The OCC Has Invented the "Technical Violation" — and Wants to Bar Examiners From Writing It Up

A Matter Requiring Attention is not an enforcement action. It carries no penalty and is not published. It is a line in an examination report telling a bank to fix something, and for years it has been the instrument through which most supervisory pressure actually reaches a bank. The Office of the Comptroller of the Currency now proposes to write down, in regulation, when an examiner may use one.

The proposed test

The notice of proposed rulemaking, issued August 27, 2026 under RIN 1557-AF56 and Docket OCC-2026-0529, would amend 12 CFR Part 4 and codify the standard at 12 CFR 4.92. Its operative sentence is short: a violation of a law or regulation is substantive if its nature, duration, frequency, or severity could meaningfully impact the institution or its customers.

That threshold alone is not enough. The violation must also meet at least one of five criteria:

1. It is systemic or represents a pattern.
2. It has a direct, clear, predictable and more-than-minimal impact on the institution's financial condition.
3. It has a more-than-minimal impact on the accuracy of the institution's books and records.
4. It requires more-than-minimal restitution, or has a more-than-minimal adverse impact on customers.
5. It involves insider misconduct or self-dealing.

The new category

Anything falling short becomes what the proposal calls a technical violation, defined as a violation of a law or regulation for which the OCC does not take an enforcement action or issue a matter requiring attention. This is a genuinely new supervisory object: an infraction that is formally acknowledged as a violation and formally excluded from both of the tools that would normally follow one.

Bulletin OCC 2026-42, issued the same day, sets out what examiners may still do about one. They may direct correction. They may not dictate the methodology of that correction, and they may not require remediation steps unrelated to the violation itself.

The manuals

Alongside the proposal, Bulletin OCC 2026-41 revised PPM 5310-3, the policies and procedures manual on bank enforcement actions, around three stated principles: escalation, tailoring, and focus. It also states that the OCC will generally not take enforcement action without first giving the bank an opportunity to remediate deficiencies through the supervisory process.

More unusually, the OCC released PPM 5400-11, the internal manual governing when MRAs are issued, publicly for the first time. Its uniform standard limits MRAs to practices that are contrary to prudent banking standards and could materially harm the bank's financial condition or pose material risk to the Deposit Insurance Fund, or that violate banking law or regulation.

Today, the OCC is taking a number of historic steps to codify the agency's return to risk-based supervision.

Scope and cost

The proposal applies to all 986 OCC-supervised institutions, of which approximately 602 are classified as small entities. The OCC characterises the cost savings as de minimis and states that the rule imposes no direct costs on institutions. The bulletins reach CEOs of all national banks, federal savings associations, and federal branches and agencies of foreign banking organisations, as well as examining personnel.

Why it matters

Supervision has always run partly on discretion, and the MRA is where that discretion lives. Codifying a threshold makes the tool more predictable for banks and more contestable — a bank told to fix something can now point to a regulation and ask which of the five criteria applies. It also narrows the range of things examiners can escalate without opening a formal action. Whether that is a correction or a loss of early-warning capacity depends on how much of past supervisory value sat in the findings that would now be technical.