WASHINGTON - It must be harder to find fault when banks are posting record profits.

For the second consecutive year, regulators in 1994 issued fewer formal enforcement actions against banks. When regulators finish tabulating 1994's performance, the industry is expected to break its previous 1993 earnings record of $43.4 billion.

"The system is just much, much healthier today," said Jo Ann Barefoot, president of Barefoot, Marrinan & Associates, a compliance consulting company based in Columbus, Ohio. "Many of the weak players (who were hit with the bulk of enforcement actions) are gone."

Just 168 national banks were hit with formal actions last year, down 42% from 1993 and off 67% from the 514 formal actions taken by the Comptroller of the Currency's office in 1992.

For state banks that do not belong to the Federal Reserve system, the decrease was 33% - to 144 formal enforcement actions in 1994. That's 57% less than the 338 taken by the Federal Deposit Insurance Corp. in 1992.

The Federal Reserve issued just 139 formal enforcement actions against its charges in 1994, down just one from the previous year but down 21% from 1992.

Formal enforcement actions are legally binding and include formal agreements, consent orders, civil money penalties, and the removal of a bank officer or director. Informal enforcement actions, such as supervisory letters, are written agreements between regulators and bankers to correct less serious problems.

The agencies are required to report their enforcement records to Congress each year. Those reports have not been filed yet, so information for this story was collected individually from each agency.

The Comptroller's office issued 22 cease and desist orders, 18 formal agreements, and 33 commitment letters last year. Thirty-seven national bank officers or directors were removed from their jobs by the agency. Civil money penalties were assessed against 98 national banks.

The FDIC doled out 48 cease and desist orders, removed 56 officers and directors, and issued 10 civil money penalties. Last year, the agency also tried to strip deposit insurance from Doolin Security Savings Bank, a New Martinsville, W.Va., federal savings bank that refused to pay its full risk-based premium. That case, argued Dec. 4 before the U.S. Court of Appeals for the Fourth Circuit in Richmond, Va., is still pending.

The Fed's 139 total includes 48 permanent or temporary cease and desist orders, 24 written agreements, 13 removals, and 13 civil money penalties.

The central bank also said informal enforcement actions fell 42% to 128 in 1994. That's down from 336 informal sanctions in 1992, the Fed said.

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