The Federal Reserve has finalized revisions to its supervisory rating framework for large banks. The current rating system includes three components: capital, liquidity, and governance and controls. Each component has four potential ratings: broadly meets expectations, conditionally meets expectations, deficient-1, or deficient-2.
The Fed is amending the system to consider a bank with no more than one deficient-1 rating to be “well managed.” Firms that do not meet this standard will be deemed not well-managed and face limitations on certain activities. A bank with a deficient-2 rating for any component will continue to be considered not well managed.
Author: sdbrownlow
Student of Design
