of how the risk is labeled by

the institution or regulators, that an

action or activity, or combination of

actions or activities, or lack of actions or

activities, of an institution could

negatively impact public perception of

the institution for reasons not clearly

and directly related to the financial

condition of the institution.

PART 364—STANDARDS FOR SAFETY

AND SOUNDNESS

■14. The authority citation for part 364

continues to read as follows:

Authority: 12 U.S.C. 1818 and

1819(a)(Tenth), 1831p–1; 15 U.S.C. 1681b,

1681s, 1681w, 6801(b), 6805(b)(1).

Appendix B to Part 364 [Amended]

■15. Amend appendix B to part 364,

supplement A, section III, Customer

Notice, by removing ‘‘Timely

notification of customers is important to

manage an institution’s reputation risk.

Effective’’ and adding in its place

‘‘Timely and effective’’.

Jonathan V. Gould,

Comptroller of the Currency. Federal Deposit

Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on October 7,

2025.

Jennifer M. Jones,

Deputy Executive Secretary.

[FR Doc

y removing ‘‘Timely

notification of customers is important to

manage an institution’s reputation risk.

Effective’’ and adding in its place

‘‘Timely and effective’’.

Jonathan V. Gould,

Comptroller of the Currency. Federal Deposit

Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on October 7,

2025.

Jennifer M. Jones,

Deputy Executive Secretary.

[FR Doc. 2025–19715 Filed 10–29–25; 8:45 am]

BILLING CODE 4810–33–6714–01–P

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

12 CFR Part 4

[Docket ID OCC–2025–0174]

RIN 1557–AF35

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 305

RIN 3064–AG16

Unsafe or Unsound Practices, Matters

Requiring Attention

AGENCY: Office of the Comptroller of the

Currency, Treasury, and the Federal

Deposit Insurance Corporation.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Office of the Comptroller

of the Currency (OCC) and the Federal

Deposit Insurance Corporation (FDIC)

propose to define the term ‘‘unsafe or

unsound practice’’ for purposes of

section 8 of the Federal Deposit

Insurance Act and to revise the

supervisory framework for the issuance

of matters requiring attention and other

supervisory communications.

DATES: Comments must be received on

or before December 29, 2025.

ADDRESSES: Comments should be

directed to the agencies as follows:

OCC: Commenters are encouraged to

submit comments through the Federal

eRulemaking Portal. Please use the title

‘‘Unsafe or Unsound Practices, Matters

Requiring Attention’’ to facilitate the

organization and distribution of the

comments. You may submit comments

by any of the following methods:

• Federal eRulemaking Portal—

Regulations.gov:

Go to https://regulations.gov/

ncies as follows:

OCC: Commenters are encouraged to

submit comments through the Federal

eRulemaking Portal. Please use the title

‘‘Unsafe or Unsound Practices, Matters

Requiring Attention’’ to facilitate the

organization and distribution of the

comments. You may submit comments

by any of the following methods:

• Federal eRulemaking Portal—

Regulations.gov:

Go to https://regulations.gov/. Enter

Docket ID ‘‘OCC–2025–0174’’ in the

Search Box and click ‘‘Search.’’ Public

comments can be submitted via the

‘‘Comment’’ box below the displayed

document information or by clicking on

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Federal Register / Vol. 90, No. 208 / Thursday, October 30, 2025 / Proposed Rules

1 For purposes of this SUPPLEMENTARY

INFORMATION, the term ‘‘institution’’ refers to insured

depository institutions and any other institutions

subject to supervision or enforcement by the

agencies. The scope of the proposed rule is

discussed below.

2 A depository institution generally refers to an

insured depository institution as defined in 12

U.S.C. 1813(c)(2); any national banking association

chartered by the OCC, including an uninsured

association; or a branch or agency of a foreign bank.

Refer to specific provisions of 12 U.S.C. 1818

regarding their applicability to a specific

institution. See 12 U.S.C. 1818(b)(4)–(5).

3 See id. 1813(u).

4 Specifically, as discussed in more detail below,

the OCC has procedures for the communication of

matters requiring attention (MRAs). The FDIC

communicates matters requiring board attention

(MRBAs).

the document title and then clicking the

‘‘Comment’’ box on the top-left side of

the screen. For help with submitting

effective comments, please click on

‘‘Commenter’s Checklist.’’ For

assistance with the Regulations.gov site,

please call 1–866–498–2945 (toll free)

Monday–Friday, 9 a.m.–5 p.m

ers requiring attention (MRAs). The FDIC

communicates matters requiring board attention

(MRBAs).

the document title and then clicking the

‘‘Comment’’ box on the top-left side of

the screen. For help with submitting

effective comments, please click on

‘‘Commenter’s Checklist.’’ For

assistance with the Regulations.gov site,

please call 1–866–498–2945 (toll free)

Monday–Friday, 9 a.m.–5 p.m. EST, or

email regulationshelpdesk@gsa.gov.

• Mail: Chief Counsel’s Office,

Attention: Comment Processing, Office

of the Comptroller of the Currency, 400

7th Street SW, Suite 3E–218,

Washington, DC 20219.

• Hand Delivery/Courier: 400 7th

Street SW, Suite 3E–218, Washington,

DC 20219.

Instructions: You must include

‘‘OCC’’ as the agency name and Docket

ID ‘‘OCC–2025–0174’’ in your comment.

In general, the OCC will enter all

comments received into the docket and

publish the comments on the

Regulations.gov website without

change, including any business or

personal information provided such as

name and address information, email

addresses, or phone numbers.

Comments received, including

attachments and other supporting

materials, are part of the public record

and subject to public disclosure. Do not

include any information in your

comment or supporting materials that

you consider confidential or

inappropriate for public disclosure.

You may review comments and other

related materials that pertain to this

action by the following method:

• Viewing Comments Electronically—

Regulations.gov:

Go to https://regulations.gov/. Enter

Docket ID ‘‘OCC–2025–0174’’ in the

Search Box and click ‘‘Search.’’ Click on

the ‘‘Dockets’’ tab and then the

document’s title. After clicking the

document’s title, click the ‘‘Browse All

Comments’’ tab. Comments can be

viewed and filtered by clicking on the

‘‘Sort By’’ drop-down on the right side

of the screen or the ‘‘Refine Comments

Results’’ options on the left side of the

screen

er

Docket ID ‘‘OCC–2025–0174’’ in the

Search Box and click ‘‘Search.’’ Click on

the ‘‘Dockets’’ tab and then the

document’s title. After clicking the

document’s title, click the ‘‘Browse All

Comments’’ tab. Comments can be

viewed and filtered by clicking on the

‘‘Sort By’’ drop-down on the right side

of the screen or the ‘‘Refine Comments

Results’’ options on the left side of the

screen. Supporting materials can be

viewed by clicking on the ‘‘Browse

Documents’’ tab. Click on the ‘‘Sort By’’

drop-down on the right side of the

screen or the ‘‘Refine Results’’ options

on the left side of the screen checking

the ‘‘Supporting & Related Material’’

checkbox. For assistance with the

Regulations.gov site, please call 1–866–

498–2945 (toll free) Monday–Friday, 9

a.m.–5 p.m. EST, or email

regulationshelpdesk@gsa.gov.

The docket may be viewed after the

close of the comment period in the same

manner as during the comment period.

FDIC: You may submit comments to

the FDIC, identified by RIN 3064–AG16,

by any of the following methods:

• Agency Website: https://

www.fdic.gov/federal-register-

publications. Follow instructions for

submitting comments on the FDIC’s

website.

• Email: comments@FDIC.gov.

Include RIN 3064–AG16 in the subject

line of the message.

• Mail: Jennifer M. Jones, Deputy

Executive Secretary, Attention:

Comments—RIN 3064–AG16, Federal

Deposit Insurance Corporation, 550 17th

Street NW, Washington, DC 20429.

• Hand Delivery/Courier: Comments

may be hand-delivered to the guard

station at the rear of the 550 17th Street

NW building (located on F Street NW)

on business days between 7 a.m. and 5

p.m.

Public Inspection: Comments

received, including any personal

information provided, may be posted

without change to https://www.fdic.gov/

federal-register-publications.

Commenters should submit only

information they wish to make available

publicly

vered to the guard

station at the rear of the 550 17th Street

NW building (located on F Street NW)

on business days between 7 a.m. and 5

p.m.

Public Inspection: Comments

received, including any personal

information provided, may be posted

without change to https://www.fdic.gov/

federal-register-publications.

Commenters should submit only

information they wish to make available

publicly. The FDIC may review, redact,

or refrain from posting all or any portion

of any comment that it may deem to be

inappropriate for publication, such as

irrelevant or obscene material. The FDIC

may post only a single representative

example of identical or substantially

identical comments, and in such cases

will generally identify the number of

identical or substantially identical

comments represented by the posted

example. All comments that have been

redacted, as well as those that have not

been posted, that contain comments on

the merits of this notice will be retained

in the public comment file and will be

considered as required under all

applicable laws. All comments may be

accessible under the Freedom of

Information Act.

FOR FURTHER INFORMATION CONTACT:

OCC: Eden Gray, Assistant Director,

Allison Hester-Haddad, Special

Counsel, Marjorie Dieter, Counsel, Harry

Naftalowitz, Attorney, Chief Counsel’s

Office, 202–649–5490, Office of the

Comptroller of the Currency, 400 7th

Street SW, Washington, DC 20219. If

you are deaf, hard of hearing, or have a

speech disability, please dial 7–1–1 to

access telecommunications relay

services.

FDIC: Division of Risk Management

Supervision: Brittany Audia, Chief,

Exam Support Section, (703) 254–0801,

baudia@fdic.gov; Legal Division, Seth P.

Rosebrock, Assistant General Counsel,

f the

Comptroller of the Currency, 400 7th

Street SW, Washington, DC 20219. If

you are deaf, hard of hearing, or have a

speech disability, please dial 7–1–1 to

access telecommunications relay

services.

FDIC: Division of Risk Management

Supervision: Brittany Audia, Chief,

Exam Support Section, (703) 254–0801,

baudia@fdic.gov; Legal Division, Seth P.

Rosebrock, Assistant General Counsel,

(202) 898–6609, srosebrock@fdic.gov.

SUPPLEMENTARY INFORMATION:

I. Introduction

The OCC and the FDIC (collectively,

the agencies) exercise their enforcement

and supervision authority to ensure that

supervised institutions 1 refrain from

engaging in unsafe or unsound

practices. To that effect, the agencies

believe it is important to promote

greater clarity and certainty regarding

certain enforcement and supervision

standards by defining them by

regulation. Moreover, the agencies

believe it is critical that examiners and

institutions prioritize material financial

risks over concerns related to policies,

process, documentation, and other

nonfinancial risks and that their

enforcement and supervision standards

further that prioritization.

Specifically, pursuant to the

provisions of section 8 of the Federal

Deposit Insurance Act (FDI Act) (12

U.S.C. 1818), the agencies are

authorized to take enforcement actions

against depository institutions 2 and

institution-affiliated parties 3 that have

engaged in an ‘‘unsafe or unsound

practice.’’ As described in section II.A of

this SUPPLEMENTARY INFORMATION, the

agencies are proposing to define by

regulation the term ‘‘unsafe or unsound

practice’’ for purposes of section 8 of the

FDI Act. The proposed implementation

of the definition of ‘‘unsafe or unsound

practice’’ would apply to the agencies’

supervisory and enforcement activities

prospectively only. Moreover, it would

not apply to the agencies’ rulemaking

activities or authority

RMATION, the

agencies are proposing to define by

regulation the term ‘‘unsafe or unsound

practice’’ for purposes of section 8 of the

FDI Act. The proposed implementation

of the definition of ‘‘unsafe or unsound

practice’’ would apply to the agencies’

supervisory and enforcement activities

prospectively only. Moreover, it would

not apply to the agencies’ rulemaking

activities or authority.

In addition, the agencies are

proposing to establish uniform

standards for purposes of their

communication of certain supervisory

concerns. The agencies each

communicate deficiencies that rise to

the level of a matter that requires

attention from an institution’s board of

directors and management, but the

agencies have different standards for

when the agency may communicate

these deficiencies.4 As described in

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5 See Groos Nat’l Bank v. OCC, 573 F.2d 889, 897

(5th Cir. 1978) (‘‘The phrase ‘unsafe or unsound

banking practice’ is widely used in the regulatory

statutes and in case law, and one of the purposes

of the banking acts is clearly to commit the

progressive definition and eradication of such

practices to the expertise of the appropriate

regulatory agencies.’’).

6 12 U.S.C. 1818(a)(2)–(3) (‘‘If the [FDIC] Board of

Directors determines that an insured depository

institution or the directors or trustees of an insured

depository institution have engaged or are engaging

in unsafe or unsound practices in conducting the

business of the depository institution . . . the

[FDIC] Board of Directors may issue an order

terminating the insured status of such depository

institution effective as of a date subsequent to such

finding.’’).

7 Id

insured depository

institution or the directors or trustees of an insured

depository institution have engaged or are engaging

in unsafe or unsound practices in conducting the

business of the depository institution . . . the

[FDIC] Board of Directors may issue an order

terminating the insured status of such depository

institution effective as of a date subsequent to such

finding.’’).

7 Id. 1818(b)(1) (‘‘If, in the opinion of the

appropriate Federal banking agency, any insured

depository institution, depository institution which

has insured deposits, or any institution-affiliated

party is engaging or has engaged, or the agency has

reasonable cause to believe that the depository

institution or any institution-affiliated party is

about to engage, in an unsafe or unsound practice

in conducting the business of such depository

institution . . . the agency may issue and serve

upon the depository institution or the institution-

affiliated party an order to cease and desist from

any such . . . practice.’’).

8 Id. 1818(c)(1) (‘‘Whenever the appropriate

Federal banking agency shall determine that . . .

the unsafe or unsound practice or practices . . . or

the continuation thereof, is likely to cause

insolvency or significant dissipation of assets or

earnings of the depository institution, or is likely

to weaken the condition of the depository

institution or otherwise prejudice the interests of its

depositors prior to the completion of the

proceedings conducted pursuant to paragraph (1) of

subsection (b) of this section, the agency may issue

a temporary order requiring the depository

institution or such party to cease and desist from

any such . . . practice and to take affirmative action

to prevent or remedy such insolvency, dissipation,

condition, or prejudice pending completion of such

proceedings.’’).

9 Id. 1818(e) (Subject to additional requirements,

‘‘[w]henever the appropriate Federal banking

agency determines that any institution-affiliated

party has, directly or indirectly

r such party to cease and desist from

any such . . . practice and to take affirmative action

to prevent or remedy such insolvency, dissipation,

condition, or prejudice pending completion of such

proceedings.’’).

9 Id. 1818(e) (Subject to additional requirements,

‘‘[w]henever the appropriate Federal banking

agency determines that any institution-affiliated

party has, directly or indirectly . . . engaged or

participated in any unsafe or unsound practice in

connection with any insured depository institution

or business institution . . . the appropriate Federal

banking agency may suspend such party from office

or prohibit such party from further participation in

any manner in the conduct of the affairs of the

depository institution . . . .’’).

