H.R. 3379: Halting Uncertain Methods and Practices in Supervision Act of 2025

The Halting Uncertain Methods and Practices in Supervision Act of 2025, also known as the HUMPS Act of 2025, aims to amend the Federal Financial Institutions Examination Council Act of 1978. The primary goal of the bill is to enhance the CAMELS Rating System, which is used to evaluate the safety and soundness of financial institutions. The CAMELS system consists of six components: Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk.

Key Findings

• The CAMELS ratings are critical for assessing the regulatory status of financial institutions, including their eligibility for mergers and acquisitions and the premiums they pay for deposit insurance.
• Current CAMELS ratings often rely on examiner judgment, leading to subjectivity and inconsistency in assessments among similar financial institutions.
• Clear and objective measures for each CAMELS component and their weightings will improve fairness and consistency in evaluations.
• Examinations and CAMELS ratings should focus on a financial institution's core financial health and solvency.

Amendments to the CAMELS Rating System

The bill proposes several amendments to the CAMELS Rating System, which include:

• Establishing clear and objective criteria for each CAMELS component.
• Revising the weight given to each component to create a composite rating that more accurately depicts the financial condition and risk profile of an institution.
• Either eliminating the "Management" component from the ratings or revising it to assess only objective measures related to governance and risk management controls.
• Ensuring that composite ratings are based on a transparent methodology limited to the established objective criteria.

Implementation Timeline

After the recommendations for these changes are made, the Federal financial institutions regulatory agencies are required to issue new rules to implement the changes within 12 months.

Public Input

The regulatory agencies must publish a notice regarding the proposed rules and allow for a public comment period of at least 60 days to gather feedback on the changes.

Rule of Construction

The bill clarifies that it does not restrict the authority of regulatory agencies to take actions necessary to ensure the safety and soundness of financial institutions.

Well Managed Definition

The bill also proposes amendments to the definition of "well managed" found in the Bank Holding Company Act, simplifying the language related to CAMELS ratings.

Relevant Companies

• None found