New Federal Deposit Insurance Corp. Chairman Jelena McWilliams’s willingness to re-examine how regulators grade banks has the industry optimistic that changes could come to the opaque system.
Banks have long complained that the CAMELS system — which evaluates banks for capital adequacy, assets, management capability, earnings, liquidity, and sensitivity to market risk — lacks objective metrics, is skewed too much on past performance, and lacks transparency.
“CAMELS ratings have been around 40 years and to say it has a checkered past is kind,” author and former Bank of America executive Richard J. Parsons told Bloomberg Law.
The industry is likely ...