10 Id. 1818(i) (‘‘[A]ny insured depository

institution which, and any institution-affiliated

party who . . . recklessly engages in an unsafe or

unsound practice in conducting the affairs of such

insured depository institution . . . which practice

is part of a pattern of misconduct; causes or is likely

to cause more than a minimal loss to such

depository institution; or results in pecuniary gain

or other benefit to such party, shall forfeit and pay

a civil penalty of not more than $25,000 for each

day during which such . . . practice . . . continues

. . . . [A]ny insured depository institution which,

and any institution-affiliated party who knowingly

. . . engages in any unsafe or unsound practice in

conducting the affairs of such depository

institution; . . . and knowingly or recklessly causes

a substantial loss to such depository institution or

a substantial pecuniary gain or other benefit to such

party by reason of such . . . practice . . . shall

forfeit and pay a civil penalty in an amount not to

exceed the applicable maximum amount

determined under subparagraph (D) for each day

during which such . . . practice . . . continues.’’).

11 See, e.g., 16 J.A. Simpson & E.S.C. Weiner,

Oxford English Dictionary 355–66 (2d ed

itution or

a substantial pecuniary gain or other benefit to such

party by reason of such . . . practice . . . shall

forfeit and pay a civil penalty in an amount not to

exceed the applicable maximum amount

determined under subparagraph (D) for each day

during which such . . . practice . . . continues.’’).

11 See, e.g., 16 J.A. Simpson & E.S.C. Weiner,

Oxford English Dictionary 355–66 (2d ed. 1989)

(safe); 19 id. at 180 (unsafe).

12 See, e.g., 16 id. at 50–52 (sound); 19 id. at 206

(unsound).

13 See, e.g., Gulf Fed. Sav. & Loan Assoc. of

Jefferson Parish v. Fed. Home Loan Bank Bd., 651

F.2d 259, 264 (5th Cir. 1981) (‘‘The authoritative

definition of an unsafe or unsound practice,

adopted in both Houses, was a memorandum

submitted by John Horne’’). Chairman Horne’s

articulation of what constitutes an unsafe or

unsound practice was read into the record in both

chambers of Congress. See 112 Cong. Rec. 25008,

26474 (1966) (remarks of Rep. Thomas W.L. Ashley

and Sen. Absalom W. Robertson).

14 112 Cong. Rec. 26474.

15 Id. at 24984 (remarks of Rep. Wright Patman).

16 See, e.g., Greene Cnty. Bank v. FDIC, 92 F.3d

633, 636 (8th Cir. 1996) (quoting First Nat’l Bank

of Eden, S.D. v. Dep’t of Treas., OCC, 568 F.2d 610,

Continued

section II.B of this SUPPLEMENTARY

INFORMATION, the agencies are proposing

to establish uniform standards for when

and how the agencies may communicate

matters requiring attention (MRAs) as

part of the supervision and examination

process, consistent with their

underlying statutory authorities. The

proposal also clarifies that the agencies

may communicate other nonbinding

suggestions to institutions orally or in

writing to enhance an institution’s

policies, practices, condition, or

operations as long as the

communication is not, and is not treated

by the agency in a manner similar to, an

MRA.

II. Description of the Proposed Rule

A

with their

underlying statutory authorities. The

proposal also clarifies that the agencies

may communicate other nonbinding

suggestions to institutions orally or in

writing to enhance an institution’s

policies, practices, condition, or

operations as long as the

communication is not, and is not treated

by the agency in a manner similar to, an

MRA.

II. Description of the Proposed Rule

A. Unsafe or Unsound Practices

Based on the agencies’ supervisory

experience and as a matter of policy, the

agencies propose implementing a

definition of ‘‘unsafe or unsound

practice’’ for purposes of section 8 of the

FDI Act that would focus on material

risks to the financial condition of an

institution and would generally require

that an imprudent practice, act, or

failure to act, if continued, would be

likely to materially harm the

institution’s financial condition. Taking

into account statutory text, legislative

history, and case law, the agencies

believe that the proposed regulatory

definition fits within the authority

Congress granted to the agencies to take

enforcement actions based on unsafe or

unsound practices under section 8 of

the FDI Act.5 The agencies believe this

change will provide greater consistency

for institutions and institution-affiliated

parties and appropriately focus

supervisory and institution resources on

the most critical financial risks to

institutions and the financial system.

The term ‘‘unsafe or unsound

practice’’ appears in section 8 of the FDI

Act for purposes of the agencies’

enforcement authority. The statute does

not define the term unsafe or unsound

practice. An unsafe or unsound practice

may serve as a ground for several types

of enforcement actions under provisions

of section 8 of the FDI Act

financial risks to

institutions and the financial system.

The term ‘‘unsafe or unsound

practice’’ appears in section 8 of the FDI

Act for purposes of the agencies’

enforcement authority. The statute does

not define the term unsafe or unsound

practice. An unsafe or unsound practice

may serve as a ground for several types

of enforcement actions under provisions

of section 8 of the FDI Act. These

include involuntary termination of

deposit insurance by the FDIC,6 a cease-

and-desist order,7 a temporary cease-

and-desist order,8 the removal and

prohibition of an institution-affiliated

party,9 or a Tier 2 or Tier 3 civil money

penalty.10 Most enforcement provisions

in section 8 of the FDI Act also include

other potential grounds, such as a

violation of law or a breach of fiduciary

duty, which are not affected by the

proposed regulatory definition.

The ordinary meaning of the term

‘‘unsafe,’’ as defined by the dictionaries

most commonly used at the time section

8 of the FDI Act was enacted, is a

sufficient degree of risk of sufficient

harm, injury, or damage to make a

situation not safe.11 They defined the

term ‘‘unsound’’ as a sufficient degree of

actual harm, injury, or damage to make

a thing not sound.12

In determining what may be

considered an unsafe or unsound

practice under section 8 of the FDI Act,

some courts have looked to a standard

articulated by John Horne, then

Chairman of the Federal Home Loan

Bank Board (FHLBB) (Horne Standard),

during congressional hearings related to

the Financial Institutions Supervisory

Act of 1966 (Act of 1966), which is the

source of the agencies cease-and-desist

authority in section 8(b) of the FDI

Act.13 Specifically, Chairman Horne

stated:

Generally speaking, an ‘‘unsafe or

unsound practice’’ embraces any action,

or lack of action, which is contrary to

generally accepted standards of prudent

operation, the possible consequences of

which, if continued, would be abnormal

risk or loss or damage to an institution,

its shareholder

cease-and-desist

authority in section 8(b) of the FDI

Act.13 Specifically, Chairman Horne

stated:

Generally speaking, an ‘‘unsafe or

unsound practice’’ embraces any action,

or lack of action, which is contrary to

generally accepted standards of prudent

operation, the possible consequences of

which, if continued, would be abnormal

risk or loss or damage to an institution,

its shareholders, or the agencies

administering the insurance funds.14

Representative Patman further

described the authority added in the Act

of 1966 as ‘‘aimed specifically at actions

impairing the safety or soundness of

. . . insured financial institutions’’ and

providing the agencies with ‘‘flexible

tools [that] relate strictly to the

insurance risk and to assure the public

. . . sound banking facilities.’’ 15

Courts reviewing cases brought by the

agencies have grappled with the

meaning of ‘‘unsafe or unsound

practice’’ in section 8 of the FDI Act and

have reached different conclusions as to

how to apply it. For example, some

courts have applied the Horne Standard

without further elaboration on what the

standard entails.16 Other courts have

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611 n.2 (8th Cir. 1978)); Doolittle v. NCUA, 992 F.2d

1531, 1538 (11th Cir. 1993) (quoting Nw. Nat’l

Bank, Fayetteville, Ark. v. Dep’t of Treas., 917 F.2d

1111, 1115 (8th Cir. 1990)) (construing the term

unsafe or unsound practice as applied to a credit

union).

17 Gulf Fed. Sav. & Loan Assoc. of Jefferson

Parish., 651 F.2d at 264.

18 Johnson v. OTS, 81 F.3d 195, 204 (D.C. Cir.

1996) (quoting Gulf Fed. Sav. & Loan Assoc. of

Jefferson Parish., 651 F.2d at 267).

19 In re Seidman, 37 F.3d 911, 928 (3d Cir. 1994);

see also id

f Treas., 917 F.2d

1111, 1115 (8th Cir. 1990)) (construing the term

unsafe or unsound practice as applied to a credit

union).

17 Gulf Fed. Sav. & Loan Assoc. of Jefferson

Parish., 651 F.2d at 264.

18 Johnson v. OTS, 81 F.3d 195, 204 (D.C. Cir.

1996) (quoting Gulf Fed. Sav. & Loan Assoc. of

Jefferson Parish., 651 F.2d at 267).

19 In re Seidman, 37 F.3d 911, 928 (3d Cir. 1994);

see also id. at 932 (stating that ‘‘[a]n unsafe or

unsound practice has two components: (1) an

imprudent act (2) that places an abnormal risk of

financial loss or damage on a banking institution’’).

20 Michael v. FDIC, 687 F.3d 337, 352 (7th Cir.

2012) (citing In re Seidman, 37 F.3d at 932).

21 Blanton v. OCC, 909 F.3d 1162, 1172 (D.C. Cir.

2018) (quoting Landry v. FDIC, 204 F.3d 1125, 1138

(D.C. Cir. 2000)).

22 In March 2023, several insured depository

institutions with total consolidated assets of $100

billion or more, including Silicon Valley Bank,

experienced significant withdrawals of uninsured

deposits in response to underlying material

weaknesses in their financial position and failed.

The agencies believe these failures highlight the

need for the agencies to allocate supervisory

resources with a focus on material financial risks.

23 In addition to enforcement actions under

section 8 of the FDI Act, the agencies identify

unsafe or unsound practices as supervisory findings

in other communications, including reports of

examination, supervisory letters, MRAs, and

informal enforcement actions. These identified

unsafe or unsound practices sometimes establish a

record for a later enforcement action under section

8 of the FDI Act. The agencies’ identification of an

unsafe or unsound practice is distinct from

standards for safety and soundness that the agencies

are required to issue pursuant to 12 U.S.C. 1831p–

1. See 12 CFR parts 30, 364.

24 See, e.g., Michael, 687 F.3d at 352 (citing Van

Dyke v. FRB, 876 F.2d 1377, 1380 (8th Cir. 1989));

Frontier State Bank Okla. City, Okla. v

action under section

8 of the FDI Act. The agencies’ identification of an

unsafe or unsound practice is distinct from

standards for safety and soundness that the agencies

are required to issue pursuant to 12 U.S.C. 1831p–

1. See 12 CFR parts 30, 364.

24 See, e.g., Michael, 687 F.3d at 352 (citing Van

Dyke v. FRB, 876 F.2d 1377, 1380 (8th Cir. 1989));

Frontier State Bank Okla. City, Okla. v. FDIC, 702

F.3d 588, 604 (10th Cir. 2012) (citing Simpson v.

OTS, 29 F.3d 1418, 1425 (9th Cir. 1994)); De la

Fuente v. FDIC, 332 F.3d 1208, 12222 (9th Cir.

2003) (citing Simpson, 29 F.3d at 1425).

25 Additionally, under the proposal, practices,

acts, or failures to act that have already caused

material harm to the financial condition of the

institution would not have to meet the ‘‘likely’’

standard, as there would be certainty with respect

to the harm.

explained that section 8 of the FDI Act

applies to practices that have a

‘‘reasonably direct effect on an

[institution]’s financial soundness’’ 17 or

‘‘threaten the financial integrity’’ of the

institution.18 Other courts have required

that unsafe or unsound practices cause

‘‘abnormal risk to the financial stability

of the . . . institution,’’ 19 ‘‘abnormal

risk of financial loss or damage,’’ 20 or

‘‘reasonably foreseeable undue risk.’’ 21

The lack of a Federal statutory

definition for the term ‘‘unsafe or

unsound practice’’ has resulted in

enforcement actions and supervisory

criticisms for concerns not related to

material financial risks. The agencies

believe that the proposed regulatory

definition faithfully reflects the intent of

the standard as enacted by Congress and

aligns with the interpretations of the

term unsafe or unsound practice within

section 8 of the FDI Act by most Federal

courts. The proposed regulatory

definition would also provide a

consistent nationwide standard to

provide greater clarity for institutions

and institution-affiliated parties

d regulatory

definition faithfully reflects the intent of

the standard as enacted by Congress and

aligns with the interpretations of the

term unsafe or unsound practice within

section 8 of the FDI Act by most Federal

courts. The proposed regulatory

definition would also provide a

consistent nationwide standard to

provide greater clarity for institutions

and institution-affiliated parties.

The agencies believe that the

proposed definition of the term unsafe

or unsound practice is also important to

appropriately focus institution and

examiner attention on practices that are

likely to materially harm an institution’s

financial condition, providing the

institution’s board of directors and

management additional flexibility to

enact day-to-day decisions based on

their business judgment and risk

tolerance. The proposed definition

reflects the agencies’ judgment and

experience that their supervisory

resources are best focused on practices

that are likely to materially harm an

institution’s financial condition, such as

risks that are more likely than other

risks to lead to material financial losses,

bank failures, and instability in the

banking system.22 For the same reasons,

the agencies believe that practices that

are likely to materially harm the

financial condition of an institution are

critical for an institution’s board of

directors and management to address.

In addition, lack of clarity regarding

the scope of the term unsafe or unsound

practice among examiners could lead to

inconsistent application of the terms in

communicating supervisory findings.23

The proposed definition of an unsafe or

unsound practice should ensure

consistency in identifying practices as

unsafe or unsound only where they are

likely to materially harm the financial

condition of an institution, are likely to

present a material risk of loss to the

Deposit Insurance Fund (DIF), or have

materially harmed the financial

condition of the institution

ervisory findings.23

The proposed definition of an unsafe or

unsound practice should ensure

consistency in identifying practices as

unsafe or unsound only where they are

likely to materially harm the financial

condition of an institution, are likely to

present a material risk of loss to the

Deposit Insurance Fund (DIF), or have

materially harmed the financial

condition of the institution. This

definition should focus institution and

examiner attention on core financial

risks facing an institution and otherwise

provide the institution’s board of

directors and management the flexibility

to enact decisions based on their

business judgment and risk tolerance.

Therefore, as explained further below,

in the proposed rule, the agencies

would define the term unsafe or

unsound practice to mean a practice,

act, or failure to act, alone or together

with one or more other practices, acts,

or failures to act, that (1) is contrary to

generally accepted standards of prudent

operation; and (2)(i) if continued, is

likely to (A) materially harm the

financial condition of the institution; or

(B) present a material risk of loss to the

DIF; or (ii) materially harmed the

financial condition of the institution.

Imprudent act. Consistent with the

Horne Standard, a practice, act, or

failure to act under the proposed

definition would have to be contrary to

generally accepted standards of prudent

operation to be considered an unsafe or

unsound practice.24 The agencies

acknowledge that an essential role of

institutions is to identify, measure,

incur, and manage risk. The agencies do

not intend to take enforcement actions

under section 8 of the FDI Act for

prudent operations that result in risk-

taking. A practice, act, or failure to act

could only be considered an unsafe or

unsound practice if it deviates from

generally accepted standards of prudent

operation (and otherwise meets the

proposed definition).

