Exams Will Change After Crisis

December 12, 2008
American Banker
Ernest (Ernie) T. Patrikis

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Throughout the credit crisis bank supervisors - federal and state - have strayed from their usual remedial practices.

Considering what has transpired, there have been few written agreements and cease-and-desist orders, which are publicly issued. Instead, the nonpublic memorandum of understanding has been the favored remedial tool.

This is about to change. As banks beef up their capital and financial markets begin to stabilize, bank supervisors will feel less constrained, and public remedial actions will become more likely.

As usual, the emphasis will be on the components of Camels ratings: capital, assets, management, earnings, liquidity, and sensitivity to market risk.