July 9, 1996, the Federal Financial Institutions Examination
Council (FFIEC) proposed revisions to the agency's Uniform
Financial Institutions Rating System, commonly referred
to as the "CAMEL" rating system. A copy of the Federal Register
notice containing the proposed revisions is attached. Comments
are due by September 16, 1996.
The proposed revisions update the rating system to reflect
changes that have occurred in the financial services industry
and in supervisory policies and procedures since the rating
system was first adopted in 1979. The proposed changes include:
- reformatting and clarifying the component rating descriptions;
- adding a sixth rating component addressing sensitivity
to market risks;
- increasing emphasis on the quality of risk management
processes in each of the rating components, particularly
in the management component;
- adding language in the composite rating definitions
to parallel the proposed changes in the component rating
- explicitly identifying the risk types that are to be
considered when assigning component ratings.
The CAMEL rating system is an internal supervisory tool
for evaluating the soundness of financial institutions on
a uniform basis and for identifying those institutions requiring
special supervisory attention or concern. State banking
departments and the Farm Credit Administration also use
the rating system.
Comments on the proposed revisions should be mailed to
Joe M. Cleaver, Executive Secretary, FFIEC, 2100 Pennsylvania
Avenue, N.W., Suite 200, Washington, D.C. 20037, or may
be sent by facsimile transmission to (202) 634-6556.
For further information on the proposed revisions, please
contact Daniel M. Gautsch, Examination Specialist in the
Division of Supervision's Office of Policy, at (202) 898-6912.