WASHINGTON—America’s Credit Unions is urging NCUA to work through the Federal Financial Institutions Examination Council (FFIEC) to modernize the CAMELS rating system, arguing that updates are needed to improve consistency and reduce subjectivity across credit union examinations.
ACU sent a letter sent to the agency Monday detailing these recommendations and more.
In the letter, ACU Regulatory Advocacy Senior Counsel Luke Martone recommends key reforms to the “M” component of CAMELS, which focuses on management. He suggests either removing it as a standalone or narrowing the rating, so it reflects only material operational risks that pose real safety-and-soundness concerns.
“If the ‘M’ score focused solely on clear, real risks, it would be more objective and better tied to actual safety and soundness concerns,” wrote Martone. “This would make the rating more useful and lead to more consistent evaluations of credit unions.”