Enforcement actions
Enforcement actions taken against institutions or individuals can be either informal and private or formal and public.*
Informal enforcement actions
Bank and thrift supervisors have a variety of informal tools that can be used in less serious situations. These informal actions include commitment letters, board resolutions and memoranda of understanding. These actions are not public and are not enforceable in a court. The analysis in this article does not include these informal enforcement actions.
Formal enforcement actions
These actions are referred to as "formal" actions because they are enforceable under section 8 of the Federal Deposit Insurance Act. The primary formal actions against institutions discussed in this article include the following:
Cease and desist orders (temporary and permanent)
Cease and desist orders are typically the most severe and can be issued either with or without consent. When cease and desist orders are issued without consent, they are done so after issuance of a Notice of Charges and an administrative hearing. If actions proceed to this level, the Notice of Charges, hearing and agency decision are also available to the public.
Written agreement
A written agreement is enforceable just like a cease and desist order, but is a contract signed by both the institution/individual and the supervisor. A written agreement usually contains the same types of provisions found in a cease and desist order, but does not include a Notice of Charges-type recitation of facts. Supervisors who use written agreements refer to them by a variety of names, including "written agreements," "formal agreements" or "supervisory agreements."
Civil money penalties
Civil money penalties are not corrective in nature, but instead simply assess a fine for various types of infractions. The amount of the penalty that can be assessed by a regulator will typically be higher if the individual's or institution's conduct was knowing or reckless, caused a loss to a financial institution or resulted in gain to the wrongdoer.
Actions against individuals: Institution-affiliated party
Formal actions can also be taken against individuals who meet the statutory definition of "institution-affiliated party." Most institution-affiliated parties are employees, officers, directors or shareholders of the financial institution or its holding company. However, under certain circ*mstances, accountants, attorneys or other consultants can meet the definition of an institution-affiliated party. Actions against individuals include cease and desist orders; written agreements; civil money penalty assessments; and removal, suspension and prohibition orders.
* Data reflected in this article deal only with formal enforcement actions. Also excluded from this review are conditions imposed in writing in connection with approval of an application filed by a banking organization. Finally, this review does not include actions taken by agencies other than the federal bank and thrift supervisors that are not joint with the action of the supervisors.
Return to: Supervisory Enforcement Actions Since FIRREA and FDICIA
FAQs
Enforcement actions can include formal agreements, cease and desist orders, civil money penalties, and removal and prohibition orders. These actions are used to require banks and other financial institutions to take corrective action to address deficiencies or violations of laws and regulations.
What are the three types of enforcement actions? ›
The three (3) main categories of enforcement action are: (1) corrective actions, (2) sanctions and (3) other supervisory actions. These enforcement actions may be imposed singly or in combination with others.
What are the formal enforcement actions of the Federal Reserve? ›
Formal enforcement actions include cease and desist orders, written agreements, prompt corrective action directives, removal and prohibition orders, and orders assessing civil money penalties.
What are enforcement actions? ›
Enforcement Action: Is when a problem has been discovered, usually by the FDA or some other. federal agency, and an official report of the problem has been given to the study.
Is a MOU an enforcement action? ›
MOUs are nonpublic enforcement actions. A public enforcement action can be issued to compel the management and directors of a bank to address its weaknesses.
What is an example of enforcement? ›
Enforcement is when someone in a position of power makes sure you follow the rules, whether it's a police officer pulling over a speeding car, or your brother catching you cheating at checkers. Most people benefit from the enforcement of laws, because it prevents criminals from taking advantage of others.
What is the most severe supervisory action? ›
Cease and desist orders are typically the most severe and can be issued either with or without consent.
How do the actions of the Federal Reserve affect me? ›
The Federal Reserve's decisions on interest rates significantly impact the economy, affecting everything from the costs consumers and businesses pay to borrow money to the job market, the stock market and inflation.
Does the Federal Reserve have law enforcement? ›
As a Law Enforcement Officer, you will report to an Assistant Manager and help protect Bank property, valuables, and staff. A sworn Federal Law Enforcement Officer with full arrest powers to enforce federal laws and Federal Reserve policies and regulations to protect life, property and assets.
What are the 5 things the Federal Reserve does? ›
The Fed Explained
- Overview of the Federal Reserve System. ...
- The Three Key System Entities. ...
- Conducting Monetary Policy. ...
- Promoting Financial System Stability. ...
- Supervising and Regulating Financial Institutions and Activities. ...
- Fostering Payment and Settlement System Safety and Efficiency.
Primary enforcement seat belt use laws permit law enforcement officers to stop and cite a violator independent of any other traffic violation. Secondary enforcement laws allow law enforcement officers to cite violators only after they first have been stopped for some other traffic violation.
What is an enforcement notice? ›
An enforcement notice is a notice served against unauthorised development requiring the unauthorised development to be demolished or the unauthorised use to cease, for example.
What is a CFPB enforcement action? ›
When we take action to enforce the law, we (or a court) may order the violator to remedy the harm it caused consumers by compensating victims for this harm. We may also give back money through our civil penalty fund or our redress program.
Does an MOU hold up in court? ›
Is an MOU Legally Binding? A memorandum of understanding (MOU) is a legal document but it is not necessarily legally binding, although it usually signals a contract is imminent. The specific intent and language of the agreement will determine whether it is actually binding or not.
Can you sue over an MOU? ›
If something is not legally binding, a court will not enforce it. This means that one party could walk away from an MOU without much worry. If the other party were to sue for not following the MOU, the court would not award damages to the party who was harmed when the other party walked away.
Can an MOU be legally binding? ›
Similar to a contract, a memorandum of understanding is an agreement between two or more parties. Unlike a contract, however, an MOU need not contain legally enforceable promises. While the parties to a contract must intend to create a legally binding agreement, the parties to an MOU may intend otherwise.
What are the three main levels of public law enforcement? ›
So whether someone is an officer, detective, marshal, or an agent, they are part of law enforcement. In the United States, there are three general levels of law enforcement: federal, state, and local. Let's take a closer look at each one.
What are the three main functions of law enforcement in the community? ›
The primary duties of law enforcement include the investigation, apprehension, and detention of individuals suspected of criminal offenses. Some law enforcement agencies, particularly sheriffs' offices, also have a significant role in the detention of individuals convicted of criminal offenses.
What are the three levels of law enforcement in this country? ›
Law enforcement is tasked with the detection and prevention of crime. There are three levels of law enforcement: federal, which investigates crimes at the national level; state, which keeps the peace within a specific state; and local, which is in charge of law and order in a specific municipality.
What are the 3 major functions of police quizlet? ›
the functions of the police can be classified into three groups: (1) order maintenance, (2) law enforcement, and (3) service.
