Hot Topics from Supervision, Regulation, and Credit

July 9, 2019

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On May 10, the Board of Governors released its second semiannual Supervision and Regulation Report, which covers the Fed's efforts to tailor supervision and regulation according to the size and complexity of banking institutions.

The report includes an overview of

  • trends in the banking sector
  • regulatory policy work, including pending rules
  • key supervisory approaches, findings, and priorities for each supervisory portfolio, including large financial institutions as well as regional and community banking organizations

Supervision and Regulation Reports are provided in conjunction with Vice Chair Randal Quarles's semiannual congressional testimony.

Information Provided on Risk-Focused Supervision Program

  • The Board of Governors issued Supervision and Regulation letter SR 19-9, about the Bank Exams Tailored to Risk (BETR) program, on June 3. The letter describes a key aspect of the Federal Reserve's risk-focused supervision program for most community and regional state member banks (SMBs) with less than $100 billion in assets.
  • BETR combines data-driven, forward-looking surveillance metrics with examiner judgment to classify the levels of risk at an SMB within individual risk dimensions. These dimensions include credit, liquidity, and operational risk. Examination work programs have been developed for each risk level to assess each risk dimension and align examination staff resources and activities more closely to a bank's risk profile and minimize regulatory burden for the bank.
  • The letter includes a description of BETR's objectives, the surveillance metrics used to determine the scope of an examination, the risk-aligned examination work programs, and the implementation of BETR.