US Fed Issues Updated Supervisory Operating Principles

Late last month, the US Federal Reserve released an updated “Statement of Supervisory Operating Principles,” superseding the October 2025 version and reflecting priorities set forth by Vice Chair for Supervision Michelle Bowman.

The updated Statement opens by explicitly defining two primary objectives of supervision: to identify, as early as possible, significant threats to the safety and soundness of supervised institutions, and to direct firms to take “appropriate, proportionate action” to address those threats promptly. The revision comes after Randall Guynn assumed the role of Director of Supervision and Regulation in March.

Several changes tighten the standards governing MRAs, MRIAs, and enforcement actions. Supervisory staff may now issue an MRA or MRIA only if they determine in good faith that a deficiency, if not remediated swiftly, would create a “significant probability of significant harm” to a firm’s financial condition. For enforcement actions, the bar is even higher, requiring supervisors to determine that there is an “abnormal probability of abnormal harm,” with “abnormal” defined as “substantially higher than normal or significant.”

Notably, the revised Statement introduces a new presumption in favor of firms that self-identify deficiencies and promptly begin remediation: such deficiencies will be treated as supervisory observations rather than formal MRAs or MRIAs. The Statement also expands the Fed’s examination authority where a primary supervisor withholds supervisory information, removing the previous “impossibility” standard that had set a high bar for independent Federal Reserve examination.

Four further changes round out the revised Statement:

• A directive that there should be no material differences between criticisms conveyed at a final exit meeting and those in the written examination report;
• An encouragement for supervised institutions to report any failure by Federal Reserve staff to comply with the Supervisory Operating Principles;
• An assertion that supervisory staff should “facilitate the early resolution of troubled insured depository institutions to minimize the long-term cost to the Deposit Insurance Fund”; and
• A call for supervisory staff to collaborate to “maintain, develop, and continuously improve forward-looking tools" to identify threats to the safety and soundness of supervised firms and the financial system.