Regulators give banks report cards in the form of CAMELS ratings. These ratings can affect examination frequency, assessments, the ability to pursue acquisitions, and the likelihood of enforcement action. The ratings are also not publicly disclosed, except on an aggregated basis or in some limited instances. A recent proposal to define “unsafe or unsound” practices…

Some key regulators and bank lobbyists characterize much of bank supervision as checking the box. “Checking the box” suggests a mindless emphasis on the superficial. Maybe the phrase test-markets well. But is box checking really that prevalent? My own experience suggests that it isn’t and that there are some fundamental contradictions associated with this narrative.…

Models play an essential role in financial decision making. Financial institutions and their regulators use models to forecast, identify exposures, and quantify risks. Whether you’re a Treasurer, a risk manager, or a regulator, it’s important to understand how models work and some of their pitfalls. The idea isn’t to turn people into modeling experts, but…

Matters requiring attention (MRAs) play a critical, if little understood role in bank supervision. While cease and desists, consent orders, and civil money penalties are public documents, MRAs are kept confidential. This confidentiality means that even those who follow the banking industry closely may have only a limited understanding of how MRAs work in practice.…

The United States Supreme Court is considering overturning Chevron USA vs. Natural Resource Defense Council, a long-standing precedent that generally defers to an administrative agency’s interpretation of the law. What impact would overturning the Chevron Deference have on banking regulation and supervision? The Chevron Deference The 1984 Chevron case centered on the EPA’s definition of…

Few things examiners find more dispiriting than to have banks go over their heads to senior agency management.  Not only does it undercut the examiner’s authority, but it places the agency itself at a distinct disadvantage.  An agency leader is likely to know a lot fewer details of the issue at hand than the examiners…