U.S. banking regulators on Friday sought public comment on the decades-old framework used to assess the health of the nation’s banks, in another win for the industry which has long complained the system is opaque and outdated, APA reports citing BBC.
The Federal Reserve and Federal Deposit Insurance Corporation said in separate statements they were seeking input on the consistency of the so-called CAMELS ratings, and their use in assessing enforcement actions and bank applications for branches and other business issues.
The public has 60 days to submit feedback.
Jelena McWilliams, who became FDIC chair last year, has said she wants increased transparency about how the agency rates banks’ financial health using the system, which measures capital adequacy, asset quality, management capability, earnings, liquidity and risk sensitivity.
She told Reuters in January that the Federal Financial Institutions Examination Council, a banking regulators interagency group, had begun a private review of the system and may seek public feedback on how to change it.
The ratings are critically important to bank management, as poor scores can lead to additional regulatory restrictions. But industry groups have complained the confidential scoring system can be opaque and needs an update.
The Fed said it was not looking to change the definition of the ratings, but was seeking to improve the transparency and efficiency of the scoring system.