BOARD OF GOVERNORS
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
DIVISION OF BANKING
SUPERVISION AND REGULATION
SR 97-5 (ENF)
March 11, 1997
TO THE OFFICER IN CHARGE OF SUPERVISION
AT EACH FEDERAL RESERVE BANK
SUBJECT: Policy Statement on Interagency Notification and Coordination of Enforcement Actions
For many years, the Federal Reserve and the other federal financial institutions supervisory agencies have been operating under two interagency notification and coordination policy statements relating to enforcement actions issued by the FFIEC in 1979 and 1984. These statements basically required that a banking agency proposing to take a formal or informal enforcement action notify in writing other federal banking authorities, and in some cases state bank supervisors, about its proposed action and, to the extent necessary, coordinate the enforcement action. Multiple written notifications were required at regional and Washington, D.C. headquarters levels, and the 1979 policy statement contained a process for coordinating enforcement matters among the federal banking agencies.
In 1996, pursuant to the requirements of section 303 of the Community Development and Regulatory Improvement Act of 1994, an interagency task force working under the auspices of the FFIEC was formed to review the agencies' experience over the past several years with the policy statements, and to determine if enhancements were needed. As a result of the review, a single revised policy statement was considered by the agencies' representatives to the Council, and published in the Federal Register on February 20, 1997. A copy of the new policy statement is attached. Each of the federal financial institutions supervisory agencies are now adopting the policy statement.
The revised policy statement establishes a uniform system of interagency written notification for both formal and informal actions, and is designed to encourage useful notification at the earliest time practicable by providing the following:
- Every time an agency proposes to take a formal enforcement action against a banking organization or institution-affiliated party, it must notify the other federal financial institutions supervisory agencies (and where appropriate a state supervisory authority).
- If there is an affiliation or other inter-institutional relationship, an agency proposing to take an informal enforcement action must notify another federal or state banking agency responsible for supervising the affiliated institution.
- Notifications must take place, at the latest, by the time an agency official, or group of officials, determine to take a formal or informal enforcement action.
- In the event complementary enforcement actions are needed, the banking agencies will coordinate the preparation, processing, presentation, service, and follow-up of the enforcement actions.
- Each notification required by the policy statement is to be made to a designated contact person or persons within the agencies.
An important change in the revised policy statement is the designation of a contact person or persons for the purposes of notification for both formal and informal actions, and the elimination of duplicative notifications at regional and headquarters offices. We expect that the designation of individuals responsible for notifications about enforcement actions at the other federal banking agencies will enhance our ability to coordinate enforcement matters of mutual interest.
For the purposes of the new interagency notification procedures concerning formal and informal enforcement actions set forth in the revised policy statement, Herbert A. Biern, Deputy Associate Director, Division of Banking Supervision and Regulation, is the Board's designated official. Under Mr. Biern's direction, the staff of the Enforcement Section of the Division of Banking Supervision and Regulation will both send notifications to and receive notifications from the contact persons at the other federal bank regulatory agencies. Reserve Banks will no longer have to send or receive their own interagency notifications to their colleagues at the regional offices of the other federal financial institutions supervisory agencies or, where needed, to state bank supervisors. In coordination with the domestic and foreign bank supervision staff of the Division, Enforcement Section staff will notify appropriate members of your Reserve Bank's staff about any formal or informal enforcement action that we are notified about by the FDIC, OCC, OTS, or NCUA which may relate to a financial institution supervised by your Reserve Bank or an institution-affiliated party associated with such an institution.
To facilitate the Federal Reserve's interagency notification responsibilities concerning informal enforcement actions, we request that your staff notify Mr. Biern whenever your Reserve Bank decides to take an informal action, such as a memorandum of understanding, against a domestic or foreign banking organization, and also to provide him with information concerning any affiliations or relationships the banking organization that will be subject to the informal action may have with another financial institution. Upon the receipt of notification from you about a proposed informal enforcement action, Mr. Biern will coordinate the matter with Board and Reserve Bank supervision staff and, where necessary, transmit a notification letter to the designated contact person or persons at the other federal banking agency supervising an affiliated bank or thrift.
It should be emphasized that the new revised policy statement principally addresses the ministerial requirement to provide written notifications to other federal and state bank supervisory authorities concerning informal and formal enforcement actions. Under the guidelines set forth above, the written notification letters will be the responsibility of the Division's Enforcement Section. The staffs of the Reserve Banks should continue to coordinate any planned enforcement actions with their colleagues at other regulatory agencies where there are mutual interests and to share pertinent information and documents at the earliest practical time.
Questions regarding this policy statement or its implementation should be directed to Mr. Biern, at (202) 452-2620.
ATTACHMENT TRANSMITTED ELECTRONICALLY BELOW:Policy Statement on Interagency Notification and Coordination of Enforcement Actions by the Federal Bank Regulatory Authorities
Supersedes SR-587 and SR 84-34 (FIS)
INTERAGENCY NOTIFICATION AND COORDINATION OF ENFORCEMENT
ACTIONS BY THE FEDERAL BANK REGULATORY AUTHORITIES
Any federal banking regulatory agency that proposes to take a formal enforcement action against any federally regulated financial institution or any institution-affiliated party shall notify in writing the other federal banking regulatory agencies, and, where appropriate, a state supervisory authority prior to or at the initiation of such action. For the purposes of interagency notification, an enforcement action is initiated when the appropriate responsible agency official, or group of officials, determines that formal enforcement action should be taken. All notification to other federal banking regulatory agencies shall be made to a designated contact person or persons as specified by each agency.
When there is an affiliation or other inter-institutional relationship, any federal banking regulatory agency that proposes to take an informal enforcement against any federally regulated financial institution or institution-affiliated party shall notify in writing the other appropriate federal banking regulatory agencies and, where appropriate, a state supervisory authority prior to or at the initiation of such action.
In the event that complementary action (e.g., action involving a bank and its parent holding company, or a U.S. branch or agency and a foreign bank) is considered appropriate by two or more federal banking regulatory agencies, the preparation, processing, presentation, service, and follow-up of the enforcement action shall be coordinated by the agencies directly involved.
The purpose of these procedures is to encourage notification to appropriate federal and state bank regulatory authorities at the earliest practicable date. These procedures are not intended to preclude or forestall any federal banking regulatory agency from initiating an enforcement action alone and on a timely basis against an institution or institution-affiliated party for which it has primary supervisory jurisdiction.
SR letters | 1997