A substantive modification. v2 expands the criteria for CAMELS composite ratings to explicitly include compliance with anti-money laundering and anti-terrorist financing laws, and extends the public comment period for new rules from 60 to 90 days. It also refines the language regarding how CAMELS components contribute to composite ratings.
HUMPS Act of 2025
- Sponsor
- Rep. Fitzgerald, Scott [R-WI-5]
- Committees
- Financial Services Committee (primary)
- Last action
- Jun 25, 2025
Bottom line
The bill aims to enhance objectivity, transparency, and consistency in federal financial institutions' supervisory ratings by reforming the CAMELS system, particularly its subjective management component, and reinforcing anti-money laundering compliance.
What it actually does
This bill mandates the Federal Financial Institutions Examination Council (FFIEC) to recommend amendments to the CAMELS rating system, requiring the establishment of clear and objective criteria for assessing each component. It specifically directs the FFIEC to either eliminate the 'Management' component or revise it to focus solely on objective measures of governance and controls. The bill also ensures that compliance with anti-money laundering and counter-terrorist financing laws is considered in composite ratings and requires a transparent methodology. Furthermore, it amends the Bank Holding Company Act of 1956 to streamline the definition of 'well managed'.
Proponents argue
Proponents argue that the current CAMELS rating system relies excessively on subjective examiner judgment, leading to inconsistent and potentially unfair ratings across similar financial institutions. They contend that establishing clear, objective measures for each CAMELS component and their relative weighting will promote fairness, consistency, and accountability in supervisory assessments, ensuring that ratings accurately reflect an institution's core financial condition and solvency.
Opponents contend
Opponents might argue that reducing the role of examiner judgment could hinder regulators' ability to assess nuanced and qualitative risks, especially those related to management quality, risk culture, and emerging non-financial threats. They could contend that a purely objective system might overlook critical qualitative factors essential for maintaining the safety and soundness of financial institutions, potentially leading to a less robust and adaptable supervisory framework.
The bill is concise and clearly structured, allowing an informed reader to quickly grasp its key provisions and implications within a short timeframe.
Section 1
Short Title
This section formally names the Act. It can be cited as the 'Halting Uncertain Methods and Practices in Supervision Act of 2025' or, more simply, the 'HUMPS Act of 2025'. This is standard legislative practice to provide a convenient and memorable name for the law.
Supporters argue
Providing a clear short title facilitates easy reference and discussion of the legislation, making it more accessible to the public and policymakers.
Critics contend
No specific opposition is typically raised against the naming of a bill, as it is a procedural element.
Tradeoffs
None.
Section 2
Congressional Findings on CAMELS System
This section outlines Congress's rationale for introducing the bill. It states that CAMELS ratings are crucial for evaluating financial institutions but are overly reliant on subjective examiner judgment, leading to inconsistencies. Congress finds that establishing clear, objective measures and focusing on core financial condition will improve fairness, consistency, and accountability in supervision.
Section 3(a), adding new Section 1012(a) to the FFIEC Act
Mandate for Objective CAMELS Criteria
This provision requires the Federal Financial Institutions Examination Council (FFIEC) to recommend amendments to the Uniform Financial Institutions Rating System (CAMELS). The goal is to establish clear and objective criteria for assessing each CAMELS component and to revise the factors that contribute to a composite rating, ensuring it more accurately reflects a financial institution's financial condition and risk profile. This aims to reduce subjectivity and increase transparency in the rating process.
Section 3(a), adding new Section 1012(a)(3) to the FFIEC Act
Management Component Reform
This key provision specifically targets the 'Management' component of the CAMELS rating system. It requires the FFIEC to either completely eliminate this component or, alternatively, revise it to strictly limit its assessment to objective measures of the governance and controls an institution uses to manage its risk profile. This aims to remove subjective judgments about management quality, focusing instead on measurable structures and processes.
Section 3(a), adding new Section 1012(a)(4) to the FFIEC Act
Inclusion of AML/CFT Compliance in CAMELS
This provision mandates that the composite CAMELS ratings for financial institutions must explicitly consider their compliance with various anti-money laundering (AML) and counter-terrorist financing (CTF) requirements. This includes compliance with the Federal Deposit Insurance Act, Public Law 91-508, and subchapter II of chapter 53 of title 31, United States Code, along with other applicable regulations related to preventing money laundering and terrorist financing.
Section 3(a), adding new Section 1012(b) and (c) to the FFIEC Act
Regulatory Implementation and Public Input
This section sets a timeline and process for implementing the FFIEC's recommendations. Within 12 months of the FFIEC making its recommendations, the federal financial institutions regulatory agencies are required to jointly issue rules to carry them out. These agencies must publish a notice of proposed rulemaking and provide a public comment period of at least 90 days, ensuring stakeholder and public input on the proposed changes.
This section amends Section 2(o)(9)(A) of the Bank Holding Company Act of 1956, which defines 'well managed' for certain regulatory purposes. Specifically, it strikes a clause that explicitly required 'at least a satisfactory rating for management' for an institution to be considered 'well managed' if it already achieved a composite CAMEL rating of 1 or 2. This effectively streamlines the 'well managed' definition by removing a specific management rating requirement for top-rated institutions.
Section 3(b)
Why it matters:This is standard legislative practice for amending existing federal law by modifying specific clauses within a larger statutory framework.
Case for: Supporters would argue that this amendment streamlines regulatory definitions and aligns with the bill's broader goal of reducing subjectivity in the management component of CAMELS. For institutions already achieving the highest composite ratings (1 or 2), removing a redundant or potentially subjective management rating requirement could reduce unnecessary regulatory burden and provide clearer criteria for 'well managed' status.
Case against: Critics might argue that removing the explicit management rating requirement, even for highly-rated institutions, could inadvertently reduce the emphasis on qualitative management assessments. This could potentially lead to overlooking subtle governance weaknesses or risk culture issues that might not be immediately reflected in other objective CAMELS components, even for otherwise strong institutions.
Estimated impact: This amendment could impact the regulatory classification of bank holding companies and influence their ability to engage in certain activities, such as mergers and acquisitions, by altering the criteria for being deemed 'well managed'. The direct financial impact is not quantified but relates to regulatory compliance and operational flexibility.