U.S. regulators have informed Bank of America's board it could face public enforcement action if they aren't satisfied with recent steps taken to strengthen the bank, The Wall Street Journal reports, citing people familiar with the situation.

BofA has been operating under a memorandum of understanding since May 2009. The memorandum, which isn't public, identified governance, risk and liquidity management as problems that had to be fixed, the paper said, citing people familiar with the document.

In recent months, regulators met with BofA's board and said they wanted to see more progress on the bank's compliance with the memorandum, the Journal said.

In the absence of progress, the informal order could turn into a formal and public action, which would likely mean intensified scrutiny and greater restrictions, the paper said.

However, the newspaper said that BofA's directors believe the bank has met demands set out in the 2009 document.

Now, "the board's view is it's time to take us out of the penalty box," one person familiar with the situation told the Journal.

Bank of America spokesman Larry Di Rita declined to comment on the Journal report to Reuters.

(Reporting by Sakthi Prasad in Bangalore and Rick Rothacker in Charlotte, North Carolina; Editing by Muralikumar Anantharaman)