Tuesday, 21 May 2024

Federal Reserve creates new safety and soundness rating for largest banks

WASHINGTON (Reuters) – The Federal Reserve on Friday said it has a new system to rate the health of the largest banks in light of financial rules conceived since the decade-old financial crisis.

The Fed said the new system will closely monitor the factors that are most important to the health of a bank: capital, liquidity, and governance and controls.

The Fed began to conceive the new rating system in August 2017 with input from the public and banking industry.

Domestic banks and holding companies with $100 billion or more in total assets must answer to the new rating. Last year, the Fed had proposed the new rules would apply to banks with $50 billion or more in assets.

“The Board’s post-crisis supervisory program for large financial institutions focuses on capital, liquidity, and the effectiveness of its governance and controls,” the Fed said in a press release on Friday.

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