The Federal Reserve has told banks it plans to review and potentially drop some outstanding confidential supervisory warnings, as Vice Chair Michelle Bowman pushes to refocus oversight on near-term threats to lenders’ financial condition, Bloomberg reported.

The Fed’s supervision staff informed banks earlier this month that examiners will begin reviewing open “matters requiring attention” and the more urgent “matters requiring immediate attention,” according to people familiar with the discussions cited by Bloomberg. Warnings that do not involve immediate, material risks to a bank’s safety and soundness could be eliminated.

The central bank will continue to issue such directives during routine exams, but examiners will apply a higher threshold for issuance, Bloomberg said. 

MRAs and MRIAs can cover a wide range of issues, from financial condition and risk management to cyber readiness and succession planning. While they typically carry no immediate penalty, unresolved findings can lead to tougher action, the news outlet noted. 

A Fed internal memo reviewed by Bloomberg framed the effort as a way to “enhance the effectiveness of supervision” by focusing on material financial risks. The memo calls for an initial pass to clear “clear-cut cases,” followed by a second phase for “close-call” findings, and instructs that supervisory warnings should be written in plain language with enough specificity to make clear what must be fixed.

The reviews are underway and are expected to run through the end of March, with decisions due by the end of July, Bloomberg reported. Banks would then be asked to work with examiners to confirm what remediation has been completed in areas such as risk management, compliance and financial condition. 

Read more at Bloomberg