The agencies said the changes would provide greater clarity and certainty for banks, while critics say revisions will weaken supervision.

The FDIC and OCC said the changes would provide greater clarity and certainty for banks.

The final rule “shifts the nature of supervisory criticisms” by directing regulators’ attention to underlying fundamental risks, instead of banks’ processes for managing risks, FDIC Chair Travis Hill said in a Thursday statement. And it imposes a materiality threshold for evaluating potential risks, he said.

“In combination, the result is that examiners will focus only on issues that can have a material impact on the financial condition of an institution and on actual violations of relevant laws or regulations,” Hill said.

Examiners aren’t prevented from proactively identifying issues due to the final rule, and don’t need to wait for financial harm to occur to issue a supervisory criticism, Hill noted.

But “the risk that a practice or act would materially harm the financial condition of the institution must be ‘more than speculative or merely possible,’” Hill said.

As a result of the shift, Hill said the FDIC is closing or has closed “a large majority of outstanding supervisory criticisms” that don’t meet new standards; meanwhile, “many” do meet new standards and will be converted to MRAs, he said.

Also Thursday, the OCC “substantially revised” its policies and procedures manuals related to enforcement actions and MRAs, to emphasize material financial risks.

Those changes were aimed at underscoring principles that should guide enforcement action considerations: “escalation, tailoring and focusing corrective actions on those essential to address specific deficiencies,” the agency said Thursday .

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