Federal Reserve reviewing confidential ratings for US big banks, WSJ reports

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(Reuters) -The U.S. Federal Reserve’s incoming vice chair for supervision is seeking to review the confidential ratings for the health of the country’s biggest banks, the Wall Street Journal reported on Friday.

If any adjustments were to be made to the supervisory ratings, which have gone through layers of evaluation at the central bank, some bank examiners would likely raise concerns, according to the report.

The Fed is yet to release the new ratings for U.S. banks with over $100 billion or more in assets and intends to wait until the Senate confirms Michelle Bowman as the new top banking cop, the report added, citing people familiar with the matter.

The Federal Reserve declined to comment on the matter, when contacted by Reuters.

Bowman was nominated by President Donald Trump for the vice chair for supervision role, the Fed’s top regulatory post. A former community banker, she has served on the Fed’s board of governors since 2018.

She has been vocal about the Biden administration’s efforts to impose stricter rules on the financial sector and has called for a lighter touch across a range of regulatory tools deployed by the Fed, which is charged with monitoring some of the country’s largest lenders.

Only a third of the largest U.S. banks received satisfactory ratings in every criterion in the Fed’s supervision and regulation report last year, which sparked criticism from the institutions.

The central bank uses ratings to judge the financial health and risk management capability of banks based on their capital, liquidity, and governance.

The Fed has already begun the process of determining next year’s bank scores, but Bowman is expected to change the way those scores are calculated, the report added.

(Reporting by Pritam Biswas in Bengaluru; Editing by Shailesh Kuber)