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WASHINGTON, Aug 3 (Reuters) - The Federal Reserve said on Thursday that it was seeking public comment on a proposal that would reduce the role bank boards play in the day-to-day regulatory obligations of their institutions.
The U.S. central bank is proposing a series of changes in how it monitors banks, with an eye towards ensuring senior management at banks handles the bulk of regular regulatory issues, rather than the board of directors.
The push comes as Fed officials have expressed concerns that more and more obligations are being placed on bank boards, potentially distracting them from stated goal of longer-term bank management.
Federal Reserve Governor Jerome Powell, who heads up bank regulation for the Fed, suggested earlier this year that the central bank could step back regulatory expectations for bank boards, shifting more of the responsibility to senior management.
"After the crisis, there was a broad increase in supervisory expectations for these boards. But it is important to acknowledge that the board's role is one of oversight, not management," he said in April. "We need to ensure that directors are not distracted from conducting their key functions by an overly detailed checklist of supervisory process requirements."
Under the proposed changes, the Fed would bring specific regulatory concerns to bank management rather than the board, and also would outline what broad principles it expects from bank boards going forward, such as holding management accountable and supporting independent risk management.
The Fed also said it was revisiting all regulatory obligations currently placed on bank boards, in an effort to identify outdated or unnecessary items to be eliminated. The Fed plans to release the results of that review at a later date.
The Fed also announced it was reworking its in-house confidential ratings system for large financial institutions. Established in 2012, those ratings help Fed supervisors assess the stability of large banks, and the changes are intended to reflect regulatory changes made by the Fed since 2012. (Reporting by Pete Schroeder; Editing by Meredith Mazzilli and Diane Craft)