The FRB has proposed an overhaul to its supervisory ratings of large financial institutions – essentially a specialized CAMELS standard focused on the biggest BHCs and other companies under the FRB’s jurisdiction. However, unlike CAMELS and the current BHC-rating system, a composite rating would not apply; instead, the FRB would judge covered companies’ capital planning and adequacy, liquidity-risk management and adequacy, and governance without combining these judgments into an overall safety-and-soundness conclusion. The governance rating would be based on the supervisory guidance for large institutions proposed in tandem with these ratings, with the capital and liquidity components now judged to a considerable extent on the performance of a covered company and its U.S. operations under FRB stress-test standards.
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