Likely

ify, measure,

incur, and manage risk. The agencies do

not intend to take enforcement actions

under section 8 of the FDI Act for

prudent operations that result in risk-

taking. A practice, act, or failure to act

could only be considered an unsafe or

unsound practice if it deviates from

generally accepted standards of prudent

operation (and otherwise meets the

proposed definition).

Likely. To qualify as an unsafe or

unsound practice under the proposed

definition, it also would have to be

likely—as opposed to, for example,

merely possible—that the practice, act,

or failure to act, if continued, would

materially harm the financial condition

of the institution or present a material

risk of loss to the DIF. The agencies

believe that including the term ‘‘if

continued’’ is important to allow for

identification of an unsafe or unsound

act or failure to act before it impacts an

institution’s financial condition.

However, the conduct must be

sufficiently proximate to a material

harm to an institution’s financial

condition to meet the proposed

definition.25 The agencies do not intend

to identify unsafe or unsound acts or

failures to act by extrapolating from

deficient conduct that could potentially

result in, alone or in combination with

other factors or events, material harm to

the financial condition of an institution

but is not likely to do so. Moreover, the

agencies considered, but did not

propose, more precisely defining the

requisite likelihood under the proposed

definition, such as through a minimum

percentage (e.g., 10%, 51%). Instead, the

agencies invite comment on whether a

minimum percentage likelihood or more

precise definition of ‘‘likely’’ is

appropriate.

Financial condition. An unsafe or

unsound practice would include a

practice, act, or failure to act that, if

continued, is likely to materially harm

the financial condition of an institution

nition, such as through a minimum

percentage (e.g., 10%, 51%). Instead, the

agencies invite comment on whether a

minimum percentage likelihood or more

precise definition of ‘‘likely’’ is

appropriate.

Financial condition. An unsafe or

unsound practice would include a

practice, act, or failure to act that, if

continued, is likely to materially harm

the financial condition of an institution.

The agencies believe that harm to

financial condition includes practices,

acts, or failures to act that are likely to

directly, clearly and predictably impact

an institution’s capital, asset quality,

earnings, liquidity, or sensitivity to

market risk.

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26 See Landry, 204 F.3d at 1138.

27 See Johnson v. OTS, 81 F.3d at 204.

28 See Gulf Fed. Sav. & Loan Assoc. of Jefferson

Parish, 651 F.2d at 264–65 (‘‘Approving

intervention under the [FHLBB]’s ‘‘loss of public

confidence’’ rationale would result in open-ended

supervision. . . . The Board’s rationale would

permit it to decide, not that the public has lost

confidence in Gulf Federal’s financial soundness,

but that the public may lose confidence in the

fairness of the association’s contracts with its

customers.’’).

29 See, e.g., id. at 259 (an institution with $75

million in assets did not engage in an unsafe or

unsound practice when it misrepresented the

calculation of interest rates on loans, which could

have resulted in an $80,000 loss to the institution—

a loss of far less than 1% of the institution’s total

assets)

confidence in the

fairness of the association’s contracts with its

customers.’’).

29 See, e.g., id. at 259 (an institution with $75

million in assets did not engage in an unsafe or

unsound practice when it misrepresented the

calculation of interest rates on loans, which could

have resulted in an $80,000 loss to the institution—

a loss of far less than 1% of the institution’s total

assets).

30 See, e.g., Blanton, 909 F.3d at 1172–73 (an

institution-affiliated party engaged in an unsafe or

unsound practice by permitting a customer to

overdraft more than $2 million over two months,

with outstanding overdrafts at one point totaling

nearly 65% of the institution’s Tier 1 capital, even

though the institution’s capital levels were critically

deficient).

31 12 U.S.C. 481, 1463, 1464, 1820, 1867, 3105(c),

5412(b).

32 See, e.g., Cuomo v. Clearing House Ass’n, 557

U.S. 519 (2009); United States v. Gaubert, 499 U.S.

315 (1991); United States v. Phila. Nat’l Bank, 374

U.S. 321 (1963).

Risk of Loss to the Deposit Insurance

Fund. An unsafe or unsound practice

would also include a practice, act, or

failure to act that, if continued, is likely

to negatively affect an institution’s

ability to avoid FDIC receivership and

present a material risk of loss to the DIF

as a result of the failure. For example,

the failure of an institution to

implement appropriate contingency

funding arrangements might not pose a

risk of material harm to the financial

condition of the institution, but could

impair the institution’s liquidity under

stress and thus present an increased risk

to the DIF. In other words, the proposed

definition would capture a practice, act,

or failure to act that materially increases

the probability that an institution would

fail and impose a material risk of loss to

the DIF.

Harm. The proposed standard focuses

on material harm to financial condition,

and the agencies generally interpret

harm to refer to financial losses

ent an increased risk

to the DIF. In other words, the proposed

definition would capture a practice, act,

or failure to act that materially increases

the probability that an institution would

fail and impose a material risk of loss to

the DIF.

Harm. The proposed standard focuses

on material harm to financial condition,

and the agencies generally interpret

harm to refer to financial losses.

Therefore, to be an unsafe or unsound

practice, a practice, act, or failure to act

generally must have either caused actual

material losses to the institution or must

be likely to cause material loss or other

negative financial impacts to the

institution.26 Conversely, that a

practice, act, or failure to act caused

actual but non-material financial losses

to the institution is insufficient to meet

the proposed standard.27

Nonfinancial risks impacting

financial condition. The agencies also

acknowledge that, in limited

circumstances, other practices, acts, or

failures to act may be captured because,

if continued, they are likely to cause

material harm to an institution’s

financial condition. For example, the

term unsafe or unsound practice could

include critical infrastructure or

cybersecurity deficiencies that are so

severe as to, if continued, be likely to

result in a material disruption to the

institution’s core operations that

prevent the institution, its

counterparties, and its customers from

conducting business operations and, in

turn, be likely to cause material harm to

the financial condition of the

institution. The standard would not

include risks to the institution’s

reputation unrelated to financial

condition.28

Material harm. Under the proposed

definition, to be considered an unsafe or

unsound practice, the likely harm to an

institution’s financial condition or risk

of loss to the DIF must also be material

turn, be likely to cause material harm to

the financial condition of the

institution. The standard would not

include risks to the institution’s

reputation unrelated to financial

condition.28

Material harm. Under the proposed

definition, to be considered an unsafe or

unsound practice, the likely harm to an

institution’s financial condition or risk

of loss to the DIF must also be material.

Risks of minor harm to an institution’s

financial condition, even if imminent,

would not rise to the level of an unsafe

or unsound practice.29 Instead, the

agencies will consider the likely harm to

an institution’s financial condition to be

material if it would materially impact

the institution’s capital, asset quality,

liquidity, earnings, or sensitivity to

market risk,30 or would materially

impact the risk that an institution fails

and causes a loss to the DIF. Going

forward, the agencies expect that it

would be rare for an institution to

exhibit unsafe or unsound practices, as

defined in the proposed rule, based

solely on the institution’s policies,

procedures, documentation or internal

controls, without significant weaknesses

in the institution’s financial condition

(i.e., weaknesses that caused material

harm to the financial condition of the

institution, or were likely to materially

harm the financial condition of the

institution or likely to present material

risk of loss to the DIF). The agencies

considered but did not propose to more

precisely define the materiality of harm

required under the proposed definition,

such as through measures of capital or

liquidity outflows. Instead, the agencies

invite comment on what, if any, more

precise measures of material harm are

appropriate.

Tailoring required. The proposal also

explains that the agencies will tailor

their supervisory and enforcement

actions under 12 U.S.C

more

precisely define the materiality of harm

required under the proposed definition,

such as through measures of capital or

liquidity outflows. Instead, the agencies

invite comment on what, if any, more

precise measures of material harm are

appropriate.

Tailoring required. The proposal also

explains that the agencies will tailor

their supervisory and enforcement

actions under 12 U.S.C. 1818 (as well as

their issuance of MRAs, as discussed

further below) based on the capital

structure, riskiness, complexity,

activities, asset size, and any financial

risk-related factor that the agencies

deem appropriate. This includes

tailoring with respect to the

requirements or expectations set forth in

such actions as well as whether, and the

extent to which, such actions are taken.

As such, the agencies expect that

finding an unsafe or unsound practice

would be a much higher bar for a

community bank than for a larger

institution when considered against the

overall operations of the institution. For

example, as applied to the threshold for

material harm, the agencies would not

expect that a particular projected

percentage decrease in capital or

liquidity that rises to the level of

materiality for the largest institutions

would necessarily also be material for

community banks. The agencies invite

comment on whether the agencies

should provide additional specificity.

Generally, because unsafe or unsound

practices by institution-affiliated parties

must, if continued, be likely to

materially harm the financial condition

of an institution, the same tailored

standard would, going forward, apply to

practices, acts, or failures to act by

institution-affiliated parties of the

institution

comment on whether the agencies

should provide additional specificity.

Generally, because unsafe or unsound

practices by institution-affiliated parties

must, if continued, be likely to

materially harm the financial condition

of an institution, the same tailored

standard would, going forward, apply to

practices, acts, or failures to act by

institution-affiliated parties of the

institution.

For these reasons, the agencies

propose to define the term unsafe or

unsound practice to mean a practice,

act, or failure to act, alone or together

with other practices, acts, or failures to

act, that (1) is contrary to generally

accepted standards of prudent

operation; and (2)(i) if continued, is

likely to (A) materially harm the

financial condition of an institution; or

(B) present a material risk of loss to the

DIF; or (ii) materially harmed the

financial condition of the institution.

B. Matters Requiring Attention

The agencies are proposing to

establish uniform standards for

examiners’ communication of MRAs.

Under the proposed rule, an examiner

would be permitted to issue an MRA to

address certain risks to the financial

condition of an institution and

violations of banking or banking-related

laws or regulations.

Through various statutory

examination and reporting authorities,

Congress has conferred upon the

agencies the authority to exercise

visitorial powers and examination

authorities with respect to supervised

institutions.31 The Supreme Court has

indicated support for a broad reading of

certain visitorial powers.32 Examination

and visitorial powers of the agencies

facilitate early identification of

supervisory concerns that may not rise

to a violation of law, unsafe or unsound

practice, or breach of fiduciary duty

under section 8 of the FDI Act. These

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ination

and visitorial powers of the agencies

facilitate early identification of

supervisory concerns that may not rise

to a violation of law, unsafe or unsound

practice, or breach of fiduciary duty

under section 8 of the FDI Act. These

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33 See 12 U.S.C. 481, 1463, 1820(b), 1867, 3105(c),

5412(b).

34 OCC, Comptroller’s Handbook, ‘‘Bank

Supervision Process’’ at 46 (March 2025).

35 Id. at 134.

36 Id. at 46.

37 Id. at 38.

38 OCC, Policies and Procedures Manual: PPM

5310–3, ‘‘Bank Enforcement Actions and Related

Matters’’ at 3 (May 25, 2022), available at https://

www.occ.gov/news-issuances/bulletins/2023/

bulletin-2023-16.html.

39 ‘‘Verification’’ is the process by which the OCC

confirms that an institution has implemented the

agreed upon corrective actions to address a

deficient practice described in an MRA.

‘‘Validation’’ is the process by which the OCC

confirms the effectiveness and sustainability of

corrective actions that an institution has

implemented.

40 The OCC must determine through examination

or review of audit reports and work papers that the

institution’s corrective actions are sustainable.

41 OCC, Comptroller’s Handbook, ‘‘Bank

Supervision Process’’ at 46.

42 See Statement of the FDIC Board of Directors

on the Development and Communication of

Supervisory Recommendations, available at https://

www.fdic.gov/about/governance/

recommendations.html.

43 See FDIC, Risk Management Manual of

Examination Policies, Report of Examination

Instructions (last updated April 2024), at 16.1–8.

44 For the FDIC, MRAs would replace MRBAs

vision Process’’ at 46.

42 See Statement of the FDIC Board of Directors

on the Development and Communication of

Supervisory Recommendations, available at https://

www.fdic.gov/about/governance/

recommendations.html.

43 See FDIC, Risk Management Manual of

Examination Policies, Report of Examination

Instructions (last updated April 2024), at 16.1–8.

44 For the FDIC, MRAs would replace MRBAs.

powers provide the agencies with

authority to issue MRAs and

supervisory ratings.33

The OCC’s current practice is to use

MRAs to communicate concerns about

an institution’s ‘‘deficient practices.’’ 34

A deficient practice is a practice, or lack

of practice, that (1) ‘‘deviates from

sound governance, internal control, or

risk management principles and has the

potential to adversely affect the bank’s

condition, including financial

performance or risk profile, if not

addressed,’’ or (2) ‘‘results in

substantive noncompliance with laws or

regulations, enforcement actions, or

conditions imposed in writing in

connection with the approval of any

applications or other requests by the

[institution].’’ 35 The purpose of an

MRA, unlike other forms of supervisory

communications, is to bring a deficient

practice to the attention of the

institution’s board of directors and

management to ensure they address the

deficiency. An MRA is not intended to

serve as a vehicle for examiners to

recommend best practices or

enhancements to already acceptable

standards. When the OCC

communicates an MRA to an institution,

it includes a corrective action stating

what management or the board of

directors must do to address the concern

and eliminate the cause.36 An

institution is expected to develop an

action plan to detail how it intends to

correct the root causes of deficiencies

rather than symptoms.37 Although an

institution has discretion to develop an

adequate action plan as it deems

appropriate, the OCC retains the

ultimate authority to determine the

method and timeframe for corrective

action

address the concern

and eliminate the cause.36 An

institution is expected to develop an

action plan to detail how it intends to

correct the root causes of deficiencies

rather than symptoms.37 Although an

institution has discretion to develop an

adequate action plan as it deems

appropriate, the OCC retains the

ultimate authority to determine the

method and timeframe for corrective

action. The actions that an institution’s

board of directors and management take

or agree to take in response to concerns

in MRAs are factors in the OCC’s

decision to pursue an enforcement

action and the severity of that action.38

The OCC tracks an institution’s

MRAs, including whether they are open,

closed, past due, or pending validation.

Current OCC policies require that MRAs

must remain open until an institution

has implemented, and examiners have

verified and validated that the

institution has consistently adhered to,

an effective corrective action.39

Validation requires the institution to

demonstrate the corrective action is

effective over a reasonable period,

which may vary and is based on the

sustainability of the corrected practice,

not the institution’s condition.40

For matters that do not warrant an

MRA, examiners may offer informal

recommendations to the board of

directors and management related to

potential policy enhancements or best

practices.41 Recommendations do not

require specific corrective action or

follow-up by examiners, and the OCC

does not include recommendations in

formal written communications to

institutions, such as a report of

examination.

The FDIC’s current practice is to issue

Supervisory Recommendations,

including Matters Requiring Board

Attention (MRBAs), as part of its

supervisory process to communicate

weaknesses in a bank’s operations,

governance, or risk management

practices.42 These supervisory tools are

designed to promote timely corrective

action and to strengthen institutions’

overall safety and soundness

ion.

The FDIC’s current practice is to issue

Supervisory Recommendations,

including Matters Requiring Board

Attention (MRBAs), as part of its

supervisory process to communicate

weaknesses in a bank’s operations,

governance, or risk management

practices.42 These supervisory tools are

designed to promote timely corrective

action and to strengthen institutions’

overall safety and soundness.

