---
title: "Enforcement Actions: definition, formula, and thresholds"
description: "Enforcement actions are formal and informal measures bank regulators take against an institution or its officers: consent orders, cease-and-desist orders, civil money penalties, and written agreements. They are the public footprint of supervisory problems."
canonical_url: https://www.bankregreports.com/glossary/enforcement-actions/
source: BankRegReports
category: "Supervision & Ratings"
units: "ratio"
---

# Enforcement Actions

> Enforcement actions are formal and informal measures bank regulators take against an institution or its officers: consent orders, cease-and-desist orders, civil money penalties, and written agreements. They are the public footprint of supervisory problems.

## Formula

```
Enforcement Actions = Formal (consent/C&D orders, CMPs) + Informal (MOUs, board resolutions) regulatory actions
```

Issued by the OCC, FDIC, Federal Reserve, NCUA, or CFPB. Formal actions are public and legally enforceable; informal actions (memoranda of understanding) are often non-public. The type and severity signal how serious supervisors consider the underlying problem.

## Why it matters

An enforcement action is a regulator putting supervisory concern on the record. A consent order over capital, asset quality, or BSA/compliance failures often constrains the bank's activities and is a strong signal of elevated risk, and frequently precedes failure in severe cases.

## How to read it

Read the type, subject, and recency. A formal capital- or safety-and-soundness order is far more serious than a routine compliance MOU, and a cluster of actions or a still-open order points to unresolved problems. Terminated actions indicate the issue was addressed.

## Thresholds

| Range | Reading | What it means |
|---|---|---|
| None | Clean | No public enforcement actions on record. |
| Informal / resolved | Low | Minor or terminated actions; issues addressed. |
| Formal order open | Watch | Active consent or C&D order constraining the bank. |
| Severe / multiple | Concern | Serious safety-and-soundness or repeat actions; elevated failure risk. |


## Worked example

A bank that was issued a consent order requiring it to raise its leverage ratio above 9% and submit a capital plan is under binding supervisory constraints until it complies: a public signal, available through the regulators' enforcement databases, that examiners see material risk.

## Questions

### What is the difference between a formal and informal enforcement action?

Formal actions (consent orders, cease-and-desist orders, civil money penalties) are public and legally enforceable. Informal actions, such as memoranda of understanding, are typically non-public and used for less severe concerns.

### Who issues bank enforcement actions?

A bank's primary federal regulator: the OCC for national banks, the FDIC and state regulators for state nonmember banks, the Federal Reserve for state member banks and holding companies, and the NCUA for credit unions, plus the CFPB for consumer matters.

## Sources

- OCC, FDIC, Federal Reserve, and NCUA enforcement action databases

## Related metrics

- [CAMELS Rating](https://www.bankregreports.com/glossary/camels-rating/): CAMELS is the supervisory rating system examiners use to grade a bank's safety and soundness across six components (Capital, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk) on a 1 (best) to 5 (worst) scale.
- [Prompt Corrective Action](https://www.bankregreports.com/glossary/prompt-corrective-action/): Prompt Corrective Action (PCA) is the framework that sorts banks into capital categories (from well capitalized to critically undercapitalized) and imposes escalating mandatory restrictions as capital falls. It defines the 'well capitalized' threshold banks aim to clear.
- [Bank Failures](https://www.bankregreports.com/glossary/bank-failures/): A bank failure occurs when a regulator closes an insolvent or critically undercapitalized bank and appoints the FDIC as receiver. Failures cluster in credit and rate crises and are the ultimate outcome the safety-and-soundness metrics try to predict.
- [Texas Ratio](https://www.bankregreports.com/glossary/texas-ratio/): The Texas ratio is a bank's problem assets divided by its tangible equity plus loan loss reserves. Problem assets are nonaccrual loans, loans 90 or more days past due and other real estate owned, net of government guarantees. A ratio above 100% means problem assets exceed the capacity to absorb them, a level long tied to bank failures.

## About this document

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