EO 14219 and MRAs, MRIAs & MRBAs

EO 14219 and MRAs, MRIAs & MRBAs -- an example from the FDIC Crypto Documents:

EO 14219 orders agencies to de-prioritize (and terminate) enforcement inconsistent with Administration policy and legal views. The banking world saw a wave of terminations last week. But there will be others we can't see.

That's because the EO's broad definition of "enforcement action" seems to encompass certain confidential supervisory processes that bank regulators do not typically deem "enforcement" -- including Matters Requiring Attention (MRAs), Matters Requiring Immediate Attention (MRIAs), and Matters Requiring Board Attention (MRBAs).

"Enforcement action" for purposes of the EO "means all attempts, civil or criminal, by any agency to deprive a private party of life, liberty, or property, or in any way affect a private party’s rights or obligations, regardless of the label the agency has historically placed on the action."

Writing against the background of the "debanking" controversy, the authors of this language may have been thinking of fact patterns like the one reflected in these two FDIC letters from 2023-24. Here's a brief timeline:

🗓️ 8/5/2022 - Bank notifies FDIC (in response to FIL 16-2022) of its intent to provide crypto-asset related services with a third party

🗓️ 8/26/2022 - FDIC requests more information.

🗓️ 9/26/2022 - FDIC launches an examination.

🗓️ 7/16/2023 - FDIC transmits exam findings including MRBAs related to the bank's intent to provide crypto-asset related services to its customers.

🗓️ 7/18/2023 - Bank notifies the FDIC that the third party was terminating its agreement with the bank.

🗓️ 9/8/2023 - Bank confirms in the exam response that "all test accounts were closed and notifications were provided to all accountholders."

🗓️ 1/26/2024 - FDIC notifies the bank that, "Based on your response to the examination findings, the MRBA are closed."

But as usual, things are not so simple.

The MRBAs spelled out a list of specific concerns about the bank's risk assessment, vendor due diligence, board oversight, and compliance management system as they related to the planned crypto activities. The shift in regulatory attitudes towards crypto does not necessarily mean anything goes. It's hard to say how this bank's experience would have gone today.

Supervision of novel products and business models operates with two layers of standards: (1) a policy layer reflecting the principal decision-makers' attitudes towards the novel product or charter, and (2) a supervisory layer that applies normal regulatory standards.

You have to check both boxes.