OCC and FDIC Adopt Definition for Unsafe Practices, Revise MRA Rules

The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation issued a final rule, Docket ID OCC-2026-0174, RIN 1557-AF35 and RIN 3064-AG16, effective November 2, 2026. The rule defines "unsafe or unsound practice" for purposes of section 8 of the Federal Deposit Insurance Act and revises the supervisory framework for issuing Matters Requiring Attention (MRAs) and other supervisory communications.

Under the final rule, an unsafe or unsound practice is a practice, act, or failure to act - alone or combined with other practices - that is contrary to generally accepted standards of prudent operation and either (i) if continued, is likely to materially harm the financial condition of an institution or present a material risk of loss to the Deposit Insurance Fund, or (ii) has already materially harmed the institution's financial condition. The definition applies to both supervised institutions and institution-affiliated parties.

The revised MRA framework limits issuance of an MRA to a practice, act, or failure to act that meets the same prudent-operation standard and either poses a reasonable expectation of material harm or loss to the DIF, has already caused such harm, or constitutes an actual violation of banking law or regulation. For concerns that do not meet the MRA criteria, examiners may provide oral or written supervisory observations without treating them as MRAs.

The rule's scope is expressly limited to institutions the agencies supervise, which include national banks, insured state nonmember banks, federal and state savings associations, federal branches and agencies of foreign banks, insured state-licensed branches of foreign banks, and industrial loan corporations subject to agency supervision or enforcement. The agencies may tailor enforcement and supervisory actions based on risk factors such as capital structure, complexity, activity mix, asset size, and other financial-risk considerations.

The agencies received 36 comments on the October 30, 2025 notice of proposed rulemaking. While many commenters supported the focus on material financial risks and greater clarity, some opposed the proposal, arguing it could limit proactive risk identification. The final rule incorporates modifications but retains the core objective of prioritizing material financial risks over non-financial concerns in supervisory and enforcement actions.