WASHINGTON, D.C.— Shayna Olesiuk, Director of Banking Policy at Better Markets, issued the following statement in connection with today’s filing of a comment letter to the Board of Governors of the Federal Reserve System (Fed) on proposed revisions to the large bank supervision framework:
“Effective supervision of the nation’s largest banks is one of the Fed’s most critical responsibilities. These institutions pose outsized risks to financial stability, and their sound management is essential to protecting Main Street Americans’ savings and the broader economy.
“Currently, the Fed assesses large banks based on three core areas: capital, liquidity, and governance and controls. When a large bank is deficient in any of these areas, it faces appropriate consequences—such as restrictions on growth. Large bank deficiencies have become more and more common in recent years. The Fed’s own data shows that 23 of the 36 large banks that are rated using this framework currently have deficiencies in at least one core area, and therefore fall short of the ‘well managed’ standard. Put differently, these deficiencies are not theoretical; they are a real threat to financial stability and should not be ignored.
“The result? The Fed’s proposed revisions would significantly weaken the large bank rating framework. Shifting the rating curve, ignoring known deficiencies, and eliminating consequences for large banks would not make the problems disappear and would only make the banking system less safe for the families and businesses across the country that trust large banks to protect their money. Altering how supervisory ratings are interpreted would dilute their meaning and limit the Fed’s ability to act on deficiencies.
“Large banks would also be less frequently deemed ‘not well managed,’ and even when they are, the consequences would be weaker. This shift would obscure serious risk management failures that Fed supervisors have already identified, creating a false sense of security.
“This is not a technical adjustment—it’s a fundamental weakening of oversight. It offers no meaningful improvements and undermines the Fed’s ability to safeguard financial stability. The public, the financial system, and even the Fed itself would be worse off.
“The Fed should focus on correcting deficiencies at large banks, not redefining success to accommodate failure. Supervisory rigor is essential—not optional—for these banks that hold such significant influence over the economy.
“This Proposal should be withdrawn.”
The Comment Letter is available here.
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