MRBAs are used to inform an

institution of the FDIC’s views about

changes needed in its practices,

operations, or financial condition to

help institutions prioritize their efforts

to address examiner concerns, identify

emerging problems, and correct

deficiencies before the institution’s

condition deteriorates.43 Boards of

directors are expected to oversee

management’s development and

implementation of corrective measures

and to ensure timely resolution of the

matters. The FDIC reviews the status of

MRBAs in subsequent examinations or

through offsite monitoring to ensure

progress and remediation. The FDIC

tracks and categorizes MRBAs to enable

the agency to analyze and identify

trends related to risk supervision

findings.

Other Supervisory Recommendations

are issued to highlight deficiencies or

weaknesses that warrant management’s

attention but do not rise to the level of

MRBAs. These recommendations are

intended to promote sound governance,

risk management, and operational

practices and, if left unaddressed, may

escalate into more significant

supervisory concerns. Although these

Supervisory Recommendations do not

carry the same weight as MRBAs,

management is expected to consider and

respond to them and to implement

corrective action as appropriate.

The agencies each apply their

different standards for MRAs and

MRBAs (collectively, matters requiring

correction) to require institutions to

align their conduct with supervisory

expectations

concerns. Although these

Supervisory Recommendations do not

carry the same weight as MRBAs,

management is expected to consider and

respond to them and to implement

corrective action as appropriate.

The agencies each apply their

different standards for MRAs and

MRBAs (collectively, matters requiring

correction) to require institutions to

align their conduct with supervisory

expectations. But a common

denominator of the agencies’ current

practices for supervisory criticisms is

that examiners frequently issue matters

requiring correction to communicate

deficiencies beyond those that are

central to, or in many cases that are

directly relevant to, an institution’s

financial condition. The agencies do not

currently require examiners to find that

a practice is likely, or reasonably can be

expected, to materially harm the

financial condition of the institution. In

practice, an institution must address the

practices described in a matter requiring

correction, regardless of whether the

institution’s board of directors and

management consider the examiner’s

concerns to be accurate or important

enough to prioritize. The agencies’

expansive definition and application of

matters requiring correction has resulted

in a proliferation of supervisory

criticisms for immaterial procedural,

documentation, or other deficiencies

that distract management from

conducting business and that do not

clearly improve the financial condition

of institutions. In addition, in the

agencies’ supervisory experience, failure

to correct a deficient practice

communicated in a matter requiring

correction often eventually results in an

enforcement action

y

criticisms for immaterial procedural,

documentation, or other deficiencies

that distract management from

conducting business and that do not

clearly improve the financial condition

of institutions. In addition, in the

agencies’ supervisory experience, failure

to correct a deficient practice

communicated in a matter requiring

correction often eventually results in an

enforcement action.

To ensure supervision efforts are

appropriately focused on material

financial risks and increase consistency

in supervisory criticisms, the agencies

are issuing this joint proposal regarding

their standard for issuing matters

requiring correction, which would be in

the form of MRAs.44

The proposed rule would provide that

the agencies may only issue an MRA for

a practice, act, or failure to act, alone or

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Federal Register / Vol. 90, No. 208 / Thursday, October 30, 2025 / Proposed Rules

45 Banking and consumer financial protection

laws include the enumerated consumer laws under

the Consumer Financial Protection Act, 12 U.S.C.

5481(12), only with respect to institutions for which

the agencies have supervisory or enforcement

authority under such laws under 12 U.S.C. 5515–

5516.

46 Supervisory observations are separate and

distinct from requirements that the agencies impose

in connection with an application, notice, or other

request, including through a condition imposed in

writing under 12 U.S.C. 1818.

together with one or more other

practices, acts, or failures to act, that

s have supervisory or enforcement

authority under such laws under 12 U.S.C. 5515–

5516.

46 Supervisory observations are separate and

distinct from requirements that the agencies impose

in connection with an application, notice, or other

request, including through a condition imposed in

writing under 12 U.S.C. 1818.

together with one or more other

practices, acts, or failures to act, that

(1)(i) is contrary to generally accepted

standards of prudent operation; and

(ii)(A) if continued, could reasonably be

expected to, under current or reasonably

foreseeable conditions, (1) materially

harm the financial condition of the

institution; or (2) present a material risk

of loss to the DIF; or (B) has already

caused material harm to the financial

condition of the institution; or (2) is an

actual violation of a banking or banking-

related law or regulation.

Under the proposed rule, the phrases

‘‘materially harm the financial condition

of an institution,’’ ‘‘materially harmed

the financial condition of an

institution,’’ and ‘‘material risk of loss to

the Deposit Insurance Fund’’ would

have the same meaning for MRAs as

they would have for the proposed

definition of unsafe or unsound

practice. The proposed MRA standard

would accordingly focus supervisory

and institution resources on material

financial risks. Similar to the proposed

definition of an unsafe or unsound

practice, practices, acts, or failures to act

that are captured by the proposed MRA

standard would, in the vast majority of

cases, relate directly to risks of material

harm to the financial condition of an

institution or violations of certain laws

and regulations. Material financial risks

will, in the vast majority of cases, relate

directly, clearly and predictably to an

institution’s capital, asset quality,

earnings, liquidity, or sensitivity to

market risk

roposed MRA

standard would, in the vast majority of

cases, relate directly to risks of material

harm to the financial condition of an

institution or violations of certain laws

and regulations. Material financial risks

will, in the vast majority of cases, relate

directly, clearly and predictably to an

institution’s capital, asset quality,

earnings, liquidity, or sensitivity to

market risk. Additionally, the proposed

standard for an MRA, like the proposed

definition of an unsafe or unsound

practice, would cover a practice, act, or

failure to act that, ‘‘if continued,’’ has

the potential to materially harm the

financial condition of an institution.

As proposed, examiners could

communicate an MRA for a practice,

act, or failure to act that, if continued,

could reasonably be expected to, under

current or reasonably foreseeable

conditions, (A) materially harm the

financial condition of an institution or

(B) present a material risk of loss to the

DIF. The agencies intend for the ‘‘could

reasonably be expected to, under

current or reasonably foreseeable

conditions’’ element in the proposed

MRA standard to present a lower bar

than does the ‘‘likely’’ element in the

proposed unsafe or unsound practice

standard.

To determine whether a practice, act,

or failure to act, if continued, could

reasonably be expected to, under

current or reasonably foreseeable

conditions, materially harm the

financial condition of an institution, the

proposed rule relies on examiners’

judgments, based on objective facts and

sound reasoning. The proposal would

not permit examiners to issue MRAs

based on potential future conditions

that are possible but not reasonably

foreseeable. Nonetheless, ‘‘reasonably

foreseeable’’ does not necessarily mean

the most likely future outcome and

could include a range of possible

outcomes

itution, the

proposed rule relies on examiners’

judgments, based on objective facts and

sound reasoning. The proposal would

not permit examiners to issue MRAs

based on potential future conditions

that are possible but not reasonably

foreseeable. Nonetheless, ‘‘reasonably

foreseeable’’ does not necessarily mean

the most likely future outcome and

could include a range of possible

outcomes. For example, in late 2022, the

agencies could have considered it

‘‘reasonably foreseeable’’ that the federal

funds rate and other market interest

rates would rise considerably, and an

institution’s vulnerability to a

significant rise in interest rates could

have been grounds for an MRA.

However, the proposal would not

permit examiners to issue MRAs that

purport to meet the proposed MRA

standard as a pretext to force an

institution to comply with an

examiner’s managerial judgment instead

of the judgment of the institution’s own

management, in the absence of a

reasonable expectation of material harm

to the financial condition of the

institution.

Under the proposed MRA standard,

violations of banking or banking-related

laws and regulations must be actual

violations of a discrete set of federal and

state law or regulation—those related to

banking. This would generally include

banking and consumer financial

protection laws, but would not include

laws and regulations outside of the

banking and consumer finance context,

such as tax laws.45 Moreover, the

agencies would not issue an MRA solely

to address an institution’s policies,

procedures, or internal controls, unless

those policies, procedures, or internal

controls otherwise satisfied the

regulatory standard for an MRA, even if

those policies, procedures, or internal

controls could lead to a violation of law

or regulation

and consumer finance context,

such as tax laws.45 Moreover, the

agencies would not issue an MRA solely

to address an institution’s policies,

procedures, or internal controls, unless

those policies, procedures, or internal

controls otherwise satisfied the

regulatory standard for an MRA, even if

those policies, procedures, or internal

controls could lead to a violation of law

or regulation. Accordingly, under the

proposed rule, examiners could issue an

MRA for a practice, act, or failure to act

related to a violation of law or

regulation only if (1) the examiner

identified actual violations of a banking

or banking-related law or regulation (as

opposed to, for example, bank policies,

procedures, or programs that could lead

to violations of such laws or regulations)

or (2) the practice, act, or failure to act

meets the MRA standard in the

proposed rule relating to material

financial harm.

As discussed above, the agencies will

tailor their issuance of MRAs based on

the capital structure, riskiness,

complexity, activities, asset size, and

any financial risk-related factor that the

agencies deem appropriate. This

includes tailoring with respect to the

requirements or expectations set forth in

such actions as well as whether, and the

extent to which, such actions are taken.

The agencies also recognize that a

more targeted use of MRAs, as proposed

in this rule, may benefit from

complementary changes to the agencies’

MRA verification and validation

procedures to ensure MRAs are lifted as

soon as practicable after the institution

completes corrective actions. The

agencies note that, under current

practices, MRAs are often kept

outstanding for a prolonged period of

time after an institution has fully

completed its remediation of the

underlying practice, act, or failure to act

because examiners seek to see

demonstrated sustainability of the

remediation before an MRA is closed

on as practicable after the institution

completes corrective actions. The

agencies note that, under current

practices, MRAs are often kept

outstanding for a prolonged period of

time after an institution has fully

completed its remediation of the

underlying practice, act, or failure to act

because examiners seek to see

demonstrated sustainability of the

remediation before an MRA is closed.

This practice has the potential to

distract an institution’s board of

directors and management, as well as

examiners, by inflating the number of

MRAs based on practices, acts, or

failures to act that have already been

remediated. The agencies invite

comment on ways in which the agencies

can improve their respective MRA

verification and validation policies and

procedures.

Informal Supervisory Communications

For concerns that do not rise to the

level of an MRA, agency examiners may

informally provide non-binding

suggestions to enhance an institution’s

policies, practices, condition, or

operations.46 The OCC refers to these

communications as ‘‘supervisory

observations.’’ For example, examiners

could offer suggestions on ways to

enhance an institution’s external audit

practices, succession planning, or risk

management processes. Given that these

supervisory communications are not

binding, the agencies would not be

permitted to require an institution to

submit an action plan to incorporate

examiners’ supervisory observations.

Examiners would not be permitted, and

the institution would not be required, to

track the institution’s adoption or

implementation of examiner

suggestions. Although examiners would

be permitted to informally make such

supervisory communications to the

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not be permitted, and

the institution would not be required, to

track the institution’s adoption or

implementation of examiner

suggestions. Although examiners would

be permitted to informally make such

supervisory communications to the

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Federal Register / Vol. 90, No. 208 / Thursday, October 30, 2025 / Proposed Rules

47 This refers to an institution’s composite rating

under the Uniform Financial Institution Rating

System (UFIRS). Currently, the UFIRS incorporates

six individual component ratings: capital, asset

quality, management, earnings, liquidity, and

sensitivity to market risk. The UFIRS also

incorporates a composite rating, which functions as

an overall assessment of the financial institution.

The composite rating generally bears a close

relationship to the component ratings assigned, but

the composite rating is not derived by computing

an arithmetic average of the component ratings. For

federal branches and agencies of foreign banks, this

refers to the institution’s composite rating under the

rating system applicable to federal branches and

agencies of foreign banks.

48 The agencies would not necessarily expect to

issue a new MRA or take an additional enforcement

action before further downgrades in an institution’s

composite rating unless the additional downgrade

was based on new concerns or there is further

deterioration in the institution’s condition.

49 OCC, Comptroller’s Handbook, ‘‘Bank

Supervision Process’’ at 71.

50 For example, a less-than-satisfactory composite

rating may limit an institution’s ability to engage in

interstate mergers, establish a de novo interstate

branch, or control or hold an interest in certain

subsidiaries. See 12 U.S.C. 24a, 36(g), 1831u,

1843(m)

here is further

deterioration in the institution’s condition.

49 OCC, Comptroller’s Handbook, ‘‘Bank

Supervision Process’’ at 71.

50 For example, a less-than-satisfactory composite

rating may limit an institution’s ability to engage in

interstate mergers, establish a de novo interstate

branch, or control or hold an interest in certain

subsidiaries. See 12 U.S.C. 24a, 36(g), 1831u,

1843(m).

institution’s board of directors, the

institution’s management would not be

required to present the supervisory

communications to the institution’s

board of directors. In addition, the

agencies would not be permitted to

criticize an institution for declining to

remediate a concern or weakness

identified by such a supervisory

communication or to escalate the

communication into an MRA on the sole

basis of an institution’s lack of adoption

of an examiner’s suggestion offered in

multiple examination cycles. If an

institution’s condition deteriorates

following a supervisory communication,

the circumstances underlying the

supervisory communication could later

be the basis for an MRA or enforcement

action, but only if the criteria for an

MRA or enforcement action under the

proposal are satisfied, and not solely on

the basis of failing to respond to the

supervisory communication. This

framework would allow examiners to

share their expertise with management

and the board of directors about

potential enhancements while leaving

decisions regarding the implementation

of any enhancements to the institution.

In addition, the agencies would also

be permitted to include supervisory

communications in a report of

examination to explain changes in

ratings

ry communication. This

framework would allow examiners to

share their expertise with management

and the board of directors about

potential enhancements while leaving

decisions regarding the implementation

of any enhancements to the institution.

In addition, the agencies would also

be permitted to include supervisory

communications in a report of

examination to explain changes in

ratings. For example, if a bank is

downgraded from a ‘‘1’’ to a ‘‘2’’ in a

particular CAMELS component, the

agency may explain this downgrade,

and such an explanation would

constitute a ‘‘supervisory

communication.’’ As noted above, such

an explanation would not impose any

binding requirement on an institution to

remediate any weakness identified, and

the agency could not further downgrade

the institution solely on the basis of

failing to remediate such a weakness.

