On April 30, the Fed released an updated “Statement of Supervisory Operating Principles,” superseding the original statement issued in October 2025 (previously covered by InfoBytes here). The updated statement incorporates guidance on additional issues not addressed in the original statement and clarifies earlier guidance in response to staff feedback. It adds an explicit statement of the primary objectives of supervision: (i) identifying as early as possible significant threats to the safety and soundness of banking organizations and financial stability, and any violation of law or regulation; and (ii) encouraging or directing banking organizations to take appropriate, proportionate action “to eliminate or mitigate” those threats and violations promptly. Notably, the guidance encourages examiners to focus on material financial risks rather than “processes, procedures, and documentation that do not pose a material risk to a firm’s safety and soundness.”

Among the changes and additions, the updated statement provides that:

1. Matters Requiring Attention (MRAs) and Matters Requiring Immediate Attention (MRIAs) based on threats to safety and soundness may be issued only where staff determines in good faith that a deficiency, if not timely remediated, would create a “significant probability of significant harm” to a firm’s financial condition.
2. Enforcement actions based on unsafe or unsound practices require a higher threshold: a practice must create an “abnormal probability of abnormal harm,” defined as “substantially higher than normal or significant,” though the vice chair for supervision may grant exceptions to the extent permitted by law.
3. Staff must use “currently available tools” to estimate probability and severity “in good faith,” a standard satisfied only if staff has sufficient evidence that a particular estimate is plausible, and quantitative tests are under development, including tests for whether an estimated loss would cause a firm to fall below well-capitalized status or suffer a significant outflow of liquid assets within a short period.
4. Self-identified deficiencies that would otherwise meet the MRA or MRIA standard will presumptively be treated as supervisory observations if the banking organization promptly begins remediation.
5. Examiners may independently validate remediation when a firm’s internal audit function is ineffective, does not exist, or has not validated the remediation — broadening the original statement’s condition of an unsatisfactory internal audit rating.
6. Staff must terminate MRAs, MRIAs, or enforcement action requirements “as promptly as possible” after remediation and issue a new MRA or MRIA, or take more forceful action, if remediation proves unsustainable.
7. The threshold for independently examining depository institution subsidiaries shifts from an “impossibility” standard to “not reasonably possible,” and the related information-sharing condition now requires the primary supervisor to provide “timely access to all supervisory information.”
8. Banking organizations are encouraged to report staff noncompliance with the principles to the head of supervision at the relevant Reserve Bank or the Fed’s deputy director for supervision.
9. Staff must facilitate early resolution of troubled insured depository institutions to minimize long-term cost to the Deposit Insurance Fund.
10. There may be no material differences between supervisory criticisms communicated in an examination’s final exit meeting and those in the written report.