The Federal Reserve is set to review issues previously flagged for banks by its examiners, signalling a significant overhaul of its oversight of U.S. financial institutions. According to a memo sent to staff, the Fed is undertaking a review of its ‘matters requiring attention (MRAs),’ directives issued by bank examiners to address potential issues. This initiative coincides with Fed Vice Chair for Supervision Michelle Bowman’s broader efforts to refine how the central bank oversees some of the largest U.S. financial institutions.
Bowman has directed Fed examiners to prioritise material financial risks at banks, arguing that examinations have become excessively focused on process. The review of MRAs is intended to ensure they align with this new standard, according to the memo. The Fed will assess whether existing MRAs are specific and highlight concerns that, if unaddressed, could cause financial harm to a bank. If an MRA does not meet these criteria, it may be downgraded to a ‘non-binding supervisory observation.’
The review will not extend to issues flagged during the oversight of consumer affairs laws, such as the Truth in Lending Act. MRAs typically represent issues that banks must address to avoid more severe penalties, including public enforcement actions and fines. The Federal Reserve System is the central banking system of the United States. It was created in 1913 with the enactment of the Federal Reserve Act, in part as a response to a series of financial panics, particularly a severe panic in 1907.
The Fed aims to resolve ‘clear-cut cases’ by the end of March, engaging with banks and fellow regulators. For MRAs requiring further review, the target resolution date is mid-July. A Fed spokesperson declined to comment on the review. Bloomberg News was the first to report news of the review.
