FR 2020-29175

The document in question is a notice from the Federal Deposit Insurance Corporation (FDIC) that outlines updates to the maximum amounts of civil money penalties (CMPs) as adjusted for inflation. This notice pertains specifically to penalties assessed after January 15, 2021, for improper conduct that occurred on or after November 2, 2015. Federal agencies like the FDIC are mandated by law to make these annual adjustments based on guidance from the Office of Management and Budget (OMB). This practice is intended to ensure that penalties effectively deter violations by maintaining their value over time, even as inflation affects the dollar's purchasing power.

General Summary

In essence, this document provides updated figures for penalties imposed by the FDIC to reflect inflationary changes. The Office of Management and Budget annually issues a multiplier, which agencies use to adjust their penalties. This ensures that penalties do not lose their deterrent value due to inflation over the years. For 2021, the FDIC has recalculated the maximum penalty amounts organizations may face when found in violation of regulations under the jurisdiction of the FDIC.

Significant Issues or Concerns

A notable issue with the document is its heavy reliance on legal language, specific U.S. Code references, and prior regulations. Terms like "CMP," "OMB Guidance," and "inflation-adjustment factor" appear without definitions that a layperson might not easily understand. Furthermore, the document references a variety of statutes and prior Federal Register notices without offering detailed context for those unfamiliar with federal regulations or legal documentation.

Another concern is the mention of a multiplier provided by the OMB, which is central to the penalty adjustments. The process by which this multiplier affects the penalties is not clearly explained, potentially leaving readers unclear about how the adjustments are calculated.

Public Impact

The document's impact on the public is somewhat indirect. For the general population, these adjustments may not be immediately relevant unless they are involved with financial institutions or regulatory compliance. However, these adjustments ensure that penalties continue to serve as effective deterrents against misconduct, which can indirectly benefit the public by promoting stability and accountability in financial institutions.

Impact on Stakeholders

For stakeholders directly affected by the FDIC's regulations, such as banks and financial institutions, these adjustments have more direct implications. The penalties for violations will now reflect inflationary changes, potentially increasing the financial burden of non-compliance. This reinforces the importance of adhering to regulations and maintaining thorough compliance programs to avoid significant penalties.

Conversely, there are positive implications for regulatory bodies and consumers. For regulators, these adjustments help maintain the punitive intent of penalties, ensuring they continue to serve as a strong deterrent against breaches. For consumers, the enforcement of these penalties can translate to increased trust and stability within financial systems, as institutions are held accountable for any misconduct.

In conclusion, while crucial for ensuring the sufficiency and effectiveness of penalties, the document's technical nature and reliance on dense legal references may pose understanding barriers for those without specialized knowledge in regulatory compliance.

The Federal Deposit Insurance Corporation (FDIC) has issued a notice regarding adjustments to civil money penalties (CMPs) due to inflation. These adjustments are a mandatory part of federal regulations to ensure that penalties keep pace with economic changes. This commentary will explore the financial implications presented in the document.

Financial Allocations and Adjustments:

The primary financial reference in the document is related to the adjustment of maximum civil money penalties by the FDIC. This adjustment is done according to the Federal Civil Penalties Inflation Adjustment Act of 1990 and subsequent amendments. The notice indicates that penalties assessed after January 15, 2021, for conduct occurring on or after November 2, 2015, will be affected by these inflationary changes.

While specific dollar amounts for the penalties are not elaborated in the presented text, a significant reference is made to the $129-per-day maximum CMP under 12 U.S.C. 1828(h) for failure or refusal to pay any assessment when the assessment amount is less than $10,000. Additionally, when the assessment exceeds $10,000, the penalty becomes 1 percent of the assessment amount for each day of continued non-compliance. This indicates a sliding scale of financial penalties that ties the penalty amount directly to the financial magnitude of the misconduct or oversight.

Relevance to Identified Issues:

One core issue identified in the document is the heavy reliance on legal statutes and complex federal codes, such as 12 U.S.C. 1828(h), without explaining their context or impact in layman's terms. For a general audience, understanding that a $129-per-day penalty applies under certain conditions helps to ground the financial implications in more everyday terms. The more substantial 1 percent daily penalty for higher assessment amounts is a direct reflection of the severe financial consequences institutions face for noncompliance, underscoring the regulatory intent to secure adherence through economic deterrents.

Furthermore, the reference to an "inflation-adjustment multiplier" provided by the Office of Management and Budget (OMB) might be unclear without additional context. The use of such multipliers implies precise financial recalculations designed to ensure penalties maintain their punitive effect over time, even as the economy fluctuates. This practical measure doubles as an assurance to the public that penalties are neither outdated nor overly punitive but rather proportionate and current.

In conclusion, while the document provides detailed information on the adjustments to civil monetary penalties, it captures a core financial principle in public regulation: maintaining economic means of compliance and deterrence vis-à-vis the economic realities of inflation. By embedding an established methodology for updating penalties based on inflation, the FDIC aligns financial punishment with current monetary values, which supports regulatory objectives and maintains fairness across the board.