FDIC urges responses on exam rating system use, related enforcement

Feedback on the consistency of ratings assigned by banking regulators under the Uniform Financial Institutions Rating System, or CAMELS ratings, was urged in a Financial Institution Letter issued Wednesday by the Federal Deposit Insurance Corp. (FDIC).

The FIL is regarding the request for information (RFI) issued jointly, late last week, by the FDIC and Federal Reserve Board. In addition to ratings consistency, the agencies are asking for feedback concerning the current use of CAMELS ratings by the agencies in their bank application and enforcement action processes. (CAMELS stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk.)

The FIL notes the request for information is not a proposal to modify the CAMELS ratings definitions; those are issued through the Federal Financial Institutions Examination Council (FFIEC). It also acknowledges some sensitivity around CAMELS itself since exam ratings and findings are to be kept confidential.

“Given confidentiality requirements applicable to financial institutions’ CAMELS ratings and other report of examination findings and conclusions, the agencies realize there are limitations on responses regarding the consistency of how CAMELS ratings are assigned,” the letter stated. “The agencies, however, welcome general comments that do not breach these confidentiality requirements.”

Comments will be due 60 days after the RFI is published in the Federal Register, which is pending.

FDIC FIL-64-2019