Many bankers are up in arms over the way regulators are evaluating their businesses, bringing complaints to their lawyers and lobbyists that toughened standards are being applied in inappropriate or inconsistent ways. But if disputes between bankers and regulators are arising, they are increasingly being resolved before the point of formal enforcement actions, as severe enforcement actions meted out by regulators ended 2011 with another sharp decline.

In a sign that the banking industry is regaining its balance, cease-and-desist orders and consent orders totaled just 34 in the fourth quarter through Dec. 20. That figure represents a 40 percent decline from the third quarter, when such enforcement actions had also dropped 40 percent from the prior three-month period. The fall-off had intensified in the second half of the year; between the first and second quarters of 2010, the number of cease-and-desist and consent orders had declined 25 percent.

Prompt corrective action directives also have become less common. The five prompt corrective action directives in the fourth quarter through Dec. 20 were half the number issued in the third quarter, and down from the 22 such directives that regulators issued in the first quarter of last year. Prompt corrective action directives are a more serious species of formal orders triggered when banks are undercapitalized, though cease-and-desist and consent orders also frequently require banks to raise capital-for instance when regulators determine that lending practices have been unsound.

When enforcement actions first began to slow, skeptics argued that the industry had simply reached a point of saturation-2,130 enforcement actions had been carried out since the beginning of 2007, in a universe of about 7,500 institutions-or that regulators were only pausing as they dealt with problems already in the queue.

Other indicators of the ranks of troubled banks also have improved, however. "Problem institutions" identified by the Federal Deposit Insurance Corp. have translated into failures at a declining rate, and the count of problem institutions itself began to drop in last year's second quarter, marking the first slowdown in almost five years.

In October, the FDIC lowered its projection for how much failures would cost the agency from 2011 to 2015 by about 10 percent to $19 billion, a forecast that compares with an estimated cost of $79 billion from failures in 2008 through 2010.

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