Federal Reserve seeks to clarify big bank risk management expectations

WASHINGTON (Reuters) – The Federal Reserve proposed new guidance Thursday that would clarify the regulator’s expectations for how senior managers at large banks handle risk at their respective institutions.

The proposed guidance would identify core principles for effective day-to-day management of a bank, ensuring risk is adequately managed. The Fed also proposed guidance outlining its expectations for how banks manage their various business lines in terms of risk.

The proposals are part of a broader effort at the Fed to overhaul its confidential internal large bank rating system. Thursday’s proposals are part of the effort to modernize that system, known as CAMELs, to reflect the host of new rules established by the Fed in recent years.

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