C. Composite Ratings Downgrades

The agencies believe that the changes

to the standards for unsafe or unsound

practices and MRAs in the proposed

rule are important to prioritize material

financial risks and compliance with

banking and banking-related laws and

regulations. In furtherance of the

agencies’ goal to prioritize attention on

material financial risks and legal

compliance, the agencies also expect

that any downgrade in an institution’s

composite supervisory rating to less-

than-satisfactory 47 would only occur in

circumstances in which the institution

receives an MRA that meets the

standard outlined in the proposed rule

or an enforcement action pursuant to

the agencies’ enforcement authority,

including an enforcement action based

on an unsafe or unsound practice as

defined in the proposed rule.48 In the

case of an insured depository

institution, a composite rating of ‘‘3’’ in

the CAMELS rating systems is generally

considered ‘‘less-than-satisfactory.’’ 49 A

downgrade to a less-than-satisfactory

composite supervisory rating can have

significant regulatory and statutory

consequences for an institution.50 By

connecting t

unsafe or unsound practice as

defined in the proposed rule.48 In the

case of an insured depository

institution, a composite rating of ‘‘3’’ in

the CAMELS rating systems is generally

considered ‘‘less-than-satisfactory.’’ 49 A

downgrade to a less-than-satisfactory

composite supervisory rating can have

significant regulatory and statutory

consequences for an institution.50 By

connecting the assignment of a less-

than-satisfactory composite rating to the

issuance of MRAs and enforcement

actions, the agencies would generally

ensure a less-than-satisfactory

composite rating is tied to a potential

material harm to the institution’s

financial condition, potential material

risk of loss to the DIF, actual material

harm to the institution’s financial

condition, or actual violations of certain

laws and regulations. Although section

8 of the FDI Act provides for grounds for

an enforcement action based on a

violation of law, the agencies expect

that they would not downgrade an

institution’s composite rating to less-

than-satisfactory based only on a

violation of law, unless such practice,

act, or failure to act that results in the

violation of law also is likely to cause

material harm to the financial condition

of the institution, is likely to present a

material risk of loss to the DIF, or has

caused material harm to the institution’s

financial condition, as the agencies

propose under the unsafe or unsound

practice definition.

III

violation of law, unless such practice,

act, or failure to act that results in the

violation of law also is likely to cause

material harm to the financial condition

of the institution, is likely to present a

material risk of loss to the DIF, or has

caused material harm to the institution’s

financial condition, as the agencies

propose under the unsafe or unsound

practice definition.

III. Request for Comments

The agencies request feedback on all

aspects of the proposed rule, including:

Question 1: What effect would the

proposed rule have on the agencies’

ability to address misconduct by

institutions under their enforcement

and supervisory authority? What effect

would the proposed rule have on the

agencies’ ability to address misconduct

by institution-affiliated parties under

their enforcement and supervisory

authority?

Question 2: Does the proposed

definition of unsafe or unsound practice

appropriately capture the types of

objectionable practices, acts, or failures

to act that should be captured? Please

explain.

Question 3: Does the proposed

definition of unsafe or unsound practice

provide the agencies with adequate

authority to proactively address risks

that could cause a precipitous decline

in an institution’s financial condition,

such as a liquidity event or a

cybersecurity incident?

Question 4: Other than ‘‘material,’’

are there terms that the agencies should

consider to specify the magnitude of the

risk required for a practice, act, or

failure to act, to be considered an

unsafe or unsound practice, e.g.,

‘‘abnormal,’’ ‘‘significant,’’ or ‘‘undue’’?

Question 5: Is ‘‘likely’’ the appropriate

standard to specify the probability of

risk required for a practice, act, or

failure to act, to be considered an

unsafe or unsound practice? Is another

term more appropriate, e.g., ‘‘reasonably

foreseeable,’’ ‘‘could reasonably,’’

‘‘imminent,’’ ‘‘abnormal probability’’?

Should the agencies specify a minimum

percentage of likelihood? If so, what

would be an appropriate m

’ the appropriate

standard to specify the probability of

risk required for a practice, act, or

failure to act, to be considered an

unsafe or unsound practice? Is another

term more appropriate, e.g., ‘‘reasonably

foreseeable,’’ ‘‘could reasonably,’’

‘‘imminent,’’ ‘‘abnormal probability’’?

Should the agencies specify a minimum

percentage of likelihood? If so, what

would be an appropriate minimum

percentage of likelihood? Should the

agencies consider a standard that does

not imply an assessment of a forward-

looking probability?

Question 6: Should the agencies

consider specifying one or more

quantitative measurements to define or

exemplify ‘‘material harm’’ to the

financial condition of the institution?

Question 7: Should the agencies

define ‘‘materially’’ in the regulation? If

so, how?

Question 8: Should the agencies

define harm to the financial condition

of an institution in the regulation? If so,

how? Should this include specific

indicators or thresholds, or adverse

effects to capital, liquidity, or earnings?

Question 9: Section 8 of the FDI Act

uses the term ‘‘unsafe or unsound

practice’’ numerous times and in

different contexts. Should the proposed

definition of unsafe or unsound practice

apply to all uses of the term within

section 8 of the FDI Act? If not, what

provisions should be excluded? Should

the agencies have a uniform definition

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in

different contexts. Should the proposed

definition of unsafe or unsound practice

apply to all uses of the term within

section 8 of the FDI Act? If not, what

provisions should be excluded? Should

the agencies have a uniform definition

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Federal Register / Vol. 90, No. 208 / Thursday, October 30, 2025 / Proposed Rules

for purposes of section 8, as proposed,

or should there be nuances depending

on the context?

Question 10: Should the proposed

definition of unsafe or unsound practice

apply to other uses of the term or

references to section 8 of the FDI Act

within Title 12 of the CFR? If so, what

provisions should be included? What, if

any, effect would the proposed

definition have on the agencies’ ability

to engage in rulemaking?

Question 11: Should the proposed

definition of unsafe or unsound practice

apply to uses of the term beyond section

8 of the FDI Act? If yes, what provisions

should be included? For example:

—Tier 2 and Tier 3 Civil Money Penalty

provisions (12 U.S.C. 93, 504, 1817,

1972).

—Capital standards in 12 U.S.C.

1464(t).

—Definition of institution-affiliated

party in 12 U.S.C. 1813(u).

—Grounds for appointing a conservator

or receiver in 12 U.S.C. 1821(c)(5).

Question 12: Is the agencies’ use of

the term ‘‘generally accepted standards

of prudent operations,’’ as described in

this proposal, appropriate for making

safety and soundness determinations?

Are there are other terms the agencies

should consider using instead?

Question 13: Other than ‘‘could

reasonably be expected,’’ are there

terms that the agencies should consider

to specify the probability of risk

required for a practice, act, or failure to

act, to be communicated as an MRA,

e.g., ‘‘could possibly,’’ ‘‘could

foreseeably,’’ ‘‘would’’? Is this standard

sufficiently distinct from the likelihood

requirement for unsafe or unsound

pr

ng instead?

Question 13: Other than ‘‘could

reasonably be expected,’’ are there

terms that the agencies should consider

to specify the probability of risk

required for a practice, act, or failure to

act, to be communicated as an MRA,

e.g., ‘‘could possibly,’’ ‘‘could

foreseeably,’’ ‘‘would’’? Is this standard

sufficiently distinct from the likelihood

requirement for unsafe or unsound

practices so as to convey a lower bar?

Question 14: The proposal would

allow the agencies to issue MRAs based

on ‘‘reasonably foreseeable conditions.’’

Is ‘‘reasonably foreseeable’’ the right

standard? As an example, at what point

in Silicon Valley Bank’s timeline would

an MRA for weaknesses in interest rate

risk management have been (1)

appropriate and (2) permissible under

the proposal? If another standard would

be more appropriate, please explain.

Question 15: If the agencies adopt the

proposed standard for the issuance of

an MRA, how should the agencies

determine when to close an MRA?

Should the agencies provide additional

clarity in a final rule? Are there unique

verification and validation concerns

associated with the proposed standard

that the agencies should consider?

Should verification and validation

procedures be tailored for different

types of institutions, considering factors

like the sophistication of an institution

and the frequency of examinations?

Should there be a limit (e.g., one or two

quarters; one examination cycle) to the

duration that an MRA may remain open

after an institution corrects the practice

resulting in the MRA? If an MRA is not

remediated for a certain period of time,

what steps should the agencies take?

Question 16: Should the proposal

provide any clarity around timeframes

for remediating MRAs? If so, should

small institutions (and those with

limited resources) be provided with

longer timeframes to address MRAs?

Should institutions with more severe

vulnerabilities (such as 5-rated

institutions) be provided shorter

timeframes?

Question 17: Should

,

what steps should the agencies take?

Question 16: Should the proposal

provide any clarity around timeframes

for remediating MRAs? If so, should

small institutions (and those with

limited resources) be provided with

longer timeframes to address MRAs?

Should institutions with more severe

vulnerabilities (such as 5-rated

institutions) be provided shorter

timeframes?

Question 17: Should the proposed

standard for issuing MRAs also apply to

issuing violations of law? Why or why

not? If a different standard should

apply, please describe the standard and

explain why. If the agencies did not use

MRAs for violations of law, how should

the agencies approach violations of law?

Question 18: Under the proposal, the

agencies could cite violations of banking

and banking-regulated laws or

regulations as MRAs. Is ‘‘banking and

banking-related’’ the right universe?

Should the agencies provide additional

clarity on what constitutes banking and

banking-related laws? If so, what should

be included? Should the agencies limit

the scope of banking and banking-

related laws to federal banking and

banking-related law? Why or why not?

Question 19: Should the agencies

provide additional clarity on the

interplay between MRAs and CAMELS

ratings? If so, how?

Question 20: Should the agencies

require any downgrade to a CAMELS

composite rating of 3 or below to be

accompanied by an MRA or

enforcement action? Are there instances

in which, for example, general economic

conditions or idiosyncratic risk factors

could cause financial deterioration

without evidence of objectionable

practices, acts, or failures to act? Could

such a provision incentivize issuing

more MRAs? Please explain

quire any downgrade to a CAMELS

composite rating of 3 or below to be

accompanied by an MRA or

enforcement action? Are there instances

in which, for example, general economic

conditions or idiosyncratic risk factors

could cause financial deterioration

without evidence of objectionable

practices, acts, or failures to act? Could

such a provision incentivize issuing

more MRAs? Please explain.

Question 21: To what extent should

the agencies use MRAs to address banks

that are vulnerable to potential

economic or other shocks? For example,

before the Federal Reserve began raising

interest rates in 2022, or shortly after it

began raising interest rates, at what

point, if any, would it have been

appropriate for a banking agency to

issue MRAs to institutions that were

vulnerable to a rise in interest rates?

Does the proposal appropriately allow

MRAs in such cases, if applicable?

Under the proposal, are there other

supervisory tools to address such risks?

Question 22: How should the agencies

tailor the framework for community

banks? For example, should there be

different standards for institutions of

different sizes and complexity? Please

explain.

Question 23: Should the proposal tie

material harm to the financial condition

of an institution more specifically to the

impact of a practice, act or failure to act

on the institution’s capital? Should

there be a higher standard for large

banking organizations compared to all

other banking organizations? Should the

potential or actual harm to an

institution’s financial condition be tied

to the capital standards in the prompt

correction action framework set forth in

12 U.S.C

itution more specifically to the

impact of a practice, act or failure to act

on the institution’s capital? Should

there be a higher standard for large

banking organizations compared to all

other banking organizations? Should the

potential or actual harm to an

institution’s financial condition be tied

to the capital standards in the prompt

correction action framework set forth in

12 U.S.C. 1831o?

Question 24: Should the proposed

regulation tie material harm to the

financial condition of an institution

more specifically to the impact of a

practice, act or failure to act on the

institution’s liquidity? Should there be a

threshold for a liquidity event, such as

an outflow of a hypothetical percentage

of an institution’s short-term deposits or

other short-term liabilities over a

defined period?

Question 25: How should the

proposed regulation interact with the

Interagency Guidelines Establishing

Safety and Soundness Standards

promulgated under 12 U.S.C. 1831p–1

(e.g., 12 CFR part 30) (Safety and

Soundness Standards)? Should the

agencies similarly revise the Safety and

Soundness Standards in a manner

consistent with the proposed regulation?

Should a violation of the Safety and

Soundness standards be considered a

violation of banking or banking-related

law or regulation for purposes of the

proposed regulation?

Question 26: What additional steps

should the agencies consider to reform

supervision, consistent with the goals of

the proposal? The agencies have an

extensive supervisory framework

including examination manuals,

regulations, guidance, and internal

procedures governing how banks are

supervised. What modifications to these

various documents are warranted? How

should the agencies sequence these

actions?

IV

ditional steps

should the agencies consider to reform

supervision, consistent with the goals of

the proposal? The agencies have an

extensive supervisory framework

including examination manuals,

regulations, guidance, and internal

procedures governing how banks are

supervised. What modifications to these

various documents are warranted? How

should the agencies sequence these

actions?

IV. Expected Effects

As previously discussed, the agencies

propose to revise the framework for

communicating MRAs to supervised

insured depository institutions (IDIs) to

focus on practices, acts, or failures to act

that, if continued, could reasonably be

expected to, under current or reasonably

foreseeable conditions, (A) materially

harm the financial condition of an

institution or (B) present a material risk

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51 44 U.S.C. 3501–3521.

52 Id.

53 Based on data accessed using the OCC’s

Financial Institutions Data Retrieval System on

September 8, 2025.

of loss to the DIF, or violations of a

banking or banking-related law or

regulation. The proposal would provide

a consistent nationwide standard for the

issuance of MRAs to promote greater

clarity for IDIs and IDI-affiliated parties.

This analysis utilizes all regulations

and guidance applicable to IDIs

supervised by the agencies, as well as

information on the financial condition

of supervised IDIs as of the quarter

ending June 30, 2025, as the baseline to

which the effects of the proposed rule

are estimated.

Scope

The proposal, if adopted, would not

impose any obligations on supervised

IDIs, and supervised IDIs would not

need to take any action in response to

this rule

icable to IDIs

supervised by the agencies, as well as

information on the financial condition

of supervised IDIs as of the quarter

ending June 30, 2025, as the baseline to

which the effects of the proposed rule

are estimated.

Scope

The proposal, if adopted, would not

impose any obligations on supervised

IDIs, and supervised IDIs would not

need to take any action in response to

this rule. The proposal, if adopted,

would require the agencies to revise

their current practices regarding the

identification and communication of

examination findings. Therefore, the

agencies would be the only entities

directly affected by the proposal.

The proposal would indirectly affect

supervised IDIs through examinations

and reports of examination (ROEs)

conducted by the agencies. All IDIs

subject to examinations by the agencies

as of June 30, 2025 could be indirectly

affected proposal. Only a subset of IDIs

are examined every year, therefore the

proposed rule could indirectly affect a

subset of supervised IDIs each year.

Costs and Benefits

The following sections discuss

qualitatively some indirect benefits and

indirect costs of the proposal.

Indirect Benefits to IDIs

The proposal, if adopted, would pose

two types of indirect benefits to

supervised IDIs: (1) reductions in, or

more efficient use of, costs to comply

with findings from ROEs, and (2)

possible increases in proceeds from the

provision of banking products and

services. By raising the standard against

which an IDI’s action, or inaction, is

assessed to be eligible for an MRA, IDIs

may experience lower volumes of

examination findings, particularly

MRAs. Further, by potentially reducing

the number of examination findings not

related to material risks to the financial

condition of the IDI, the proposed rule

may enable IDIs that do receive MRAs

to more effectively address those risks

ainst

which an IDI’s action, or inaction, is

assessed to be eligible for an MRA, IDIs

may experience lower volumes of

examination findings, particularly

MRAs. Further, by potentially reducing

the number of examination findings not

related to material risks to the financial

condition of the IDI, the proposed rule

may enable IDIs that do receive MRAs

to more effectively address those risks.

