Quarterly Financial Services Enforcement Actions Tracker

A total of 45 actions were levied by federal regulators in Q3 2019. The number of regulatory enforcement actions increased 18% from Q2 2019 and was driven primarily by an increase in activities from the FDIC and other federal regulators, as seen in Table 1. 

BICMStarting from Q4 2018, the FDIC has been providing a larger percentage of overall actions enforced by federal regulators: In Q4 2018, it enforced 29% of total actions; in Q1 2019, it enforced 32% of total actions; in Q2 2019, it enforced 29% of total actions; and in this past quarter, the FDIC enforced 14 actions accounting for 31% of the total 45 actions. Some of FDIC’s top regulatory focus areas are National Flood Insurance Program violations, and Governance Deficiencies related to Insufficient Capital and Bank Secrecy Act violations. 

It is noteworthy that the Commodity Futures Trading Commission (CFTC) enforced seven actions in Q3 2019, with most of these actions involved improper records-keeping, data reporting, or documents filing. 

Federal Actions Highlights from Q3 2019:

Actions by Regulators
  • A total of 45 federal-level regulatory actions were observed this period. Compared with 38 federal actions in the past quarter and 23 federal actions in Q3 2018, the current quarter is an 18% increase since last quarter, and a 96% increase from Q3 2018.
  • In Q3 2019, there were 30 actions levied by the five major federal regulators, including the Consumer Financial Protection Bureau (CFPB), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), Federal Reserve Bank (FED), and Department of Justice (DOJ). The number is a 6% decrease since last quarter, and a 58% increase compared with Q3 2018.
  • In this quarter, the FDIC had its highest number of actions in a single period observed over the past five quarters: a total of 14 actions were levied by the FDIC in Q3 2019, an increase of three over last quarter, and 2.5 times more actions than Q3 2018.
  • The Q3 2019 increase was primarily driven by high activity from regulators other than the five major federal regulators, with 16 actions enforced, representing 36% of total actions enforced by federal regulators.
Actions by Action Types
  • Civil Money Penalty is still the most frequently used action type for federal regulators to enforce regulatory requirements. In Q3 2019, 30 actions involved Civil Money Penalty, making up 67% of the 45 federal actions. In the past quarter, there were 24 actions involving Civil Money Penalty, making up 63% of the 38 federal actions.
  • The second-most frequently used action type was Consent Order. In Q3 2019, 23 actions involved Consent Order, making up 51% of the 45 federal actions. 
Actions by Cited Regulations
  • National Flood Insurance Program was the area of law that was cited the most during this quarter, with a total of 10 actions, or 22% of total Q3 2019 federal actions. Most of these actions were enforced by the FDIC. It is also the most frequently cited area of law in federal actions during the past five quarters, with a total of 27 citations accounting for 13% of the total 214 observations. 
  • Allowance for Loan and Lease Losses-related violations were the area of law that was cited the second-most frequently during this quarter, with a total of six citations accounting for 13% of the total Q3 2019 federal-level enforcement actions. These actions were mostly related to insufficient capital and governance deficiencies violations. 
  • Bank Secrecy Act/Anti-Money Laundering laws is the other most frequently cited area of law in federal actions during the past five quarters, with a total of 27 citations observed. 
    Actions by Business Area.
  • Twelve federal actions in the third quarter were related to mortgage origination or mortgage servicing. In Q3 2019, California-based loan modification service providers were alleged for discrimination in loan origination process; one bank violated the Real Estate Settlement Procedures Act (RESPA) by agreeing to pay and accept fees for the referral of mortgage loan business, and the bank also violated the Telephone Consumer Protection Act by placing telemarketing phone calls to consumers on the “Do Not Call” registry. 
  • One federal action in the quarter was related to auto loans, violating the Servicemembers Civil Relief Act. The company repossessed vehicles without obtaining appropriate court orders and failed to refund lease amounts paid in advance on a pro rata basis. 
    Monetary Penalty by Violation Types
  • In Q3 2019, Unfair, Deceptive or Abusive Acts or Practices (UDAAP) has been the source of the highest amount of associated monetary penalties enforced by federal regulators, with over $783 million enforced. Most of these monetary penalties were caused by a global settlement with Equifax that provided up to $700 million in monetary relief and penalties.  
  • In the past five consecutive quarters, improper mortgage loan practice has been the source of the highest amount of associated monetary penalties enforced by federal regulators, with almost $8.5 billion enforced, most of which were related to carryover cases from the credit crisis that involved loan underwriting and securitizing/issuance of residential mortgage-backed securities. 
  • A total of 59 actions over the past five quarters involved governance deficiencies, making it the source of the highest number of occurrences, with almost $1 billion in fines or penalties. Most of these observed governance deficiencies violations were related to UDAAP, insufficient capital, BSA/AML, and risk management. 
  • National Flood Insurance Program; Bank Secrecy Act; Unfair, Deceptive or Abusive Acts or Practices; and Securities, Commodities, or Foreign Exchange are some of the other most frequently referenced violation types in the past five quarters, with over 20 cases observed for each.

Special thanks to contributors Caitlin Cremlin and Siwen Tang.

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