<\/p>\n
US regulators unveiled a proposal to overhaul how examiners secretly rate banks, a move likely to be cheered by lenders who have long griped about the process.<\/p>\n
The plan, released on Tuesday, would reshape the framework known as CAMELS that examiners use to grade banks on capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk. Those grades create an overall rating that determines the degree of scrutiny a financial institution faces, the activities it can engage in and how much capital it has to hold.<\/p>\n
The proposal would \u201cstrengthen the link between CAMELS ratings and a financial institution\u2019s safety and soundness,\u201d the Federal Financial Institutions Examination Council said in a release.<\/p>\n
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Under the plan, which is subject to 90 days of public input, examiners would focus on a lender\u2019s financial condition and any material risks tied to it rather than what some argue are more subjective issues, among other things.<\/p>\n
\u201cThe revised CAMELS framework marks a decisive shift toward transparency, quantitative factors, and predictability of supervisory oversight,\u201d said FFIEC Chair Michelle Bowman, who also serves as the Federal Reserve\u2019s top bank cop.<\/p>\n
Bloomberg News reported earlier that regulators were poised to unveil as soon as this week a plan to overhaul how examiners rate banks.<\/p>\n
The move comes as Trump-era regulators are aiming to refine the \u201cmanagement\u201d component of the framework. The Bank Policy Institute, an industry trade group,\u00a0has previously said\u00a0that category is \u201cwhere immaterial and non-financial issues like \u2018reputational\u2019 risk can manifest themselves.\u201d<\/p>\n
Federal Deposit Insurance Corp. Chairman Travis Hill said in a statement that a key change of the proposal would include \u201creducing the influence\u201d of the management component rating. But Jonathan Gould, the head of the Office of the Comptroller of the Currency, said he thinks the proposal should go a step further.<\/p>\n
\u201cWhile I support the direction of this proposal, I remain concerned that the revisions do not sufficiently address \u2018double counting\u2019 within the management, or m, component,\u201d said Gould in a statement. \u201cTo maintain the integrity and transparency of the CAMELS system, it is vital that the management rating serve as a standalone assessment rather than a secondary reflection of other components.\u201d<\/p>\n
\u00a9\u00a02026\u00a0Bloomberg L.P.<\/p>\n
#regulators #propose #reshaping #secret #bank #ratings #process<\/p>\n","protected":false},"excerpt":{"rendered":"
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