The Federal Reserve has launched a full review of the issues its examiners had earlier directed banks to correct, according to an internal memo circulated to staff. The review focuses on the central bank's so-called "matters requiring attention" or MRAs - formal examiner findings that prompt institutions to remedy potential deficiencies.
The initiative is part of a wider retooling of the Fed's approach to overseeing large U.S. financial institutions under the supervision leadership. Examiners have been instructed to concentrate chiefly on material financial risks at banks, a shift from a process-oriented approach that leadership has said had become overly detailed.
The memo states the MRA review is intended to check whether outstanding findings are narrowly targeted and identify concerns that, if unaddressed, could inflict financial harm on a bank. If an existing MRA does not meet that threshold of specificity or potential harm, it may be downgraded to a "non-binding supervisory observation," according to the memo.
MRAs are typically items banks must address; failure to remediate them can lead to escalation, including public enforcement actions and fines. The Fed plans to resolve "clear-cut cases" by the end of March while engaging in outreach with banks and other regulators. MRAs that require additional analysis are targeted for resolution by the middle of July, the memo says.
The review accompanies directives given to examiners to prioritize material risks over procedural matters. The memo emphasizes ensuring MRAs conform to the new supervisory standard and specifically flags the need for clarity about how a finding could cause financial harm if left unresolved.
A Fed spokesperson declined to comment on the memo.
Timeline highlighted in the memo:
- End of March - resolution of clear-cut MRA cases.
- Middle of July - target for resolving MRAs that require further review.
The internal review is positioned as a quality check on supervisory guidance, seeking to align examiner directives with a narrowed focus on risks that materially threaten a bank's financial condition rather than on procedural shortcomings.