Bank regulators now favor SEA CRABS over CAMELS
JPM•Context and sourcing
The U.S. Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency on August 27 jointly released a revised and combined framework for bank supervision.
Concerns about weaker oversight
Some of this recalibration is sensible. The CAMELS system often seems to snag healthy institutions alongside troubled ones. In 2024, half of all large U.S. banks regulated by the OCC, which includes JPMorgan JPM.N and 21 others, received a "weak" or "unsatisfactory" management grade, Bloomberg reported.
The purpose of supervision, however, is not merely to measure today’s problems but to identify tomorrow’s. Doing so inevitably requires making judgments about leadership, governance and corporate culture. A green light given to World Liberty, the Trump family-backed crypto venture run by executives with scant banking experience, already warrants skepticism over how rigorously or evenly any oversight will be applied.
