Enforcement Actions Declined 5% at Fed Last Year

The Federal Reserve hit 5% fewer banks with enforcement actions last year, but the reduction was not as great as at the other regulatory agencies.

The Fed issued 132 formal enforcement actions in 1995, seven fewer than in the previous year. The decline was the third in a row for the central bank.

As reported in January, the Office of the Comptroller of the Currency issued only 85 enforcement actions in 1995, down 63% from the 1994 total. Actions against state banks that are not members of the Fed dropped 13%, to 126, according to the Federal Deposit Insurance Corp. And the Office of Thrift Supervision took only 168 enforcement actions last year, down 22% from 216.

Jim McLaughlin, director of regulatory and trust affairs at the American Bankers Association, said banks' high capital levels and stepped-up compliance efforts had reduced the number of enforcement actions.

"I think the industry has its act together," Mr. McLaughlin said. "But it doesn't mean that we should get complacent with compliance."

Enforcement actions can be either formal or informal. Formal enforcement actions are legally binding and include formal agreements, consent orders, civil money penalties, or the removal of a bank director or officer. Informal actions are written agreements between regulators and bankers to correct less serious problems.