By Pete Schroeder
Feb 11 (Reuters) – The Federal Reserve plans to review issues its examiners had previously flagged for banks to address, as the U.S. central bank overhauls its oversight of the nation’s financial institutions, according to a memo sent to staff and seen by Reuters.
The Fed is undergoing a review of its “matters requiring attention (MRAs),” which are directives from bank examiners to institutions to address potential issues. The push coincides with Fed Vice Chair for Supervision Michelle Bowman’s broad overhaul of how the central bank polices some of the largest U.S. financial institutions.
Under Bowman, Fed examiners have been directed to focus primarily on material financial risks at banks, as she has argued examinations have become overly process-focused. The review of so-called MRAs is to ensure they are within that new standard, the memo said. Bloomberg News was first to report the review.
A Fed spokesperson declined to comment.
Under the review, the Fed will be checking if existing MRAs are specific and flag concerns that could cause financial harm to a bank if not addressed. If an MRA does not meet those standards, it could be downgraded to a “non-binding supervisory observation.”
The new review will not apply to issues flagged during the oversight of consumer affairs laws like the Truth in Lending Act, the memo said.
MRAs typically are issues that banks must address, otherwise they could eventually elevate to more severe penalties, including public enforcement actions and fines.
The Fed plans to resolve “clear-cut cases” by the end of March while conducting outreach to banks and fellow regulators, and is eyeing the middle of July for resolving MRAs that require further review, the memo said.
(Reporting by Federica Mileo in Barcelona; Editing by Franklin Paul and Paul Simao)
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