FFIEC Seeks Public Comment on Proposed Revisions to Financial Institutions Rating System

2026-05-19 · Regulation · QuoteReporter

FFIEC Seeks Public Comment on Proposed Revisions to Financial Institutions Rating System

The Federal Financial Institutions Examination Council (FFIEC) has issued a request for public comment on proposed changes to the CAMELS rating system, which is used to assess the safety and soundness of financial institutions. The proposed revisions aim to enhance transparency and focus on material financial risks. Comments are invited within 90 days of the proposal's publication in the Federal Register.

Proposed Revisions to CAMELS Rating System

The FFIEC has proposed revisions to the CAMELS rating system, which is a critical tool used by regulators to evaluate the safety and soundness of financial institutions. The CAMELS system assigns a composite rating to each institution and evaluates six key components: capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk. These ratings help identify institutions that may require heightened supervisory attention or other supervisory actions.

The proposed changes are intended to strengthen the connection between ratings and a financial institution’s safety and soundness by focusing on material financial risks. The revisions will retain the basic framework of the existing rating system but will include modifications to the definitions and evaluation factors of the composite and component ratings.

Focus on Transparency and Risk

According to Michelle W. Bowman, Chair of the FFIEC and Vice Chair for Supervision of the Federal Reserve Board, the proposed revisions represent a significant shift towards greater transparency, the inclusion of quantitative factors, and the predictability of supervisory oversight. This comprehensive revision of the CAMELS framework is the first in 30 years, highlighting the importance of adapting the system to current financial risks and supervisory needs.

Public Participation and Next Steps

The FFIEC is encouraging public participation in the revision process by inviting comments on the proposed changes. Interested parties are urged to submit their feedback within 90 days of the proposal's publication in the Federal Register. Comments can be submitted through the Federal eRulemaking Portal, ensuring that a wide range of perspectives are considered in the finalization of the revisions.

The FFIEC, established by the federal Financial Institutions Regulatory and Interest Rate Control Act of 1978, plays a crucial role in prescribing uniform principles and standards for the federal examination of financial institutions. It also promotes uniformity in the supervision of these institutions and conducts training for examiners employed by federal and state agencies.

The council consists of six voting members, including representatives from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the National Credit Union Administration, and the State Liaison Committee.

For further information or media inquiries, contacts are provided for each of the member agencies, including the Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Federal Reserve Board, National Credit Union Administration, Office of the Comptroller of the Currency, and State Liaison Committee.