The OCC and FDIC define unsafe or unsound practice by rule — narrowing matters requiring attention to material financial harm — Federal Register (September 2026)
The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation adopted a final rule defining unsafe or unsound practice for purposes of section 8 of the Federal Deposit Insurance Act and revising the framework for issuing matters requiring attention. Effective November 2, 2026.
Document overview (primary data)
- Document typeRule
- AgencyDepartment of the Treasury
- Citation91 FR 56004
Key points
- The OCC and FDIC published a final rule defining unsafe or unsound practice for section 8 of the Federal Deposit Insurance Act (published September 1, 2026; effective November 2, 2026).
- It also sets standards for issuing Matters Requiring Attention and supervisory observations.
- The framework focuses on practices that, if continued, would likely materially harm financial condition or present a material risk of loss to the Deposit Insurance Fund.
- The agencies state it is critical that examiners and institutions prioritize material financial risk over policy, process and documentation concerns.
- Modified from the October 30, 2025 proposal after comments, with scope explicitly limited to institutions the agencies supervise.
1Deciding by rule what an examination may flag
In bank supervision, examiners issue Matters Requiring Attention to the institutions they oversee. For a long time that practice was built up as supervisory convention rather than set out in regulation. The final rule the OCC and FDIC published on September 1, 2026 changes that premise.
It defines unsafe or unsound practice — the phrase that carries the enforcement authority of section 8 of the Federal Deposit Insurance Act — in regulation, and sets standards for when MRAs and supervisory observations are issued. The agencies state that defining these enforcement and supervision standards by regulation is important for promoting greater clarity and certainty.
2A shift in what gets priority
The agencies state their concern plainly: it is critical that examiners and institutions prioritize material financial risks over concerns related to policies, process, documentation and other nonfinancial risks. Moving the center of gravity of supervision toward financial substance has been written into the text of the rule itself.
3From proposal to final rule
The agencies published a notice of proposed rulemaking on October 30, 2025 (90 FR 48835). Having considered the comments received, they adopt a final rule consistent with the objectives of the proposal, with modifications.
One is scope: the final rule is explicitly limited to institutions the agencies supervise — national banks, insured state nonmember banks, federal and state savings associations, federal branches and agencies of a foreign bank, insured state licensed branches of a foreign bank, and industrial loan corporations subject to the agencies' supervision or enforcement.
The other clarifies how the agencies will tailor their use of unsafe or unsound practices and MRAs based on risk factors specific to an institution.
4Where a rule sits
The document is published as a rule, effective November 2, 2026. Of the 6,830 Federal Register documents this site holds as of 2026-09-02, 920 are rules and 460 are proposed rules, against 5,384 notices. The path from proposed rule to final rule typically runs over a year with a comment period in between; here roughly ten months separate the October 2025 proposal from this final rule.
A further two months sit between publication and effect, functioning as the window in which institutions adjust.
Why it matters
A framework shifting supervisory weight from nonfinancial findings toward material financial risk has been set in regulation rather than convention. Because it reaches national banks, insured state nonmember banks and U.S. offices of foreign banks, reviewing examination readiness before the effective date becomes a practical concern.
FAQ
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Sources (primary)
Source: Federal Register (federal documents, public domain). Links go to the official site.