What Is A Formal Enforcement Action?



Clients interested in U.S. Department of the Treasury’s Emergency Capital Investment Program recently learned that credit union’s with formal enforcement actions are precluded from receiving the funds.


I have clients with outstanding Document of Resolution, (DOR) Examiner Findings, and some have Letters of Understanding (LUA). Do these forms of enforcement actions count as formal? If not, what does?


The good news is the above examples are NOT formal, with the rare exception of a certain type of LUA.


The NCUA may use a wide variety of formal enforcement actions to support its

supervisory objectives.


Formal enforcement actions:


· are authorized by statute (mandated in some cases).

· are generally more severe.

· are disclosed to the public.


Also, formal actions are enforceable through other formal enforcement actions, such as the assessment of civil money penalties and may require litigation before an administrative law judge or a federal district court.


What are formal actions against a credit union?


· Published Letters of Understanding and Agreement.

· Cease and Desist orders.

· Civil Money Penalties.

· Prompt Corrective Action {PCA) directives.

· Termination of Insurance.

· Conservatorship.

· Liquidation


The good news is formal actions are RARE and preclude very few credit unions from this program.


Should you find yourself facing or fearing formal or informal regulatory actions and want to talk – reach out for a no obligation consultation on how I might be able to assist you in receiving fair treatment.


I can be reached at Info@marktreichel.com