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Reuters: Trump Regulators Launch Biggest Bank Oversight Overhaul Since 2008

Is NCUA next?

WASHINGTON—Federal banking regulators under President Trump are undertaking what Reuters described as the most significant overhaul of bank supervision since the 2008 financial crisis, shifting examiner focus away from process and compliance issues and toward what agencies consider “material” financial risks.

FDIC

According to Reuters, the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. have directed examiners to concentrate on risks that pose direct threats to a bank’s safety and soundness, rather than on paperwork deficiencies, governance concerns or procedural issues that do not immediately affect financial stability.

Reuters reported that regulators have also moved away from evaluating banks based on “reputational risk,” a supervisory concept long criticized by banks as overly subjective. The change follows complaints from President Trump and others that financial institutions have used reputational-risk considerations to deny services to certain customers, allegations banks have denied.

Critics told Reuters the changes could weaken oversight by limiting examiners’ ability to address emerging problems before they become significant financial risks. Reuters also reported that regulators have restricted the use of “Matters Requiring Attention” (MRAs)—confidential supervisory directives used to compel banks to correct deficiencies—part of a broader effort to ensure examiners focus primarily on issues deemed material to a bank’s financial condition.

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