WASHINGTON—The Federal Reserve under the Trump Administration continues to ease regulations for the largest financial institutions, with the Fed now changing how it defines a bank that is “well-managed.”
Under a proposal it has now put out for comment, the Fed would allow banks with one “deficient” rating to still be considered well-managed. Those ratings are based on capital, liquidity and governance and controls.
The current rules were released in 2018 and state that any deficiencies prevent banks from meeting the management standard, which in turn prevents from them certain activities such as making acquisitions.
“In this way, the proposal would provide greater recognition of a firm’s overall condition in determining well-managed status,” Fed Vice Chair for Supervision Michelle Bowman said in a statement. “By addressing this mismatch between ratings and overall firm condition, the proposal adopts a pragmatic approach to determining whether a firm is well managed.”
Not Everyone Agrees
Bowman predecessor at the Fed, Michael Barr, said the proposal would weaken safeguards at the largest banks
“The current proposal would fundamentally change the long-established concept of well managed and would introduce greater risk to the banking system,” Barr said in a statement.
As the CU Daily reported, the new proposal comes just a few weeks after the Fed approved new capital rules for big banks, to which Barr also objected.
