On September 8, the FDIC announced it had updated chapter four of its Formal and Informal Enforcement Actions Manual, on Cease-and-Desist Actions, revising the minimum standards for terminating cease-and-desist and consent orders issued under Section 8(b) of the FDI Act. The latest update allows for greater discretion in terminating an order. Termination of an order may be considered in the following circumstances: if an institution has achieved at least substantial compliance; if the order is no longer applicable due to closure, self-liquidation, or merger; or if deterioration leads to a new or revised formal action. The FDIC had previously modified its procedures in 2022 to prohibit termination of Section 8(b) orders unless the bank was in full compliance with all provisions but now presents greater leeway with terminating orders.
An institution may have achieved substantial compliance with an order when it has satisfied the essential requirements of the order’s purpose or objective, despite minor or isolated requirements not fully satisfied. The FDIC also acknowledged rare circumstances where termination may be appropriate even if none of the specified conditions are met, but in such situations regional office staff must believe there should be made exception and obtain agreement from the FDIC’s office in Washington, D.C.
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