The Federal Reserve Board requested comment on a targeted proposal to revise its supervisory rating framework for large bank holding companies to clarify when a firm qualifies as “well managed”. The changes are intended to better align supervisory ratings with the underlying strength of firms and the banking system, and with rating approaches used for other banking organizations. Under the large bank framework issued in 2018, supervisors assign ratings across three components, capital, liquidity, and governance and controls, using four grades: broadly meets expectations, conditionally meets expectations, deficient-1, and deficient-2. The proposal would treat a bank holding company as well managed if it has no more than one deficient-1 rating across the three components; firms that do not meet this standard would be deemed not well managed and would face limitations on certain activities. As under the current approach, any deficient-2 rating would continue to result in a not well managed determination. Parallel changes are proposed for the Federal Reserve Board’s supervisory rating framework for insurers it regulates, and the Board signaled it will separately evaluate more comprehensive revisions, including the possible addition of composite ratings. Comments are due 30 days after publication in the Federal Register.
Federal Reserve Board 2025-07-10
Federal Reserve Board consults on revising large bank and insurance supervisory ratings to redefine well managed status
The Federal Reserve Board seeks comments on revising its supervisory rating framework for large bank holding companies to clarify "well managed" criteria. A firm would be well managed with no more than one deficient-1 rating across capital, liquidity, and governance. Similar changes are proposed for insurers, with further revisions under consideration.