Finally, by enacting a consistent

definition of conditions that merit the

use of MRAs across the agencies, the

proposed rule may improve clarity and

reduce uncertainty of ROE findings,

relative to the baseline. Such reductions

in findings and increases in clarity may

reduce compliance costs or increase the

efficiency with which compliance costs

are expended by IDIs to respond to ROE

findings. The agencies do not have the

information necessary to quantify such

potential indirect benefits.

Negative feedback from regulators

during the examination process may

discourage IDIs from taking part in

activity and could result in reduced

provision of banking products and

services. To the extent that matters

requiring the attention of an

institution’s board of directors and

management are currently identified

and used in a way that raises potential

chilling effects, the proposal could

result in fewer such effects relative to

the baseline. A reduction in chilling

effects could enable IDIs to provide

financial products and services to

entities that they would not have

otherwise. The FDIC does not have the

data necessary to quantify this potential

benefit.

Indirect Costs to IDIs

If adopted the proposed rule may

reduce the volume of examination

findings communicated to IDIs and this

could pose certain indirect costs. To the

extent that the proposed rule, if

adopted, delayed the identification of

material risks to the financial condition

of an IDI, such entities could incur

higher costs to resolve such issues,

associated losses, and in extreme cases,

failure

IDIs

If adopted the proposed rule may

reduce the volume of examination

findings communicated to IDIs and this

could pose certain indirect costs. To the

extent that the proposed rule, if

adopted, delayed the identification of

material risks to the financial condition

of an IDI, such entities could incur

higher costs to resolve such issues,

associated losses, and in extreme cases,

failure. However, as previously

discussed, the agencies believe that

proposed definition of unsafe or

unsound practice better prioritizes the

identification and communication of

such risks. Therefore, the agencies

believe that such costs are unlikely to be

substantial. Moreover, it is also possible

that under the proposal risks to IDIs and

risks of IDI failures could decrease

significantly, because under the

proposal IDI management and

examiners would prioritize the

identification and remediation of issues

that could result in material financial

loss to IDIs.

V. Alternatives Considered

The agencies considered leaving the

current regulatory framework

unchanged. However, as previously

discussed, the current methods for

communicating certain supervisory

examination findings can promote

confusion or not appropriately focus

supervisory and institution resources on

the most critical financial risks to

institutions and the financial system.

Therefore, the agencies believe that the

proposal is more appropriate.

VI. Regulatory Analyses

Paperwork Reduction Act

The Paperwork Reduction Act of

1995 51 (PRA) states that no agency may

conduct or sponsor, nor is the

respondent required to respond to, an

information collection unless it displays

a currently valid Office of Management

and Budget (OMB) control number. The

agencies have reviewed this proposed

rule and determined that it does not

create any information collection or

revise any existing collection of

information. Accordingly, no PRA

submissions to OMB will be made with

respect to this proposed rule

required to respond to, an

information collection unless it displays

a currently valid Office of Management

and Budget (OMB) control number. The

agencies have reviewed this proposed

rule and determined that it does not

create any information collection or

revise any existing collection of

information. Accordingly, no PRA

submissions to OMB will be made with

respect to this proposed rule.

Regulatory Flexibility Act

The Regulatory Flexibility Act 52

(RFA) requires an agency to consider the

impact of its proposed rules on small

entities. In connection with a proposed

rule, the RFA generally requires an

agency to prepare an Initial Regulatory

Flexibility Analysis (IRFA) describing

the impact of the rule on small entities,

unless the head of the agency certifies

that the proposed rule will not have a

significant economic impact on a

substantial number of small entities and

publishes such certification along with

a statement providing the factual basis

for such certification in the Federal

Register. An IRFA must contain: (1) a

description of the reasons why action by

the agency is being considered; (2) a

succinct statement of the objectives of,

and legal basis for, the proposed rule;

(3) a description of and, where feasible,

an estimate of the number of small

entities to which the proposed rule will

apply; (4) a description of the projected

reporting, recordkeeping, and other

compliance requirements of the

proposed rule, including an estimate of

the classes of small entities that will be

subject to the requirements and the type

of professional skills necessary for

preparation of the report or record; (5)

an identification, to the extent

practicable, of all relevant Federal rules

that may duplicate, overlap with, or

conflict with the proposed rule; and (6)

a description of any significant

alternatives to the proposed rule that

accomplish its stated objectives.

1

will be

subject to the requirements and the type

of professional skills necessary for

preparation of the report or record; (5)

an identification, to the extent

practicable, of all relevant Federal rules

that may duplicate, overlap with, or

conflict with the proposed rule; and (6)

a description of any significant

alternatives to the proposed rule that

accomplish its stated objectives.

1. OCC

The OCC currently supervises 1,012

institutions (commercial banks, trust

companies, Federal savings

associations, and branches or agencies

of foreign banks),53 of which

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54 The OCC bases its estimate of the number of

small entities on the Small Business

Administration’s size thresholds for commercial

banks and savings institutions, and trust

companies, which are $850 million and $47

million, respectively. Consistent with the General

Principles of Affiliation, 13 CFR 121.103(a), the

OCC counted the assets of affiliated financial

institutions when determining if it should classify

an OCC-supervised institution as a small entity. The

OCC used average quarterly assets in December 31,

2024 to determine size because a ‘‘financial

institution’s assets are determined by averaging the

assets reported on its four quarterly financial

statements for the preceding year.’’ See footnote 8

of the U.S. Small Business Administration’s Table

of Size Standards.

55 SBA defines a small banking organization as

having $850 million or less in assets, where an

organization’s ‘‘assets are determined by averaging

the assets reported on its four quarterly financial

statements for the preceding year.’’ See 13 CFR

121.201 (as amended by 87 FR 69118, effective

December 19, 2022)

footnote 8

of the U.S. Small Business Administration’s Table

of Size Standards.

55 SBA defines a small banking organization as

having $850 million or less in assets, where an

organization’s ‘‘assets are determined by averaging

the assets reported on its four quarterly financial

statements for the preceding year.’’ See 13 CFR

121.201 (as amended by 87 FR 69118, effective

December 19, 2022). In its determination, the ‘‘SBA

counts the receipts, employees, or other measure of

size of the concern whose size is at issue and all

of its domestic and foreign affiliates.’’ See 13 CFR

121.103. Following these regulations, the FDIC uses

an insured depository institution’s affiliated and

acquired assets, averaged over the preceding four

quarters, to determine whether the insured

depository institution is ‘‘small’’ for the purposes of

the RFA.

56 5 U.S.C. 603(b)(4).

57 See, e.g., Calcutt v. FDIC, 37 F.4th 293, 325 (6th

Cir. 2022), rev’d on other grounds, 598 U.S. 623

(2023) (citing Seidman, 37 F.3d at 926–27)

(‘‘[Twelve U.S.C. 1818] does not define an ‘unsafe

or unsound practice,’ and the term is interpreted

flexibly.’’); id. at 353–57 (Murphy, J., dissenting)

(discussing circuit split and reliance on legislative

history as opposed to plain text); see also Greene

Cnty. Bank, 92 F.3d at 636.

58 A depository institution generally refers to an

insured depository institution as defined in 12

U.S.C. 1813(c)(2); any national banking association

chartered by the OCC, including an uninsured

association; or a branch or agency of a foreign bank.

Refer to specific provisions of 12 U.S.C. 1818

regarding their applicability to a specific

institution. See 12 U.S.C. 1818(b)(4)–(5).

59 See id. 1813(u).

60 FDIC Call Report Data, June 30, 2025

insured depository institution as defined in 12

U.S.C. 1813(c)(2); any national banking association

chartered by the OCC, including an uninsured

association; or a branch or agency of a foreign bank.

Refer to specific provisions of 12 U.S.C. 1818

regarding their applicability to a specific

institution. See 12 U.S.C. 1818(b)(4)–(5).

59 See id. 1813(u).

60 FDIC Call Report Data, June 30, 2025.

approximately 609 are small entities

under the RFA.54

In general, the OCC classifies the

economic impact on an individual small

entity as significant if the total

estimated impact in one year is greater

than 5 percent of the small entity’s total

annual salaries and benefits or greater

than 2.5 percent of the small entity’s

total non-interest expense. Furthermore,

the OCC considers 5 percent or more of

OCC-supervised small entities to be a

substantial number, and at present, 30

OCC-supervised small entities would

constitute a substantial number.

Therefore, since the proposed rule

would affect all OCC-supervised

institutions, a substantial number of

OCC-supervised small entities would be

impacted.

This proposed rulemaking imposes no

new mandates, and thus no direct costs,

on affected OCC-supervised institutions.

Therefore, the proposed rule would not

have a significant economic impact on

a substantial number of small entities.

2. FDIC

Generally, the FDIC considers a

significant economic impact to be a

quantified effect in excess of 5 percent

of total annual salaries and benefits or

2.5 percent of total noninterest

expenses. The FDIC believes that effects

in excess of one or more of these

thresholds typically represent

significant economic impacts for FDIC-

insured institutions.

The FDIC believes that the proposed

rule will not have a significant

economic impact on a substantial

number of small entities 55 because the

proposed rule will not pose reporting,

recordkeeping and other compliance

requirements 56 on small, FDIC-

supervised IDIs

in excess of one or more of these

thresholds typically represent

significant economic impacts for FDIC-

insured institutions.

The FDIC believes that the proposed

rule will not have a significant

economic impact on a substantial

number of small entities 55 because the

proposed rule will not pose reporting,

recordkeeping and other compliance

requirements 56 on small, FDIC-

supervised IDIs. However, the proposed

rule could present significant indirect

benefits to small, FDIC-supervised IDIs.

Therefore, the FDIC is presenting an

Initial Regulatory Flexibility Act

Analysis in this section.

Reasons Why This Action Is Being

Considered

The lack of a consistent nationwide

standard about the scope of the term

unsafe or unsound practice, as

interpreted by the courts, has caused

uncertainty for institutions and

institution-affiliated parties.57 The

proposed regulatory definition would

provide a consistent nationwide

standard to reduce burden and provide

greater clarity for institutions and

institution-affiliated parties.

Policy Objectives

The policy objectives are to promote

greater clarity and certainty regarding

enforcement and supervision standards

so that examiners and IDIs prioritize

material financial risks to IDIs and avoid

unnecessary regulatory burden.

Legal Basis

Pursuant to the provisions of section

8 of the FDI Act (12 U.S.C. 1818), the

FDIC is authorized to take enforcement

actions against depository institutions,58

and institution-affiliated parties 59 that

have engaged in an ‘‘unsafe or unsound

practice.’’ Under this authority, the

FDIC is proposing to define by

regulation the term ‘‘unsafe or unsound

practice’’ for purposes of section 8 of the

FDI Act. For a more detailed discussion

of the proposed rule’s legal basis please

refer to section A. Unsafe or Unsound

Practices, within Section II of the

preamble

tution-affiliated parties 59 that

have engaged in an ‘‘unsafe or unsound

practice.’’ Under this authority, the

FDIC is proposing to define by

regulation the term ‘‘unsafe or unsound

practice’’ for purposes of section 8 of the

FDI Act. For a more detailed discussion

of the proposed rule’s legal basis please

refer to section A. Unsafe or Unsound

Practices, within Section II of the

preamble.

Description of the Rule

The agencies propose implementing a

definition of unsafe or unsound practice

for purposes of section 8 of the FDI Act

that would focus on material risks to the

financial condition of an IDI and require

the likelihood that an imprudent

practice, act, or omission, if continued,

would pose a material risk to the IDI’s

financial condition. The agencies are

also proposing to establish uniform

standards for examiners’

communication of MRAs. Under the

proposed rule, an examiner would be

permitted to issue an MRA to address

certain risks to the financial condition

of an institution. For a more detailed

description of the proposal please refer

to section A. Unsafe or Unsound

Practices, within Section II of the

preamble.

Small Entities Affected

The proposal, if adopted, would not

impose any obligations on small, FDIC-

supervised entities, and supervised

entities would not need to take any

action in response to this rule. The

proposal, if adopted, would require the

FDIC to revise their current practices

regarding the communication of IDI

examination findings. Therefore, the

FDIC would be the only entity directly

affected by the proposal.

The proposal would indirectly affect

small, FDIC-supervised IDIs through

examinations and reports of

examinations conducted by the

agencies

ion in response to this rule. The

proposal, if adopted, would require the

FDIC to revise their current practices

regarding the communication of IDI

examination findings. Therefore, the

FDIC would be the only entity directly

affected by the proposal.

The proposal would indirectly affect

small, FDIC-supervised IDIs through

examinations and reports of

examinations conducted by the

agencies. As of the quarter ending June

30, 2025, the FDIC supervised 2,808

IDIs, of which 2,085 are small entities

for the purposes of the RFA.60 Only a

subset of small, FDIC-supervised IDIs

are examined every year, therefore the

proposed rule could indirectly affect a

subset of small, FDIC-supervised IDIs

each year.

Cost and Benefits

To estimate the expected effects of the

proposal, this analysis considers all

relevant regulations and guidance

applicable to these institutions, as well

as information on the financial

condition of all IDIs as of the quarter

ending June 30, 2025.

The proposal, if adopted, would pose

two types of indirect benefits to small,

FDIC-supervised IDIs: (1) reductions in,

or more efficient use of, costs to comply

with findings from ROEs, and (2)

possible increases in proceeds from the

provision of banking products and

services. By raising the standard against

which an IDI’s action, or inaction, is

assessed to be eligible for an MRA, IDIs

may experience lower volumes of

examination findings, particularly

MRAs. Further, by potentially reducing

the number of examination findings not

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ard against

which an IDI’s action, or inaction, is

assessed to be eligible for an MRA, IDIs

may experience lower volumes of

examination findings, particularly

MRAs. Further, by potentially reducing

the number of examination findings not

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61 FDIC Call Report Data, June 30, 2025.

62 2 U.S.C. 1531 et seq.

63 Id. 1532.

related to material risks to the financial

condition of the IDI, the proposed rule

may enable IDIs that do receive MRAs

to more effectively address those risks.

Finally, by enacting a consistent

definition of conditions that merit the

use of MRAs across agencies the

proposed rule may improve clarity and

reduce uncertainty of ROE findings,

relative to the baseline. Such reductions

in findings and increases in clarity may

reduce compliance costs or increase the

efficiency with which compliance costs

are expended by IDIs to respond to ROE

findings. The agencies do not have the

information necessary to quantify such

potential indirect benefits.

Negative feedback from regulators

during the examination process may

discourage IDIs from taking part in

activity and could result in reduced

provision of banking products and

services. To the extent that matters

requiring the attention of an

institution’s board of directors and

management are currently identified

and used in a way that raises potential

chilling effects by, the proposal could

result in fewer such effects relative to

the baseline. A reduction in chilling

effects could enable IDIs to provide

financial products and services to

entities that they would not have

otherwise. The FDIC does not have the

data necessary to quantify this potential

benefit

management are currently identified

and used in a way that raises potential

chilling effects by, the proposal could

result in fewer such effects relative to

the baseline. A reduction in chilling

effects could enable IDIs to provide

financial products and services to

entities that they would not have

otherwise. The FDIC does not have the

data necessary to quantify this potential

benefit. Moreover, it is also possible that

under the proposal risks to small, FDIC-

supervised IDIs and risks of IDI failures

could decrease significantly, because

under the proposal IDI management and

examiners would prioritize the

identification and remediation of issues

that could result in material financial

loss to IDIs.

