This article was developed using publicly available responses submitted to Requests for Information issued by banking regulators. It summarizes and synthesizes themes, perspectives, and information reflected in those public submissions for informational purposes only. The article does not represent the views of any regulator, respondent, institution, or the Firm, and should not be interpreted as legal, regulatory, or compliance advice.
Executive Summary
Question 18 asks whether violations of banking and banking-related laws should form the basis for MRAs, and if so, how precisely that universe should be defined. Respondents broadly support the concept but emphasize the need for clear boundaries, examples, and alignment with agencies’ enforcement authority. Views diverge on whether to include state laws alongside federal banking statutes. The central challenge is delivering fair notice and uniformity while avoiding overlap and ambiguity.
Key takeaways:
- Commenters urged the agencies to publish categories of laws considered “banking and banking-related.”
- Several respondents recommended limiting MRAs to laws for which an agency has specific statutory enforcement authority.
- Some advocated that only federal banking laws where the agencies have primary enforcement should form the basis for MRAs.
- Others supported including actual violations of state and federal banking and consumer financial laws as a basis for MRAs.
- Fair notice and avoidance of overlapping supervisory authority were recurring reasons for tighter definitions.
- Commenters flagged ambiguity in the phrase, asking “where is the line on banking and banking-related laws?”
- Multiple submissions affirmed that MRAs should rest on actual violations of statutes or regulations, not broad expectations.
Bottom line:
Most respondents agree that “banking and banking-related” violations can appropriately ground MRAs, but they call for explicit boundaries, examples, and alignment with agency enforcement authority. The strongest consensus favors clarifying the definition and, for many, limiting it to laws the agencies can directly enforce, while others would also include state laws.
The Question (Ref #18)
Under the proposal, the agencies could cite violations of banking and banking-regulated laws or regulations as MRAs. Is ‘‘banking and banking-related’’ the right universe? Should the agencies provide additional clarity on what constitutes banking and banking-related laws? If so, what should be included? Should the agencies limit the scope of banking and banking-
related laws to federal banking and banking-related law? Why or why not?
Direct Response to the Catalog Question
Most respondents (70%) support using violations of banking and banking-related laws as a basis for MRAs, signaling the universe is directionally right but needs clearer boundaries.
Respondents asked the agencies to define the term by publishing categories and illustrative examples of banking and banking-related laws and regulations.
Multiple commenters recommended limiting MRAs to laws the issuing agency has specific statutory authority to enforce, tying scope to clear jurisdiction.
Some urged narrowing further to federal banking and banking-related laws where the agencies have primary enforcement responsibility.
Others argued the scope should include actual violations of state and federal banking and consumer financial laws, not just federal statutes.
Across positions, commenters stressed fair notice, avoidance of overlapping authority, and reliance on actual legal violations rather than supervisory expectations.
Introduction
Under the proposal, agencies could cite violations of banking and banking-related laws or regulations as MRAs. Question 18 asks whether that is the right universe, whether additional clarity is needed on what counts as banking and banking-related, what should be included, and whether the scope should be limited to federal law. Respondents addressed these issues through recommendations on specificity, enforcement authority, and the treatment of state law.
Historic Lessons in the Evidence
Respondents’ reasoning highlights recurring themes: clarity reduces ambiguity and promotes fair notice; tying the scope to statutory enforcement authority avoids supervisory overlap; and publishing categories or examples aids examiner consistency. Where definitions are vague, stakeholders fear inconsistent application and jurisdictional conflicts. Emphasizing actual violations anchors MRAs in law rather than subjective expectations, improving predictability.
The Challenge
The practical difficulty is drawing a workable line for “banking and banking-related” that is neither overbroad nor underinclusive. Commenters flagged risks of overlapping authority and inconsistent examiner application if the term remains ambiguous, while noting tension between a federal-only approach and inclusion of state banking and consumer financial laws. Ensuring fair notice and uniform execution, without constraining supervisors from citing actual legal violations, is the core implementation challenge.
Evolving Metrics
Respondents assessed the scope through legal and supervisory lenses: alignment with specific statutory enforcement authority; whether an agency holds primary enforcement; the connection to banking and consumer financial laws; and the requirement that MRAs be grounded in actual violations. They also emphasized procedural fairness, fair notice and uniformity, as key evidence standards for an acceptable definition.
A Framework Inspired by the Inputs
A common pattern emerges: define the universe explicitly via categories, anchor inclusion to agency enforcement authority, clarify how state and federal laws fit, and provide illustrative examples for fair notice. Apply MRAs only to actual violations, not expectations, and coordinate to avoid overlap. This approach seeks certainty for institutions and uniformity for examiners while preserving necessary supervisory tools.
Case Study
A representative thread across submissions paired definitional clarity with enforcement alignment: commenters recommended publishing a categorized list and examples of covered laws, restricting MRAs to statutes the agencies can enforce (often emphasizing federal banking laws with primary enforcement), while others argued that state and federal consumer financial laws should also count. This illustrates a balancing act between precision and breadth, resolved by transparent criteria and examples.
Recommendations
- Publish a categorized taxonomy of “banking and banking-related” laws and regulations, supported by illustrative examples.
- Tie eligibility for MRA citation to laws for which the issuing agency has specific statutory enforcement authority.
- Clarify when federal-only coverage applies versus when state banking and consumer financial laws can form the basis for MRAs.
- Provide examiner job aids and cross-agency guidance to ensure uniform application and minimize overlap.
- Embed a fair notice standard by pre-identifying covered categories and updating examples periodically.
- Center MRAs on actual violations of statutes or regulations rather than supervisory expectations.
- Coordinate with state supervisors to address jurisdictional boundaries and avoid duplicative or conflicting actions.
Conclusion
Respondents largely endorse using “banking and banking-related” violations as a basis for MRAs but want the term expressly defined and bounded. The evidence supports a definition anchored in statutory enforcement authority, complemented by published categories and examples to deliver fair notice and consistency. Views diverge on including state law, with some favoring a federal-only scope where agencies have primary enforcement and others supporting both state and federal banking and consumer financial laws. Clear criteria and coordination can reconcile these positions and operationalize the proposal effectively.
Follow us, stay informed, stay secure, and let’s navigate the risk landscape together.