A proposal in the United States to revise the CAMELS rating system — the supervisory tool used by US federal regulators to assess the health and safety of financial institutions — risks diluting one of its most vital components: the quality of management. The so-called HUMPS Act of 2025 aims to curb subjectivity in ratings by eliminating or restricting the "M" in CAMELS — an acronym for Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk. The bill argues that supervisory judgement of management is inherently subjective and lacks transparency. But scrapping it could strip bank supervision of a critical lens: organisational culture.In the current CAMELS framework, the 'M' may sit alphabetically at the centre, but functionally it is the fulcrum. Management quality influences asset quality, earnings, and even liquidity. The board and management may have different roles — the former sets strategic direction and the latter executes it — but both are assessed together as part of the "M" rating. Eliminating this component might address the issue of examiner discretion, but it risks discarding the very capacity to detect cultural and governance failures.
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