FDIC cannot quantitatively estimate

the indirect effects that small, FDIC-

supervised IDIs are likely to incur if the

proposed rule were adopted. However,

in the four quarters ending June 30th,

2025, 5 percent of total annual salaries

and benefits or 2.5 percent of total

noninterest expenses amounts to

$139,850 and $124,175, respectively, for

the median small, FDIC-supervised

institution.61 The indirect benefits that

a small, FDIC-supervised institution

could realize as a result of the proposed

rule would depend on changes in the

volume of findings of examination and

the compliance costs to address those

examination findings, relative to the

baseline. The proposed rule would

establish a definition of unsafe or

unsound practice that would result in

issuances of MRAs only where a

practice, act, or failure to act that, if

continued, could reasonably be

expected to, under current or reasonably

foreseeable conditions, materially harm

the financial condition of an institution.

The FDIC believes that it is plausible

that the proposed rule, if adopted, could

pose indirect benefits to FDIC-

supervised IDIs that exceed $139,850

and $124,175 a year for a substantial

number of small, FDIC-supervised IDIs

that, if

continued, could reasonably be

expected to, under current or reasonably

foreseeable conditions, materially harm

the financial condition of an institution.

The FDIC believes that it is plausible

that the proposed rule, if adopted, could

pose indirect benefits to FDIC-

supervised IDIs that exceed $139,850

and $124,175 a year for a substantial

number of small, FDIC-supervised IDIs.

The FDIC invites comments on all

aspects of the supporting information

provided in this RFA section, and in

particular, whether the proposed rule

would have any significant effects on

small entities that the FDIC has not

identified?

OCC Unfunded Mandates Reform Act

The OCC has analyzed the proposed

rule under the factors in the Unfunded

Mandates Reform Act of 1995

(UMRA).62 Under this analysis, the OCC

considered whether the proposed rule

includes a Federal mandate that may

result in the expenditure by State, local,

and tribal governments, in the aggregate,

or by the private sector, of $100 million

or more in any one year ($187 million

as adjusted annually for inflation).

Pursuant to section 202 of the UMRA,63

if a proposed rule meets this UMRA

threshold, the OCC would need to

prepare a written statement that

includes, among other things, a cost-

benefit analysis of the proposal. The

UMRA does not apply to regulations

that incorporate requirements

specifically set forth in law.

This proposed rulemaking imposes no

new mandates—and thus no direct

costs—on affected OCC-supervised

institutions. The OCC, therefore,

concludes that the proposed rule would

not result in an expenditure of $187

million or more annually by state, local,

and tribal governments, or by the

private sector. Accordingly, the OCC has

not prepared the written statement

described in section 202 of the UMRA.

Riegle Community Development and

Regulatory Improvement Act of 1994

Pursuant to section 302(a) of the

Riegle Community Development and

Regulatory Improvement Act of 1994, 12

U.S.C

expenditure of $187

million or more annually by state, local,

and tribal governments, or by the

private sector. Accordingly, the OCC has

not prepared the written statement

described in section 202 of the UMRA.

Riegle Community Development and

Regulatory Improvement Act of 1994

Pursuant to section 302(a) of the

Riegle Community Development and

Regulatory Improvement Act of 1994, 12

U.S.C. 4802(a), in determining the

effective date and administrative

compliance requirements for new

regulations that impose additional

reporting, disclosure, or other

requirements on insured depository

institutions, the agencies will consider,

consistent with principles of safety and

soundness and the public interest: (1)

any administrative burdens that the

proposed rule would place on

depository institutions, including small

depository institutions and customers of

depository institutions; and (2) the

benefits of the proposed rule. The

agencies request comment on any

administrative burdens that the

proposed rule would place on

depository institutions, including small

depository institutions, and their

customers, and the benefits of the

proposed rule that the agencies should

consider in determining the effective

date and administrative compliance

requirements for a final rule.

Providing Accountability Through

Transparency Act of 2023

The Providing Accountability

Through Transparency Act of 2023, 12

U.S.C. 553(b)(4), requires that a notice of

proposed rulemaking include the

internet address of a summary of not

more than 100 words in length of a

proposed rule, in plain language, that

shall be posted on the internet website

www.regulations.gov.

The Office of the Comptroller of the

Currency and the Federal Deposit

Insurance Corporation propose to define

the term ‘‘unsafe or unsound practice’’

for purposes of 12 U.S.C. 1818 and to

revise the supervisory framework for the

issuance of Matters Requiring Attention

and other supervisory communications

in plain language, that

shall be posted on the internet website

www.regulations.gov.

The Office of the Comptroller of the

Currency and the Federal Deposit

Insurance Corporation propose to define

the term ‘‘unsafe or unsound practice’’

for purposes of 12 U.S.C. 1818 and to

revise the supervisory framework for the

issuance of Matters Requiring Attention

and other supervisory communications.

The proposal and the required

summary can be found at https://

www.regulations.gov by searching for

Docket ID OCC–2025–0174 and https://

occ.gov/topics/laws-and-regulations/

occ-regulations/proposed-issuances/

index-proposed-issuances.html.

Executive Order 12866

Executive Order 12866, titled

‘‘Regulatory Planning and Review,’’ as

amended, requires the Office of

Information and Regulatory Affairs

(OIRA), Office of Management and

Budget to determine whether a

proposed rule is a ‘‘significant

regulatory action’’ prior to the

disclosure of the proposed rule to the

public. If OIRA finds the proposed rule

to be a ‘‘significant regulatory action,’’

Executive Order 12866 requires the

agencies to conduct a cost-benefit

analysis of the proposed rule. Executive

Order 12866 defines ‘‘significant

regulatory action’’ to mean a regulatory

action that is likely to (1) have an

annual effect on the economy of $100

million or more or adversely affect in a

material way the economy, a sector of

the economy, productivity, competition,

jobs, the environment, public health or

safety, or State, local, or tribal

governments or communities; (2) create

a serious inconsistency or otherwise

interfere with an action taken or

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a sector of

the economy, productivity, competition,

jobs, the environment, public health or

safety, or State, local, or tribal

governments or communities; (2) create

a serious inconsistency or otherwise

interfere with an action taken or

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64 See Clancy Fossum, Embark, What Are The

Fees & Hourly Rates Of Accounting Consulting

Firms? (Nov. 13, 2019), https://

blog.embarkwithus.com/what-are-the-fees-hourly-

rates-of-accounting-consulting-firms#:∼:text=

in%20each%20category.-,Big%204%20Firms,

global%20footprints%2C%20and%20charge

%20accordingly.&text=Although%20Big

%204%20fees%20in,be%20aware%20

of%20before%20proceeding.

65 See Consulting Mavericks, Average Consulting

Rates By Industry, https://

consultingmavericks.com/start/other/average-

consulting-rates-by-industry/ (last visited Sept. 26,

2025).

66 Note, these price ranges are as of 2019 economy

prices.

67 Financial advisory firms offer a wide range of

services to clients that could be useful for MRA

remediation. However, they typically do not

provide traditional accounting services and do not

sign off on opinions or certifications the way

accounting firms do.

68 See Perry Menezes et al., CSO Online, How

Financial Institutions Can Reduce Security and

Other Risks from MRAs | CSO Online (Aug. 29,

2023), https://www.csoonline.com/article/650386/

how-financial-institutions-can-reduce-security-and-

other-risks-from-mras.html#:∼:text=MRAs%20are%

20expensive,has%20not%20done%20its%20job.

69 According to a 2021 survey by Better Market,

the largest U.S. banks have incurred almost $200

billion in aggregate fines and penalties over the

previous 20 years from the time of the survey. See

BIP. Monticello Consulting Group, Building

Regulatory Resilience: A Deeper Look into Consent

Orders & MRAs (Apr

-risks-from-mras.html#:∼:text=MRAs%20are%

20expensive,has%20not%20done%20its%20job.

69 According to a 2021 survey by Better Market,

the largest U.S. banks have incurred almost $200

billion in aggregate fines and penalties over the

previous 20 years from the time of the survey. See

BIP. Monticello Consulting Group, Building

Regulatory Resilience: A Deeper Look into Consent

Orders & MRAs (Apr. 20, 2021), https://

www.monticellocg.com/blog/2021/04/20/building-

regulatory-resilience-a-deeper-look-into-consent-

orders-mras#_ftn2.

70 FDIC Call Report data, June 30, 2025.

planned by another agency; (3)

materially alter the budgetary impact of

entitlements, grants, user fees, or loan

programs or the rights and obligations of

recipients thereof; or (4) raise novel

legal or policy issues arising out of legal

mandates, the President’s priorities, or

the principles set forth in Executive

Order 12866.

OIRA has deemed that this proposed

rule is an economically significant

regulatory action under Executive Order

12866 and, therefore, is subject to

review under Executive Order 12866.

The agencies’ analysis conducted in

connection with Executive Order 12866

is set forth below.

1. OCC

The OCC currently supervises 1,012

national banks, federal savings

associations, trust companies and

branches and agencies of foreign banks

(collectively, banks). This proposed rule

would apply to all OCC-supervised

institutions. The OCC expects that OCC-

supervised institutions would have both

direct and indirect benefits as well as

indirect costs as a result of this

proposal.

Specifically, the proposed rule would

result in several direct benefits to OCC-

supervised institutions, namely,

significant cost and time savings to

institutions because they would have

fewer MRA issuances and enforcement

actions (collectively, issues) to address

going forward. Banks can incur

significant direct costs arising from

issues

as

indirect costs as a result of this

proposal.

Specifically, the proposed rule would

result in several direct benefits to OCC-

supervised institutions, namely,

significant cost and time savings to

institutions because they would have

fewer MRA issuances and enforcement

actions (collectively, issues) to address

going forward. Banks can incur

significant direct costs arising from

issues. For example, some banks hire

external consultants, for which hourly

rates can range from between $300 and

$1,200 an hour for top tier firms 64 65 to

$150 to $300 an hour for lower tier

firms. And financial advisory firms may

charge $250 to $550 per hour.66 67 To the

extent that there may be less need for

consultants, banks will directly benefit

from consultant cost savings.

In addition to consultant fees, banks

incur other direct costs to successfully

address issues and pay any associated

penalties. These costs may include

increased hiring and retention of

appropriately qualified employees,

training for existing employees, time

expenditure of employees (which may

include time spent addressing the

underlying issue, time by management

and the board to review and approve

changes made, time spent working with

external consultants, time conducting

internal audit verification, and time

spent in partnership with the OCC in

ongoing follow up communications and

possibly examinations specific to the

issue), updating processes and

procedures, and addressing the

underlying issue itself. If the issue has

to do with bank systems or

infrastructure, these costs could include

technology costs, which could be very

costly expenditures

nducting

internal audit verification, and time

spent in partnership with the OCC in

ongoing follow up communications and

possibly examinations specific to the

issue), updating processes and

procedures, and addressing the

underlying issue itself. If the issue has

to do with bank systems or

infrastructure, these costs could include

technology costs, which could be very

costly expenditures. If banks do not

remediate issues in a timely fashion,

they may also incur additional fines and

penalties on top of the costs to

remediate the issue itself.68 69

While it would be difficult to

precisely quantify the overall aggregate

annual direct cost savings to OCC

supervised institutions, the OCC expects

that this proposal would result in an

immediate and material cost savings to

affected institutions, easily ranging from

hundreds of millions to billions of

dollars saved annually in aggregate. In

addition to the significant direct cost

savings from no longer needing to

address issues, banks could potentially

experience several indirect benefits,

including clarity and consistency

regarding MRA or enforcement concerns

and less staffing turnover.

Regarding direct costs, this proposed

rulemaking imposes no new mandates,

and thus no direct costs, on affected

OCC-supervised institutions. Regarding

indirect costs, fewer issues may lead to

delayed identification of material risks,

which could include higher costs to

resolve such issues, associated losses,

and in extreme cases, failure.

Nevertheless, those risks should be low

because the proposed definition

endeavors to more effectively prioritize

the identification of material financial

risks (i.e., those most likely to cause

significant stress) and therefore to lower

the risk of bank failure

on of material risks,

which could include higher costs to

resolve such issues, associated losses,

and in extreme cases, failure.

Nevertheless, those risks should be low

because the proposed definition

endeavors to more effectively prioritize

the identification of material financial

risks (i.e., those most likely to cause

significant stress) and therefore to lower

the risk of bank failure. Accordingly, it

is also possible that under the proposal

risks to banks and risks of bank failures

could decrease significantly, because

under the proposal bank management

and bank examiners would prioritize

the identification and remediation of

issues that could result in material

financial loss to banks. Ultimately, the

net effect will be dependent upon

agency policies and oversight and

responses by bank management to this

proposal.

Overall, the OCC expects that the

combined effects of the proposed rule’s

changes to result in net direct impact of

a significant cost savings to all OCC-

supervised institutions, easily ranging

from hundreds of millions to several

billion dollars in aggregate. There are

also no explicit mandates in the

proposal for affected institutions. How

the proposal is executed and bank

responses to the execution will

ultimately determine the net impact

over the longer term.

2. FDIC

This analysis utilizes all regulations

and guidance applicable to FDIC-

supervised IDIs, as well as information

on the financial condition of IDIs as of

the quarter ending June 30, 2025, as the

baseline to which the effects of the

proposed rule are estimated.

Scope

The proposal, if adopted, would not

impose any obligations on FDIC-

supervised IDIs, and supervised IDIs

would not need to take any action in

response to this rule. The proposal, if

adopted, would require the FDIC to

revise their current practices regarding

the identification and communication of

examination findings. Therefore, the

FDIC would be the only entity directly

affected by the proposal

osal, if adopted, would not

impose any obligations on FDIC-

supervised IDIs, and supervised IDIs

would not need to take any action in

response to this rule. The proposal, if

adopted, would require the FDIC to

revise their current practices regarding

the identification and communication of

examination findings. Therefore, the

FDIC would be the only entity directly

affected by the proposal.

The proposal would indirectly affect

FDIC-supervised IDIs through

examinations conducted by the FDIC,

and the resulting ROEs. All FDIC-

supervised IDIs are subject to

examination by the FDIC. As of the

quarter ending June 30, 2025, the FDIC

supervised 2,808 IDIs.70 However, only

a subset of IDIs are examined every year,

therefore the proposed rule could

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71 $100,000,000/(2,808/1.5) = $53,418.80.

72 12 CFR part 364 establishes standards for safety

and soundness for supervised institutions.

indirectly affect a subset of FDIC-

supervised IDIs each year.

