-1.6 C
New York
Friday, January 28, 2022

New head of FDIC plans to review financial health rating system

New head of FDIC plans to review financial health rating system© Reuters. FILE PHOTO: Jelena McWilliams, nominee to be chairperson of the Federal Deposit Insurance Corporation, speaks during a Senate Banking Committee hearing on Capitol Hill in Washington

By Katanga Johnson

WASHINGTON (Reuters) – The newly appointed head of the Federal Deposit Insurance Corporation (FDIC) said on Tuesday said she plans to review the decades-old system for measuring lenders’ financial health, which banks say is outdated.

Jelena McWilliams, who became FDIC chair this month, said she wants the regulator to be more transparent about how it rates banks’ financial health using the so-called CAMELS rating system.

CAMELS has not been modernized in more than 20 years, said McWilliams, a former banker who was appointed by President Donald Trump.

“The more transparent and accountable we can be in the process of how we do things, I think, the more likely regulated agencies can give us genuine feedback,” she told an industry conference during her first public appearance since becoming FDIC chair.

“I am willing to take a look and review the CAMELS rating,” she added.

McWilliams was addressing an event hosted by the Securities Industry and Financial Markets Association and The Clearing House, both Washington-based trade groups.

The FDIC guarantees customer deposits in case a bank fails and has the power to seize banks that are judged to be on the verge of collapse. Like other bank regulators, the FDIC uses the CAMELS system to measure a bank’s overall financial condition.

The system assesses capital adequacy, asset quality, management capability, earnings, liquidity and risk sensitivity. The Clearing House and other groups have complained that the system, as applied by the FDIC, is opaque because banks are not able to contest their rating.

McWilliams said she soon intends to open the CAMELS system and other regulations to public comment so lenders and academics can advise whether the rules have shortcomings.

“Are the regulations applied to banks uniformly, are they appropriate for where we are today, and what does that mean for the system?” McWilliams said of the issues she plans to review.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source: Investing.com

Related Articles

Stay Connected

11,093FansLike
12,893FollowersFollow
752FollowersFollow
- Advertisement -

Latest Articles

Popular Articles