- Key insight: Annual enforcement actions by the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency have fallen steadily dating back to the Obama administration.
- Expert quote: "What has happened within the banking industry to justify a 50% reduction in enforcement activity for Federal Reserve-supervised banks versus OCC-supervised banks? I believe it is a culture of regulatory laxity at the Fed." — Aaron Klein, senior fellow in economic studies, Brookings Institution
- Forward Look: Other data points, such as matters requiring attention, dropped sharply last year, indicating that enforcement activity could decline still further.
Much has changed in bank supervision during the past four presidential administrations, but one thing has remained true: the number of public enforcement actions has been on the decline.
In 2015, the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency issued more than 500 public enforcement actions, according to a recent
The two years are not outliers, the study finds, but rather the bookends of a decade-long decline in enforcement activity that has persisted through changing political environments and agency leadership. Aaron Klein, a senior fellow in economic studies at Brookings and one of the co-authors of the report, said his findings dispel the notion that bank oversight is more rigorous under Democratic administrations and more permissive under Republicans.
"The narrative of a regulator pendulum is just false," Klein said. "There has been a ratchet down for the past 10 years, and it's across the board."
This downward trajectory has been most evident at the Fed, he said, noting that the central bank averaged 87 actions a year under Dan Tarullo — the Fed governor who oversaw bank regulation and supervision under then-President Barack Obama — 72 under former Vice Chair for Supervision Randal Quarles, 42 under former Vice Chair for Supervision Michael Barr and 37 under current Vice Chair for Supervision Michelle Bowman, who took the position last year.
The OCC has followed a similar path under its recent comptrollers: Tom Curry's annual average was 119, Joseph Otting's was 90, Michael Hsu's was 84 and Jonathan Gould — who was sworn in in July 2025 — has overseen 89. At the FDIC, former Chair Martin Gruenberg's first chair stint saw an average 238 actions per year, which dipped to 130 under his successor Jelena McWilliams. Gruenberg oversaw an average of 108 enforcement actions in his second go around as chair, and current chair Travis Hill has overseen 143 actions.
While the trendline has been the same, Klein noted that the dropoff has been sharpest at the Fed. Looking at the periods 2017 to 2019 and 2023 to 2025 — factoring out the tail-end of the financial crisis and the COVID-19 pandemic — the Fed's annual enforcement activity fell by 48%, compared to a 25% drop from the FDIC and a 4% increase for the OCC.
"The Fed, more than any other regulator, has radically reduced its use of enforcement, which is the hammer in the supervisory toolkit," Klein said, noting that the decline pre-dates the current set of bank regulators in Washington. "What has happened within the banking industry to justify a 50% reduction in enforcement activity for Federal Reserve-supervised banks versus OCC-supervised banks? I believe it is a culture of regulatory laxity at the Fed."
Yet, former supervisory officials say the topline numbers explored in the Brookings report do not tell the entire story.
Scott Alvarez, the former general counsel of the Federal Reserve Board, said the decline in enforcement actions likely reflects the shrinking footprint of the banking system, which has gone from well over 5,000 banks in 2015 to fewer than 4,000 today.
Along with a smaller pool of banks, there are also fewer individuals to cite, Alvarez said, noting that enforcement actions against bank employees and executives typically take the form of lifetime bans from banking — a practice that has a "purifying" effect on the industry.
"I don't take any signal from the number of enforcement actions. I like to see that the agencies are active and engaged, but you can't tell much from the numbers," Alvarez said. "When the banking industry is stable, without a lot of bank failures, that's a good sign that the system is working. To some extent, complaints from the banks are a good sign, too, because they would not complain if the agencies weren't after them to remain in compliance."
There are other confounding factors as well. Public enforcement actions are not the only method for agencies to compel banks to address issues — they can also issue directives known as matters requiring attention or, for more urgent issues, matters requiring immediate attention. The number of those citations issued between 2021 and 2024 rose among most categories of banks, according to the Fed's latest
Agencies can also enter into memorandums of understanding with banks to address issues. These have a similar corrective function as other enforcement actions but are not made public and are typically not enforceable in court. The degree to which supervisors have relied upon those arrangements in lieu of a more formal enforcement action is unknown.
It is also true that enforcement actions differ substantially from one to another. For example, the OCC's
Alvarez said the issues flagged by enforcement actions tend to be ones that transcend partisan politics.
"The politics of bank regulation are not enforcement actions. Everybody agrees that those should be brought against people and companies for embezzlement and money laundering," he said. "Capital rules, living wills, permissible activities — the bigger, broader regulatory stuff that doesn't lead to enforcement — those are the parameters where the political fights usually occur."
Klein acknowledged the limited scope of the data in his report, but noted that public enforcement actions are among the only means to evaluate the work of bank regulators. While much supervisory activity is shielded from the public to avoid inducing panics, Klein said the agencies could do more to release high-level, anonymized data about deficiencies in the banking system and their efforts to address them.
"The data we have to judge regulators' effectiveness are small. Public enforcement actions are one metric — and maybe not even the best one — for judging effectiveness, but regulators have been reluctant to provide more information about MRAs, MRIAs and MOUs," he said. "It highlights the need for regulators to be more transparent about what they are doing to allow the public to judge them."
