WASHINGTON—The Federal Reserve Board has finalized updates to its supervisory rating framework for large bank holding companies, refining how regulators assess the overall strength and management of major financial institutions.
The changes, largely consistent with the Fed’s July proposal, aim to ensure ratings more accurately reflect a firm’s overall safety and soundness rather than isolated weaknesses.
Vice Chair for Supervision Michelle W. Bowman said the revisions “help ensure that overall firm condition is the primary consideration in a bank’s rating.”
Under the new framework, a bank with no more than one “deficient-1” component rating will be deemed “well managed,” while any “deficient-2” rating will continue to disqualify a firm from that status. The revised framework—covering capital, liquidity, and governance and controls—will take effect 60 days after publication in the Federal Register.