US banking regulators are narrowing their enforcement and supervision standards to emphasise material financial risk. The Office for the Comptroller of the Currency and the Federal Deposit Insurance Corporation will announce new rules on Thursday centred on "refocusing supervision on what matters most — material financial risk," an agency official said.

The overhaul is part of a deregulatory push under the Trump administration that has also led regulators to scrap "reputational risk" from their supervisory framework to prevent unfair "debanking." The agency said it was removing "Biden-era distractions" that caused bank examinations to become a "check-the-box compliance exercise."

The revamp includes a new definition for "unsafe or unsound practice" and sets a higher bar for issuing "Matters Requiring Attention." The shift comes after regulators faced criticism for failing to address interest rate and liquidity risks at Silicon Valley Bank, which failed in 2023.

The OCC will also make its policies and procedural manual public for the first time and establish two categories of violations: "substantive" and "technical." OCC head Jonathan V Gould said prioritising material financial risks was critical. The American Bankers Association and its president Rob Nichols welcomed the changes.