U.S. banking regulators are reportedly focusing on key financial metrics and limiting their scrutiny of non-core banking issues like reputational risk, climate change risk, and diversity, equity and inclusion.
This shift in focus represents a change from recent years and a return to supervision centered on metrics like capital, liquidity and management competence, Reuters reported Tuesday (Sept. 2).
Supervisors are also sticking more closely to the assessments outlined in examination rulebooks and, when they have identified problems, working to direct banks to fix them via less formal communication rather than formal disciplinary letters, the report said, citing unnamed sources.
Asked about the report by Reuters, the Office of the Comptroller of the Currency (OCC) said, per the report: “The OCC is reexamining its supervisory approach to ensure it conforms to its statutory mission and reflects a risk tolerance enabling banks to support economic growth.”
Bank groups have said that regulators’ exams had become too subjective, opaque and focused on things other than financial risk, according to the report.
Democrats have argued that supervision should take into account a broad range of bank risks, per the report.
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It was reported on May 31 that banking regulators were preparing to loosen restrictions imposed after the 2008 financial crisis.
When the Senate voted to confirm the nomination of Jonathan Gould to be comptroller of the currency for a five-year term, the U.S. Senate Banking Committee GOP account said in a post on X that Gould “will continue the important work started by Acting Comptroller [Rodney Hood] to return the OCC to its true purpose of chartering and supervising banks to ensure a safe and sound banking system.”
The Financial Services GOP account, which represents the House Financial Services Committee Republicans, said at the time in a post on X that the committee “looks forward to working with [Gould] to return the OCC back to its core mission and focus on policies that empower Main Street banks.”
Federal Reserve Vice Chair for Supervision Michelle Bowman said in a June 6 speech that she aims to “refocus supervisory and regulatory efforts on the core financial risks most critical to maintaining a healthy and resilient banking system.”
