Comptroller Gould Statement Flags Double Counting Concern in Proposed CAMELS Rating System Revisions

Summary

Comptroller of the Currency Jonathan Gould on May 19, 2026, issued a statement on the FFIEC's proposed revisions to the CAMELS bank rating system, supporting the shift toward material financial risk but warning that the proposal does not sufficiently address double counting within the Management component, which has historically reflected deficiencies already captured in other components. Gould also cautioned that no single component rating should disproportionately drive the composite rating, with public comments due 90 days after Federal Register publication.

Market Impact

The proposed CAMELS revisions would change how all U.S. bank supervisors assign the ratings that determine deposit insurance assessments, examination intensity, and regulatory approval eligibility for every insured depository institution. Gould's double-counting critique targets the Management component, whose downgrades have historically constrained bank M&A approvals and expansion applications even when capital and asset quality components remained satisfactory, making the resolution of this design question consequential for how ratings translate into supervisory consequences.

Why It Matters

CAMELS ratings are the central supervisory scoring mechanism for the entire U.S. banking system, and this is the first comprehensive revision proposal to reach public comment in decades; the OCC head publicly flagging component design concerns while supporting the overall direction signals interagency negotiation over how much weight management process findings should carry relative to measurable financial risk.

Key Points

• The FFIEC proposed revisions to the Uniform Financial Institutions Rating System (CAMELS) that shift supervision away from process-heavy oversight toward a stronger focus on material financial risk.
• Comptroller Gould supports the direction but remains concerned the revisions do not sufficiently address double counting within the Management (M) component.
• Gould stated the Management rating has historically reflected deficiencies already captured in other components and should serve as a standalone assessment.
• Gould said that absent extenuating circumstances, no single component rating should disproportionately drive the composite rating.
• Public comments on the proposed revisions are due 90 days from publication in the Federal Register.

Key Entities

Evidence

I remain concerned that the revisions do not sufficiently address double counting within the Management, or M, component. For the CAMELS framework to function effectively, each component must provide distinct, increme...

Supports: Gould's central critique: the Management component double-counts deficiencies captured elsewhere

The revisions shift supervision away from process-heavy oversight toward a stronger focus on material financial risk.

Supports: The direction of the proposed CAMELS revisions: from process oversight to material financial risk

Absent extenuating circumstances, no single component rating should disproportionately drive the composite rating. A bank's overall health is the sum of its parts

Supports: Gould's second concern: composite ratings should not be driven by a single component