Key facts
- Total enforcement actions against financial services firms fell 37% in the first half of 2025.
- Monetary penalties dropped 32% across tracked violation categories.
- Financial penalties for competition violations decreased by 97%.
- Bank regulators are shifting focus from process issues to 'material financial risks'.
- The use of 'matters requiring attention' (MRAs) directives has been restricted to material financial risks.
- Confidential bank ratings systems are being updated to emphasize financial risk.
The Trump administration is significantly reducing financial regulatory enforcement, a shift that critics argue will weaken the financial system. A study by Wolters Kluwer found a 37% decrease in enforcement actions against financial services firms and a 32% drop in monetary penalties in the first half of 2025 compared to the latter half of 2024. This pullback is attributed to the administration's deregulatory agenda, including rolling back parts of the Dodd-Frank Act and streamlining enforcement at agencies like the Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB).
Regulators, including the Federal Reserve, OCC, and FDIC, are refocusing supervision on 'material financial risks' and away from process issues. They have restricted the use of 'matters requiring attention' (MRAs) directives to only significant risks and are overhauling confidential bank rating systems to emphasize financial risk. Critics contend these changes reduce examiners' ability to police potential problems that may not be immediately material but could lead to future issues, such as control lapses or governance problems.
Elaine Duffus, a regulatory compliance expert at Wolters Kluwer, noted that the reduced enforcement leaves the financial industry with more discretion in compliance, requiring corporate boards to determine their own risk appetites. She advised that compliance programs should remain robust, especially to keep pace with expanding state laws that are filling federal enforcement gaps, particularly in consumer protection.