Banks Say US Plan to Define Risky Practices Leaves Wiggle Room

A Trump administration plan to define “unsafe or unsound” banking practices, intended to ensure US regulators focus on core risks, still leaves too much room for interpretation, some banks said.

The October proposal from the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency to create a standard definition of risky banking practices is part of the administration’s broad plan to overhaul the bank examination process and ease federal scrutiny of some lenders.

The proposed rule would require examiners to focus only on activities at banks that would likely pose a material risk to their balance ...