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Adds a new provision (titled '1012 Amendments to the CAMELS Rating System') to the Federal Financial Institutions Examination Council Act of 1978 requiring the Council to make recommendations to amend the Uniform Financial Institutions Rating System and CAMELS components, directing joint rulemaking by Federal financial institutions regulatory agencies to carry out those recommendations, requiring publication of a proposed rule and a public comment period of not less than 60 days, and stating that nothing in the section limits supervisory or enforcement authority.
Amends the 'well managed' definition in section 2(o)(9)(A) of the Bank Holding Company Act of 1956 by striking specified language beginning with 'achievement of' through other material and inserting 'a CAMEL', removing clause (ii), and adjusting punctuation.
Requires the designated interagency Council to rewrite how bank CAMELS ratings are produced so they rely on clear, objective, and transparent measures instead of broad examiner judgment. The bill would narrow or remove the subjective “management” component, require ratings to capture anti‑money‑laundering and related compliance, and direct a rulemaking with public comment and a set timetable; it also amends the Bank Holding Company Act’s “well managed” language accordingly.
CAMELS ratings (Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk) are a critical tool for evaluating the safety and soundness of financial institutions, and the basis for determining significant regulatory matters such as the evaluation for mergers and acquisitions and a bank’s deposit insurance premiums.
The CAMELS rating system relies heavily on examiner judgment, which can lead to subjective and inconsistent ratings across similar institutions.
Establishing clear, objective measures for each CAMELS component and their relative weighting in determining composite ratings will promote fairness, consistency, and accountability in supervisory assessments.
Examination and supervision, as well as the CAMELS rating system, should focus on a financial institution’s core financial condition or solvency.
Council must recommend amendments to the Uniform Financial Institutions Rating System and CAMELS components to establish clear and objective criteria for assessing each CAMELS component.
Primary impacts: depository institutions and bank holding companies will face a changed supervisory scoring system that emphasizes objective, measurable criteria and explicitly includes AML/CFT performance. Boards, senior managers, and governance functions may be evaluated under narrower, more measurable standards if the “management” component is narrowed or removed; this could change how institutions document governance and internal controls. Federal supervisors, examiners, and the Council will need to design, test, and implement new metrics and weighting; the rulemaking process will require time and resources across agencies. For consumers and the broader financial system, more consistent ratings could lead to fairer supervisory outcomes and more predictable capital/merger decisions, but there is a risk that rigid metrics could miss context-specific risks. Smaller banks may face proportionally higher compliance or documentation costs to meet newly formalized scoring criteria. The amendment to “well managed” language may affect statutory assessments used in approvals and enforcement actions. Overall, the bill increases transparency and standardization in bank supervision but shifts judgment from individual examiners toward defined metrics — producing tradeoffs between consistency and examiner discretion.
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Referred to the House Committee on Financial Services.
Introduced May 14, 2025 by Scott Fitzgerald · Last progress May 14, 2025
Placed on the Union Calendar, Calendar No. 136.
Reported (Amended) by the Committee on Financial Services. H. Rept. 119-170.
Ordered to be Reported (Amended) by the Yeas and Nays: 29 - 23.
Committee Consideration and Mark-up Session Held