US EditionFed Proposes Changes to Large Bank Supervisory Rating Framework
UNITED STATES, JUL 11 – The Federal Reserve aims to ease regulatory hurdles by allowing large banks with one deficient rating to still be considered well managed, affecting about two-thirds of supervised banks.
- On July 10, the Federal Reserve Board proposed easing supervisory ratings, allowing banks with one 'Deficient-1' rating to remain 'well managed' to reduce regulatory hurdles.
- Under the 2018 supervisory framework, banks are graded on capital, liquidity, and governance, with any deficiency preventing them from being classified as 'well managed' and limiting activities like acquisitions.
- Fed data shows over 60% of large banks, despite strong capital and liquidity, are considered not well managed under current ratings, highlighting regulatory mismatch.
- Fed's proposed easing of supervision could enable unsatisfactory banks to pursue activities increasing risks to consumers and the financial system.
- Over the next month, the Federal Reserve seeks public input on its rating proposal, with Bowman anticipating future tweaks like composite scores to refine bank supervision.
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Fed’s Rule Change Ties Ratings to Capital Strength
The Federal Reserve on Thursday proposed easing its supervisory framework for large banks by raising the threshold for a "well managed" rating. Under the current system, a single "deficient-1" grade in any of the three categories—capital, liquidity or governance—disqualifies a ba
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