Banking regulators have proposed overhauling the confidential rating system used to evaluate banks, aiming to ensure examiners focus primarily on financial risks when grading institutions.
The proposed changes target the CAMELS rating system, which examiners use to assess bank health across multiple categories. The Federal Financial Institutions Examination Council put forward the proposal.
The overhaul is expected to address industry concerns that the current metric can be subjective and overly punitive.
Federal Reserve Vice Chair for Supervision Michelle Bowman said the changes mark "a decisive shift toward transparency, quantitative factors, and predictability of supervisory oversight."
