An earlier post discussed how the tone from the top can either mitigate or reinforce concerns around regulatory capture. The 2023 post concluded that regulatory capture was real, if overblown. More recent actions by agency leadership have made the situation decidedly worse by undercutting the examiner’s authority. Three prominent examples include revisions to the supervisory…

Excessive asset or liability concentrations have historically played a large role in bank failures. A recent proposal to revise the CAMELS ratings for banks appears to define asset concentrations more narrowly. The change is subtle and its motivation unclear. But it appears to rest on the underlying premise that concentrations of supposedly low risk assets…