Is the Fed Taking it Too Easy on Bank Enforcement?

A primary task of the Federal Reserve, separate from using monetary policy to set interest rates, is that it carries out bank “supervision”–which refers to taking a close look at a bank’s finances and record-keeping to be sure that the bank isn’t taking on too much risk. Often, this process is resolved by not giving the bank a top-level ranking in certain categories, but still saying that the bank financials are overall satisfactory. But when the situation at a given bank is more dire, the Fed has power to bring enforcement actions against the bank to require compliance. A look at the data leads Aaron Klein and Cameron Connell to ask: “Why is bank enforcement declining?” (Brookings Institution, July 8, 2026). They offer this figure on the number of enforcement actions brought by the Fed each year. The story here is clearly not a standard “Democrats regulate, Republicans don’t” story. There’s a modest decline in Fed enforcement actions from the tail years of the Obama administration…