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Introduced May 14, 2025 by Scott Fitzgerald · Last progress May 14, 2025
The bill would make bank supervision more objective and transparent—potentially strengthening AML oversight and creating predictability for institutions—while raising compliance costs, risking short‑term metric‑driven behavior, and introducing governance and legal transition risks.
Financial institutions face clearer, more consistent and objective CAMELS supervision, making examination outcomes and supervisory expectations more predictable.
Taxpayers and the broader public could see stronger anti-money‑laundering and counter‑terrorist financing oversight because AML/CFT compliance is explicitly factored into ratings, reducing illicit finance risks to the financial system.
Consumers and depositors may benefit from fairer, more objective assessments that better align deposit insurance premiums and merger reviews with measurable solvency and risk indicators.
Banks and their customers could face higher compliance and reporting costs to implement and maintain objective scoring systems, with those costs potentially passed along to consumers and taxpayers.
Financial institutions may be driven to prioritize short‑term compliance with prescriptive metrics rather than effective long‑term risk management, raising the risk of regulatory gaming and narrower risk practices.
Banks and taxpayers could be harmed if the legislation narrows or eliminates the qualitative 'management' component of CAMELS, causing important governance and judgement issues to be underweighted in supervision.
Based on analysis of 3 sections of legislative text.
Directs FFIEC to set objective CAMELS criteria and weights, include AML/CFT measures, and forces agencies to adopt rules within 12 months with a 90-day comment period.
Requires the Federal Financial Institutions Examination Council (FFIEC) to create and recommend objective, transparent criteria and weightings for each CAMELS supervisory component and for composite bank ratings, and mandates federal banking agencies to adopt those recommendations through rulemaking within set timelines. It also directs clearer links between ratings and objective measures, narrows the management component to measurable governance and controls, explicitly requires consideration of anti-money-laundering/combating financing of terrorism (AML/CFT) compliance in ratings, and amends a related Bank Holding Company Act definition to alter statutory language tied to CAMELS.