Fed considering changes to what constitutes a ‘well-managed’ bank

Fed considering changes to what constitutes a ‘well-managed’ bank


The Federal Reserve building is seen before the Federal Reserve board is expected to signal plans to raise interest rates in March as it focuses on fighting inflation, in Washington, D.C., on Jan. 26, 2022.
Joshua Roberts | Reuters

The Federal Reserve is taking another step toward easing regulation for big financial institutions, this time changing the definition for a “well-managed” bank.

Under a proposal put up for comment Thursday, the Fed would allow banks with one “deficient” rating to still be considered well-managed. The ratings run across three criteria: capital, liquidity and governance and controls.

Rules released in 2018 say 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.”

However, the move drew an immediate rebuke from Bowman’s predecessor, Michael Barr, who said the idea would weaken important safeguards.

“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.

Governor Adriana Kugler also signaled apprehension about the move, saying she agrees there are problems with the current system but said there are “risks going too far in the other direction” with the new plan.

The proposal comes just a few weeks after the Fed approved new capital rules for big banks, which also drew objections from Barr and Kugler.



Source

Why 22 million people may see ‘sharp’ increase in health insurance premiums in 2026
Finance

Why 22 million people may see ‘sharp’ increase in health insurance premiums in 2026

Key Points The so-called “big beautiful bill” that President Donald Trump signed on July 4 cut taxes for many households. However, the law didn’t extend an enhanced premium tax credit that has lowered health insurance premiums for millions of Affordable Care Act enrollees in recent years. The tax break is slated to end after 2025, […]

Read More
China’s deflationary slide is worsening as companies spiral into price wars
Finance

China’s deflationary slide is worsening as companies spiral into price wars

Key Points There’s a pattern in China: companies rush into an industry, then resort to discounts to stay afloat. “On the surface you’re dominating, but deep inside you’re paying a high price to dominate,” an economist said. The escalation of tariffs has made Chinese manufacturers more determined to build factories overseas, “potentially generating redundant supply […]

Read More
Goldman Sachs is piloting its first autonomous coder in major AI milestone for Wall Street
Finance

Goldman Sachs is piloting its first autonomous coder in major AI milestone for Wall Street

Key Points Goldman is testing an autonomous software engineer from artificial intelligence startup Cognition that is expected to soon join the ranks of the firm’s 12,000 human developers, Goldman tech chief Marco Argenti told CNBC. The program, named Devin, became known in technology circles last year with Cognition’s claim that it had created the world’s […]

Read More