Over the last eight years, the number of severe enforcement actions issued to U.S. banks and thrifts by the country's major banking regulators has decreased 95.6% as the Consumer Financial Protection Bureau assumed a larger role in policing the finance industry. But on the aggregate, banks have seen fewer enforcement actions as the overall industry continues to reduce safety and soundness concerns.

Chris Cole, executive vice president and senior regulatory counsel at the Independent Community Bankers of America, said in an interview that an improving economy generally lends itself to fewer enforcement actions. Although he still sees "run of the mill" enforcement actions concerning issues like flood insurance and the Bank Secrecy Act, Cole said he has seen an overall decline in orders at the community bank level. An S&P Global Market Intelligence analysis shows that in 2010, the Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, and the Office of Thrift Supervision issued 767 severe enforcement actions to U.S. banks and thrifts compared to 34 in 2017.
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"I think it is largely because they're in better shape now than they used to [be]," Cole said, comparing the health of community banks in the present day to the financial crisis. Cole said ICBA members have instead seen a rise in matters requiring attention, or MRAs, over the past three to four years, particularly concerning national rate caps and high commercial real estate concentrations.
The decline in enforcement actions since 2010 partially reflects the shift in enforcement responsibilities to the CFPB, which was created by the post-crisis Dodd-Frank financial regulatory framework. The CFPB assumed jurisdiction over any enforcement matters concerning federal consumer financial laws. Since its founding in 2011, the agency has publicly issued 45 enforcement actions against banks or subsidiaries of banks.
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But the tides may be changing as the CFPB undergoes an internal review initiated by Acting Director Mick Mulvaney, the Office of Management and Budget director selected by President Donald Trump to head the agency after Richard Cordray left to run for governor of Ohio. Mulvaney has actively halted agency work on enforcement actions, and is reviewing open investigations left behind by Cordray.
Recently, Mulvaney asked the public for comment on how the agency should function, beginning with a "call for evidence" on civil investigative demands. The agency already dropped two enforcement actions: one against World Acceptance Corp. and one against a group of online lenders.
"When it comes to enforcement, we will be focusing on quantifiable and unavoidable harm to the consumer," Mulvaney wrote to CFPB staff in a memo Jan. 23. He added that "we won't go looking for excuses to bring lawsuits." Mulvaney soon after consolidated a key office dealing with fair lending matters into the office of director, re-purposing employees formerly tasked with pursuing enforcement matters into "advocacy, coordination, and education" roles.
Alan Kaplinsky, a partner with Ballard Spahr, said it is too early to say if the change in leadership at the CFPB will dramatically reduce enforcement actions in the future. But he said Mulvaney has slowed down activity within the CFPB's enforcement division.
"The trend is going in a more industry friendly [direction]," Kaplinsky said.
States, especially those with Democratic attorneys general, could more aggressively pursue enforcement actions against banks as the CFPB backs off. But Kaplinsky noted that state AGs currently cannot issue subpoenas to national banks, motivating Democratic senators to propose legislation to expand the states' power in enforcing state laws.
Cole said community banks, for the time being, have not been too bothered by state AGs but could see "activist" states taking more interest in enforcement.
"They're trying to fill what they say are voids in federal regulations," Cole said.

S&P Global Market Intelligence defines severe enforcement actions as cease-and-desist orders, prompt corrective action directives, and formal agreements/consent orders handed to a bank or thrift by a federal regulator. This analysis does not include severe enforcement actions issued to holding companies or credit unions.
It is important to note that certain cease-and-desist orders issued by federal regulators in the recent past may be referred to as consent agreements on regulatory websites due to a change in language. However, a cease and desist order and a consent order are derived from the same section of law 12 U.S.C. 1818(b). Both orders are structured the same, outlining areas of concern and the corrective actions that an institution must take. In order to maintain consistency with previous years, this analysis refers to these recent actions as cease-and-desist orders.
Did you enjoy this analysis? Click here to set up real-time alerts for data-driven articles on the U.S. financial sector. Click here to view the map as a PDF. For a spreadsheet listing the five most recent enforcement actions for an individual bank or thrift, click here. Click here to visit S&P Global Market Intelligence's enforcement actions page. |



