The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have finalized a rule defining “unsafe or unsound practice” and standardizing the issuance of Matters Requiring Attention (MRAs). Building on their 2025 proposal to focus supervision on material financial risks, the rule defines such a practice as conduct contrary to generally accepted standards of prudent operation that has materially harmed an institution’s financial condition or, if continued, is likely to cause such harm or present a material risk of loss to the Deposit Insurance Fund. It applies prospectively to institutions supervised by the agencies and excludes institution-affiliated parties, which remain subject to prior enforcement standards. MRAs may be issued where imprudent conduct could reasonably be expected, under current or reasonably foreseeable conditions, to cause material financial harm or risk to the Deposit Insurance Fund, a lower probability threshold than the unsafe-or-unsound standard. They may also address actual violations of banking or banking-related law. The agencies intend to reserve MRAs for substantive violations, including patterned or systemic breaches, those causing more than minimal harm or restitution, and insider misconduct or self-dealing. Lesser violations may still require remediation. Supervisory observations that do not meet the MRA threshold carry no requirement or expectation for corrective action or board presentation, while determinations supporting MRAs or unsafe-or-unsound findings must rest on objective facts and sound reasoning. Application will be tailored to each institution’s capital structure, complexity, activities, size and other financial risk factors. As risk increases, the materiality threshold decreases, assessments become more granular and remediation expectations rise. The rule takes effect 60 days after publication in the Federal Register.

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