Although, as I have discussed, there are published standards as to how bank supervisors should assign these ratings, there will always be borderline cases and close calls, and these decisions are made out of the view of the public. There are at least two reasons why it is critical that we get ratings correct.
The first is that the supervisory rating is the most important communication that we have with firms. It encapsulates our expert judgment of the firm and lets the firm know how its performance compares with our standards. And second, as discussed, ratings have material real-world consequences. A firm with unsatisfactory ratings faces significant competitive disadvantages relative to firms deemed to be satisfactory.