Bank regulators now favor Sea Crabs over Camels

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.

If CAMELS no longer applies, a new acronym to describe bank regulation under Trump is warranted. SEA CRABS might do the trick. The S, E, A and C still stand for the same things, but R is for reserves or liquidity while the extra A represents access to Trump. The last two letters helpfully encapsulate the less rigorous approach.

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.