Annual Effect on the Economy or

Adverse Effect

The proposal, if adopted, would pose

two types of indirect benefits to FDIC-

supervised IDIs: (1) reductions in, or

more efficient use of, costs to comply

with findings from ROEs, and (2)

possible increases in proceeds from the

provision of banking products and

services. By raising the standard against

which an FDIC-supervised IDI’s action,

or inaction, is assessed to be eligible for

an MRA, IDIs may experience lower

volumes of examination findings,

particularly MRAs. Further, by

potentially reducing the number of

examination findings not related to

material risks to the financial condition

of the IDI, the proposed rule may enable

IDIs that do receive MRAs to more

effectively address those risks

DIC-supervised IDI’s action,

or inaction, is assessed to be eligible for

an MRA, IDIs may experience lower

volumes of examination findings,

particularly MRAs. Further, by

potentially reducing the number of

examination findings not related to

material risks to the financial condition

of the IDI, the proposed rule may enable

IDIs that do receive MRAs to more

effectively address those risks. Finally,

by enacting a consistent definition of

conditions that merit the use of MRAs

across the agencies, the proposed rule

may improve clarity and reduce

uncertainty of ROE findings, relative to

the baseline. Such reductions in

findings and increases in clarity may

reduce compliance costs or increase the

efficiency with which compliance costs

are expended by FDIC-supervised IDIs

to respond to ROE findings. The FDIC

does not have the information necessary

to quantify such potential indirect

benefits.

Negative feedback from regulators

during the examination process may

discourage FDIC-supervised IDIs from

taking part in activity and could result

in reduced provision of banking

products and services. To the extent that

matters requiring the attention of an

institution’s board of directors and

management are currently identified

and used in a way that raises potential

chilling effects, the proposal could

result in fewer such effects relative to

the baseline. A reduction in chilling

effects could enable FDIC-supervised

IDIs to provide financial products and

services to entities that they would not

have otherwise. The FDIC does not have

the data necessary to quantify this

potential benefit. Moreover, it is also

possible that under the proposal risks to

IDIs and risks of IDI failures could

decrease significantly, because under

the proposal IDI management and

examiners would prioritize the

identification and remediation of issues

that could result in material financial

loss to IDIs

have otherwise. The FDIC does not have

the data necessary to quantify this

potential benefit. Moreover, it is also

possible that under the proposal risks to

IDIs and risks of IDI failures could

decrease significantly, because under

the proposal IDI management and

examiners would prioritize the

identification and remediation of issues

that could result in material financial

loss to IDIs.

If adopted the proposed rule may

reduce the volume of examination

findings communicated to FDIC-

supervised IDIs and this could pose

certain indirect costs. To the extent that

the proposed rule, if adopted, delayed

the identification of material risks to the

financial condition of an IDI, such

entities could incur higher costs to

resolve such issues, associated loses,

and in extreme cases, failure. However,

as previously discussed, the FDIC

believe that the proposed definition of

unsafe or unsound better practice

prioritizes the identification and

communication of such risks. Therefore,

the FDIC believes that such costs are

unlikely to be substantial.

FDIC cannot quantitatively estimate

the indirect effects that FDIC-supervised

IDIs are likely to incur if the proposed

rule were adopted. However, assuming

that all FDIC-supervised IDIs are subject

to a bank examination once every 18

months the proposed rule would only

need to pose $53,419 in indirect

benefits, on average, to FDIC-supervised

IDIs to result in an annual economic

effect in excess of $100 million.71 Based

on the preceding analysis the FDIC

believes that the proposed regulatory

action could plausibly result in an

annual effect on the economy of $100

million or more. However, the FDIC

does not believe that the proposed rule

will adversely affect in a material way

the economy, a sector of the economy,

productivity, competition, jobs, the

environment, public health or safety, or

State, local, or tribal governments or

communities

lieves that the proposed regulatory

action could plausibly result in an

annual effect on the economy of $100

million or more. However, the FDIC

does not believe that the proposed rule

will adversely affect in a material way

the economy, a sector of the economy,

productivity, competition, jobs, the

environment, public health or safety, or

State, local, or tribal governments or

communities.

Serious Inconsistency

The FDIC does not believe the

proposed regulatory action would create

a serious inconsistency or otherwise

interfere with an action taken or

planned by another agency. Currently,

the FDIC and OCC use distinct

terminology to identify and

communicate deficiencies that rise to

the level of a matter that requires

attention from an institution’s board of

directors and management. The agencies

are proposing to jointly revise the

terminology and thresholds for the

issuance of MRAs in their supervisory

programs. Therefore, the FDIC believes

that this regulatory action would not

create a serious inconsistency or

otherwise interfere with an action taken

or planned by another agency, but rather

would remove existing inconsistencies.

Material Alternation

The FDIC does not believe the

proposed regulatory action would

materially alter the budgetary impact of

entitlements, grants, user fees, or loan

programs or the rights and obligations of

recipients thereof. The proposed

regulatory action does nothing to alter

entitlements, grants, user fees, or loan

programs or the rights and obligations of

the recipients of such programs.

Novel Legal or Policy Issues

The FDIC does not believe the

proposed regulatory action would raise

novel legal or policy issues arising out

of legal mandates, the President’s

priorities, or the principles set forth in

Executive Order 12866. The FDIC has

experience in conducting examinations

of the safety and soundness of IDIs and

communicating their findings in a

variety of ways since its inception

l or Policy Issues

The FDIC does not believe the

proposed regulatory action would raise

novel legal or policy issues arising out

of legal mandates, the President’s

priorities, or the principles set forth in

Executive Order 12866. The FDIC has

experience in conducting examinations

of the safety and soundness of IDIs and

communicating their findings in a

variety of ways since its inception.

Further, IDIs have an existing mandate

to operate in a safe and sound manner.72

Therefore, this proposed regulatory

action does not raise any novel legal or

policy issues.

Executive Order 14192

Executive Order 14192, titled

‘‘Unleashing Prosperity Through

Deregulation,’’ requires that an agency,

unless prohibited by law, identify at

least 10 existing regulations to be

repealed when the agency publicly

proposes for notice and comment or

otherwise promulgates a new regulation

with total costs greater than zero.

Executive Order 14192 further requires

that new incremental costs associated

with new regulations shall, to the extent

permitted by law, be offset by the

elimination of existing costs associated

with at least ten prior regulations. The

agencies anticipate that the proposed

rule will not be a regulatory action for

purposes of Executive Order 14192.

List of Subjects

12 CFR Part 4

Administrative practice and

procedure, Freedom of information,

Individuals with disabilities, Minority

businesses, Organization and functions

(Government agencies), Reporting and

recordkeeping requirements, Women.

12 CFR Part 305

Banks, Banking, Organization and

functions (Government agencies).

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

12 CFR Chapter I

Authority and Issuance

For the reasons set out in the

preamble, the OCC proposes to amend

chapter I of title 12 of the Code of

Federal Regulations as follows:

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OF THE TREASURY

Office of the Comptroller of the

Currency

12 CFR Chapter I

Authority and Issuance

For the reasons set out in the

preamble, the OCC proposes to amend

chapter I of title 12 of the Code of

Federal Regulations as follows:

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PART 4—ORGANIZATION AND

FUNCTIONS, AVAILABILITY AND

RELEASE OF INFORMATION,

CONTRACTING OUTREACH

PROGRAM, POST-EMPLOYMENT

RESTRICTIONS FOR SENIOR

EXAMINERS

■1. Revise the authority citation for part

4 to read as follows:

Authority: 5 U.S.C. 301, 552; 12 U.S.C. 1,

93a, 161, 481, 482, 484(a), 1442, 1462a, 1463,

1464, 1467a, 1817(a), 1818, 1820, 1821,

1831m, 1831p–1, 1831o, 1833e, 1867, 1951 et

seq., 2601 et seq., 2801 et seq., 2901 et seq.,

3101 et seq., 3102(b), 3401 et seq.,

3501(c)(1)(C), 5321, 5412, 5414; 15 U.S.C.

77uu(b), 78q(c)(3); 18 U.S.C. 641, 1905, 1906;

29 U.S.C. 1204; 31 U.S.C. 5318(g)(2), 9701; 42

U.S.C. 3601; 44 U.S.C. 3506, 3510; E.O.

12600 (3 CFR, 1987 Comp., p. 235).

■2. Add subpart G, consisting of §§ 4.91

and 4.92, to read as follows:

Subpart G—Enforcement and

Supervision Standards

Sec.

4.91

[Reserved]

4.92

Enforcement and supervisory

standards.

§ 4.91

[Reserved]

§ 4.92

Enforcement and supervisory

standards.

41, 1905, 1906;

29 U.S.C. 1204; 31 U.S.C. 5318(g)(2), 9701; 42

U.S.C. 3601; 44 U.S.C. 3506, 3510; E.O.

12600 (3 CFR, 1987 Comp., p. 235).

■2. Add subpart G, consisting of §§ 4.91

and 4.92, to read as follows:

Subpart G—Enforcement and

Supervision Standards

Sec.

4.91

[Reserved]

4.92

Enforcement and supervisory

standards.

§ 4.91

[Reserved]

§ 4.92

Enforcement and supervisory

standards.

(a) Unsafe or unsound practices. For

purposes of the OCC’s supervisory and

enforcement activities under 12 U.S.C.

1818, an ‘‘unsafe or unsound practice’’

is a practice, act, or failure to act, alone

or together with one or more other

practices, acts, or failures to act, that:

(1) Is contrary to generally accepted

standards of prudent operation; and

(2)(i) If continued, is likely to—

(A) Materially harm the financial

condition of the institution; or

(B) Present a material risk of loss to

the Deposit Insurance Fund; or

(ii) Materially harmed the financial

condition of the institution.

(b) Matters requiring attention. The

OCC may only issue a matter requiring

attention to an institution for a practice,

act, or failure to act, alone or together

with one or more other practices, acts,

or failures to act, that:

(1)(i) Is contrary to generally accepted

standards of prudent operation; and

(ii)(A) If continued, could reasonably

be expected to, under current or

reasonably foreseeable conditions,

(1) Materially harm the financial

condition of the institution; or

(2) Present a material risk of loss to

the Deposit Insurance Fund; or

(B) Materially harmed the financial

condition of the institution; or

(2) Is an actual violation of a banking

or banking-related law or regulation.

ii)(A) If continued, could reasonably

be expected to, under current or

reasonably foreseeable conditions,

(1) Materially harm the financial

condition of the institution; or

(2) Present a material risk of loss to

the Deposit Insurance Fund; or

(B) Materially harmed the financial

condition of the institution; or

(2) Is an actual violation of a banking

or banking-related law or regulation.

(c) Clarification regarding supervisory

observations. Nothing in paragraph (b)

of this section prevents the OCC from

communicating a suggestion or

observation orally or in writing to

enhance an institution’s policies,

practices, condition, or operations as

long as the communication is not, and

is not treated by the OCC in a manner

similar to, a matter requiring attention.

(d) Tailored application required. The

OCC will tailor its supervisory and

enforcement actions under 12 U.S.C.

1818 and issuance of matters requiring

attention based on the capital structure,

riskiness, complexity, activities, asset

size and any financial risk-related factor

that the OCC deems appropriate.

Tailoring required by this paragraph (d)

includes tailoring with respect to the

requirements or expectations set forth in

such actions as well as whether, and the

extent to which, such actions are taken.

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Chapter III

Authority and Issuance

For the reasons set out in the

preamble, the Board of Directors of the

Federal Deposit Insurance Corporation

proposes to add part 305 to title 12 of

the Code of Federal Regulations as

follows:

■3. Add part 305, consisting of § 305.1,

to read as follows:

PART 305—ENFORCEMENT AND

SUPERVISION STANDARDS

Sec.

305.1

Enforcement and supervision

standards.

Authority: 12 U.S.C. 1818, 1819(a)

(Seventh, Eighth, and Tenth), 1831p–1.

§ 305.1

Enforcement and supervision

standards.

Insurance Corporation

proposes to add part 305 to title 12 of

the Code of Federal Regulations as

follows:

■3. Add part 305, consisting of § 305.1,

to read as follows:

PART 305—ENFORCEMENT AND

SUPERVISION STANDARDS

Sec.

305.1

Enforcement and supervision

standards.

Authority: 12 U.S.C. 1818, 1819(a)

(Seventh, Eighth, and Tenth), 1831p–1.

§ 305.1

Enforcement and supervision

standards.

(a) Unsafe or unsound practices. For

purposes of the FDIC’s supervisory and

enforcement activities under 12 U.S.C.

1818, an ‘‘unsafe or unsound practice’’

is a practice, act, or failure to act, alone

or together with one or more other

practices, acts, or failures to act, that:

(1) Is contrary to generally accepted

standards of prudent operation; and

(2)(i) If continued, is likely to—

(A) Materially harm the financial

condition of the institution; or

(B) Present a material risk of loss to

the Deposit Insurance Fund; or

(ii) Materially harmed the financial

condition of the institution.

(b) Matters requiring attention. The

FDIC may only issue a matter requiring

attention to an institution for a practice,

act, or failure to act, alone or together

with one or more other practices, acts,

or failures to act, that:

(1)(i) Is contrary to generally accepted

standards of prudent operation; and

(ii)(A) If continued, could reasonably

be expected to, under current or

reasonably foreseeable conditions,

(1) Materially harm the financial

condition of the institution; or

(2) Present a material risk of loss to

the Deposit Insurance Fund; or

(B) Materially harmed the financial

condition of the institution; or

(2) Is an actual violation of a banking

or banking-related law or regulation.

ii)(A) If continued, could reasonably

be expected to, under current or

reasonably foreseeable conditions,

(1) Materially harm the financial

condition of the institution; or

(2) Present a material risk of loss to

the Deposit Insurance Fund; or

(B) Materially harmed the financial

condition of the institution; or

(2) Is an actual violation of a banking

or banking-related law or regulation.

(c) Clarification regarding supervisory

observations. Nothing in paragraph (b)

of this section prevents the FDIC from

communicating a suggestion or

observation, orally or in writing, to

enhance an institution’s policies,

practices, condition, or operations as

long as the communication is not, and

is not treated by the FDIC in a manner

similar to, a matter requiring attention.

(d) Tailored application required. The

FDIC will tailor its supervisory and

enforcement actions under 12 U.S.C.

1818 and issuance of matters requiring

attention based on the capital structure,

riskiness, complexity, activities, asset

size and any financial risk-related factor

that the FDIC deems appropriate.

Tailoring required by this paragraph (d)

includes tailoring with respect to the

requirements or expectations set forth in

such actions as well as whether, and the

extent to which, such actions are taken.

Jonathan V. Gould,

Comptroller of the Currency.

Federal Deposit Insurance Corporation.

By order of the Board of Directors.

Dated at Washington, DC, on October 7,

2025.

Jennifer M. Jones,

Deputy Executive Secretary.

[FR Doc. 2025–19711 Filed 10–29–25; 8:45 am]

BILLING CODE 4810–33–6714–01–P

DEPARTMENT OF TRANSPORTATION

Office of the Secretary of

Transportation

14 CFR Part 399

[DOT–OST–2025–0633]

RIN 2105–AF38

Procedures in Regulating and

Enforcing Unfair or Deceptive

Practices

AGENCY: Office of the Secretary of

Transportation (OST), U.S. Department

of Transportation (DOT or Department)

ecretary.

[FR Doc. 2025–19711 Filed 10–29–25; 8:45 am]

BILLING CODE 4810–33–6714–01–P

DEPARTMENT OF TRANSPORTATION

Office of the Secretary of

Transportation

14 CFR Part 399

[DOT–OST–2025–0633]

RIN 2105–AF38

Procedures in Regulating and

Enforcing Unfair or Deceptive

Practices

AGENCY: Office of the Secretary of

Transportation (OST), U.S. Department

of Transportation (DOT or Department).

VerDate Sep<11>2014

16:26 Oct 29, 2025

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