Change in Focus for US Banking Regulators
US banking regulators are reportedly shifting their attention back to critical financial indicators, while reducing their scrutiny of non-core banking issues such as reputation, climate change, and matters related to diversity, equity, and inclusion.
This realignment marks a return to previously established supervisory changes, zeroing in on metrics like capital, liquidity, and management capacities. Recent reports highlighted this trend on September 2.
Supervisors are now emphasizing the assessments outlined in the exam rulebook. The aim seems to be guiding banks through more formal communication, rather than relying heavily on disciplinary letters, as suggested by the findings.
In response to a Reuters inquiry, the Office of the Comptroller of the Currency (OCC) indicated that it’s reassessing its supervisory methods to ensure they align with statutory objectives and foster risk tolerance that allows banks to promote economic growth.
The banking group mentioned in the report that the regulator’s testing process has started to feel overly subjective and unclear, straying from a focus on financial risks.
Democrats argue that a wide range of banking risks should be evaluated during supervision, according to the report.
On May 31, it was noted that banking regulators were looking into easing restrictions that were put in place after the financial crisis of 2008.
When the Senate confirmed Jonathan Gould as the Director of Currency for a five-year term, Republicans from the Senate Banking Committee shared on X that they hope to pursue the important initiatives commenced by former Comptroller Rodney Hood, to ensure the OCC focuses on its primary role of chartering and overseeing banks for a stable banking system.
The House Financial Services Committee Republicans also expressed in a post that they’re eager to work with Gould on the goal of redirecting the OCC towards its fundamental mission, particularly emphasizing policies that empower local banks.
In a speech delivered on June 6, Michelle Bowman, Vice-Chairman of Supervision at the Federal Reserve, stated that the focus will shift towards regulatory efforts concerning the financial risks essential for maintaining a healthy banking system.
