Fed’s Bowman Floats Bank Rating, Regulatory Threshold Changes

Federal Reserve Vice Chair for Supervision Michelle Bowman said the agency is revisiting how it issues certain bank ratings, continuing a broader Trump-era effort to refocus supervision on issues posing a significant risk to lenders.

“The supervisory operating principles emphasize that examination findings and reports must focus on material financial risk,” Bowman said of the changes she envisions for the so-called framework known as CAMELS.

That rating system grades firms on a one-to-five scale for each component — capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk. She said the agency is working to ensure that CAMELS ...