What’s Driving the Proposed Changes in MRA Issuance, and What They Mean for Banks

Over a three-decade career at the Office of the Comptroller of the Currency (OCC), Kris McIntire’s duties included overseeing community, mid-size, and large banks. He served as the examiner-in-charge at three major financial institutions, had a role on the OCC’s National Risk Committee, and was named an international member of the Basel Committee on Bank Supervision’s Cross-Border Crisis Management Group.

Currently, as part of his work as a consultant for Ludwig Advisors and Huron—and as a national bank board member for SoFi, where he participates on the audit, risk, and compensation committees—McIntire has taken a keen interest in the proposed changes in how banking supervisors treat Matters Requiring Attention (MRAs). Captured in the Notice of Proposed Rulemaking Regarding Unsafe or Unsound Practices and Matters Requiring Attention, the changes are designed to focus attention on material financial risks, contributing to a stronger financial system, he said.

Examiners will no longer be constrained by a long checklist that led to concerns of “mission creep” as the 2008 financial crisis receded into the distance. The changes leave some banking leaders believing they’ll have a clearer idea of what supervisors expect and a freer hand to shore up in-house safeguards. The joint revision from the OCC and FDIC sets a higher bar for issuing MRAs that allows examiners to largely rely on their own judgment to detect and determine if banking activity rises to “unsafe or unsound practices,” according to the joint release of proposed supervisory standards. 

However, some observers say the proposed rule leaves a lack of clarity in how to define “material financial risk.”

The time is right to more precisely define what rises to the level of an MRA, McIntire said. “But I also agree with those who are calling for clarity in defining what is considered to be a material financial risk. That will be an important aspect in the final rule.

“I want to see where the industry tries to go and where the regulators end up with a final rule. There needs to be a more consistent definition of material financial risk for MRAs that is positive not just for the industry but for regulatory agencies as well,” he said.

The comment period on the OCC and FDIC proposal closed at the end of last year. Hammering out the finer details continues ahead of an unconfirmed 2026 release date. Separately, the Federal Reserve has shared a memo of operating principle priorities.

In the Q&A below, which has been edited for length and clarity, McIntire gives his perspectives on the proposed changes and what they might mean for financial institutions.

ProSight Financial Association: What is driving the proposed rulemaking on safety and soundness and MRAs?

McIntire: One is an overarching driver that is influencing not just this topic but, frankly, the whole regulatory regime. And that is to “right-size” the supervisory approach. Whether we’re talking about the OCC, which I’m most familiar with, or the Fed or FDIC, they’re all similar in what they’re trying to achieve. At its core, this is a refocus on helping institutions be an integral part of the economic engine that will support growth in the U.S. In doing that, the federal banking agencies are refocusing the examination approach on material financial risks. You hear that in speeches that [Comptroller of the Currency] Jonathan Gould or members of his senior leadership team give.

The second driver is around the industry’s call that federal banking regulators had perhaps gone too far in what they consider to be MRAs. When we think back to the financial crisis of 2008 and post-crisis, there were a lot of regulatory requirements put in place through law and regulation, and secondarily, changes in the way federal banking regulators carried out their jobs. Tolerance for that degree of scrutiny rose because that was human nature in the wake of a big crisis. Now it’s time for reflection: “Have we perhaps taken it too far?”

The industry learned great lessons and instilled tremendous discipline on the financial side of the house: capital management, credit risk, liquidity risk, etc., over the past decade. And that gives one pause to ask if that’s, in part, why you may have an increase in MRAs or other supervisory findings in non-financial areas such as compliance risk, operational risk, etc. Have financial risks been getting less attention and do they need energy refocused toward them?

ProSight: How would you characterize the way the issuance of MRAs has evolved?

McIntire: Speaking directly from my experience as a private sector board member, the number of MRAs that institutions have faced, whether by the OCC or the other federal banking agencies, greatly increased. In some instances, an institution may be dealing with 100-plus MRAs. The resources associated with that are tremendous. What the OCC is trying to do here is bring more clarity and more consistency in defining what constitutes an MRA so banks can be more critically focused on issues that could or are already impacting their financial condition. For instance, the rulemaking rewrite puts a focus on bank practices or acts that present a material risk of loss to the deposit insurance fund as one proposed criterion for citing an MRA.

I also think that in recent years, as what some would call “mission creep” occurred and a checklist of risks to account for developed, examinations tended to be more process-oriented and less about examiner judgment.

We can use the speed of the run on Silicon Valley Bank as an example—although keep in mind I have not consulted in an official capacity on that institution, so any analysis is purely speculative from my point of view. But one could argue that the SVB situation is exactly where this proposed rulemaking may be going, meaning you can argue that its closing was largely a missed liquidity crisis and signs, if noticed, would have constituted a material financial risk. Did internal or supervisory focus waver too much from looking at core aspects like liquidity, liquidity management, contingency planning around liquidity, or scenario planning? This is a potential thesis that this proposal by the FDIC and OCC may be attempting to address.

I take comfort in the fact that the OCC and the FDIC will still afford their examiners the opportunity to share observations with the institutions that they supervise, either in written form or verbally. There is risk that any bank will or will not act on what is a recommendation or observation. Most bankers that I dealt with [as a regulator] appreciated that aspect of the supervision, the part of the consultation that wasn’t always criticism. Similarly, it behooves the industry to instill more discipline around giving appropriate attention to those observations and recommendations. At the end of the day, you don’t do something for a regulator or banking agency. You act because it’s right for the organization you manage.

ProSight: One proposed adjustment calls for immediately closing an MRA once a bank can verify an underlying issue is corrected. And the section of the memo on operating principles that does away with “overly broad” examinations stresses supervisors should invite feedback from banks on whether an MRA is justified. So banks are helping to determine what remediation might include.

McIntire: It’s never a one-sided process. There are any number of discussions that happen between the examiners and the supervised institutions before exam reports or supervisory letters are written. Examiners are reasonable. If they hear something or are provided with new or different information, they will take that into account before reaching a final conclusion. That process will continue to exist after this proposal.

The industry should largely be self-policing. Regulators are there as a safety net. It’s really a mandate from Congress that they exist. This proposed MRA regulatory change does not mean that if I’m a bank CEO I now just sit back and relax a lot more. In many ways, that job may have gotten tougher now that they need to make sure in-house processes, systems, and controls are stronger because the regulatory environment has changed and may continue to change.