WASHINGTON — For the second year in a row, enforcement actions set a record, jumping 21% last year, to 2,724, an increase industry representatives attributed to a persistently heightened focus on capital and safety and soundness standards in the wake of the financial crisis.

But unlike in 2009, regulators last year appeared to be leaning more toward informal, nonpublic actions. Formal enforcement actions dropped nearly 8% from their record a year earlier but informal ones shot up by 34%, to 1,668, according to data collected by American Banker.

"This is the second year of literally explosive enforcement actions," said Tom Vartanian, a partner in Dechert LLP. "You have almost 3,000 actions taken in just 2010. That's almost twice what you'd expect in a normal year. We are nowhere near normal in terms of actions."

To some, the figures were more proof of what community bankers have been arguing for two years: Regulators are being too tough.

"The clear message here is, in an era when exams have become far more stringent, regulators are more apt to reach for enforcement solutions as a first line of action rather than a last recourse," said V. Gerard Comizio, a partner in Paul, Hastings, Janofsky & Walker LLP. "Yesterday's exam criticisms requiring board attention often today turn into some type of formal or informal action."

Data from the regulators also showed differences in how each agency approached enforcement actions. The Federal Deposit Insurance Corp., which regulates the most institutions, led the pack, with 1,263 formal and informal enforcement orders, up 29% from 2009. The Federal Reserve Board was No. 2, with 903 actions in 2010, up 37%. The Office of Thrift Supervision reported 237 formal enforcement actions, a slight increase from 2009, but declined to disclose data on informal enforcement actions.

The Office of the Comptroller of the Currency, meanwhile, was the only agency whose total enforcement actions declined last year, off 16%, to 321. Though formal enforcement orders issued by the agency were up slightly last year, the overall decrease was due to a significant drop in informal actions.

Enforcement orders have jumped dramatically since the financial crisis as banks continue to struggle with safety and soundness concerns, particularly capital levels.

"The formal orders can be directly traced to the economic environment," said L. Richard Fischer, a partner in the Morrison & Foerster law firm. "Because if you are far enough along [that] they are going to hit you with a formal order, you have very serious capital problems. Many of these are related to capital and representation on boards of directors, which are typically a companion issue."

Andrew Sandler, a co-chairman of BuckleySandler LLP, said he has seen a shift in the types of orders brought against his clients.

"We have seen a significant increase in the number of safety and soundness orders involving capital and related issues and product lines," he said.

Vartanian agreed that there has been a shift in the types of orders issued by regulators. Before the crisis, he said, regulators were focused on operations, the Bank Secrecy Act and unsafe lending. During and since the crisis, they have become far more worried about capital.

"What the glaring message is, with the amount of formal and informal actions being brought, is [that] the regulators want the banks to have more capital," he said, "and they are not there yet."

Though lawmakers have publicly chastised regulators for being overly aggressive, many observers said the agencies are still reacting to criticism during the crisis that they were essentially "asleep at the switch." In particular, regulators were heavily criticized for bank failures in which no formal or informal enforcement order was not issued until just before the collapse.

"The agencies are keenly aware that, after the crisis, they will for the next several years be closely scrutinized by Congress," said Ernest Patrikis, a partner in White & Case LLP. "And the further we are from the worse days of the credit crisis, the easier it is for a bank supervisor to take a public remedial action against a financial organization."

Asked why the OCC was apparently the outlier among regulators, agency officials said the drop was in contrast to their aggressive actions in 2009 to correct problems before they got worse.

"We tried to get out in front of the curve," said Bob Garsson, a spokesman for the OCC. "We tried to get banks to address the problems early in the crisis, so we probably took more informal actions early on. We are at the stage in the economic cycle that you would expect to see fewer informal actions than formal actions because we are at the stage in the financial crisis where the informal actions tend to become enforcement."

But some observers saw significance in the differences among the agencies. They noted that, though the FDIC had taken few formal actions, which were off 32%, to 373, its informal actions more than doubled, to 890. The OCC, meanwhile, had roughly the same level of formal actions in 2010 as in 2009 but saw its informal orders fall 33%, to 139. The Fed was the only agency to see both types of actions increase during the year; formal actions were up 38%, to 264, and informal orders rose 37%, to 639.

"What is striking is the difference in the agencies' approaches the past several years," said Gil Schwartz, a partner in Schwartz & Ballen LLP. "After an initial spike, it seems that the volume of OCC and OTS orders leveled off in 2010 and continued at about the same pace as in the past. … The FDIC seems to have taken the approach of de-emphasizing its reliance on formal orders and increasing its reliance on informal memorandums of understanding. The Fed appears to be the only agency that is continuing to step up the number of both formal and informal orders it issues. It is difficult to speculate why the agencies' practices have diverged so markedly."

Some observers said the sheer number of institutions that appear to be operating under an enforcement order speaks volumes about the condition of the industry. Of 7,647 depository institutions, about 2,724 are under an order (though it is possible that some informal enforcement actions were later turned into formal ones for the same institution.) The FDIC's latest quarterly banking profile reported that 860 institutions, with assets of $379 billion, were on the problem bank list as of last year's third quarter.

"It gives pause that so many banks are under an enforcement order," Comizio said. "What does that say about the balance of regulatory response?" But Jack Murphy, a lawyer at Cleary, Gottlieb, Steen & Hamilton and a former FDIC general counsel, had a more optimistic assessment.

"The thing that strikes me about this is, although the numbers are large, it would be consistent with [FDIC Chairman] Sheila Bair's view that the peak of bank failures has probably passed," Murphy said. "The reason I say that is, when you look at the informal total, there were fewer informals than formals in 2009 and it's really quite reversed in 2010. That would be consistent with the view that, although there are lot[s] of problems in the banking industry, they are probably less severe."

Observers were also split on what this means for this year. Morrison & Foerster's Fischer said the numbers point to more problems in 2011.

"What it shows is, there are a lot of formal and informal orders still working their way through the system," he said. "That tells me there will still be a significant number of bank failure numbers. … What this tells me is, we are not at the end of the road in terms of bank failures."

But Murphy disagreed.

"I would have guessed that in 2011 the numbers both informal and formal would probably trend down a bit," he said. "I don't think it will be dramatic, and the reason is the regulators. Whenever there is an order in place, they want to see a sustained performance on an order until they lift it."

Ralph Sharpe, a partner in Venable LLP, also said he expects enforcement orders to decline this year.

"We should see a decline on the safety and soundness side," he said. "A lot of banks have had two years now to work through their problem loans, either sell them off or find another way of disposing [of] them. There are a lot of banks that have failed. It's a lagging indicator, but over time banks work through their loans and they get injections of capital and they tend to turn themselves around."

But Jean Veta, a partner in Covington & Burling LLP, cautioned against too much easing in 2011.

"I'm hoping that we will see the banks start to do better, but as I said, I think the regulators will then raise the bar in terms of what they expect [of] these institutions in these key areas," she said. "In the height of the crisis, the regulators were focusing on the worst problems, by necessity, and now as banks get healthier, I think the criticism, for example on asset quality, will remain, but they will be more refined."