Question

The CAMELS criteria to evaluate the health of banks by supervisors is not made public. Make a case for one making this information public and a case for keeping it private.

Answer 1

The CAMELS rating is issued in the USA about the condition of banks and other financial institutions. It is the best way to classify the banks based on the risk factor involved.

But such a report released through the CAMELS criteria is not made public. Following is the case for not making it public.:

The banks with negative CAMELs rating would see the huge bank run and it might lead to the failure of banks or banks will lose its business and the condition of the bank will become worse after making such a report public.

The argument in favor of CAMELS rating:

The CAMELS rating must be made public as the public funds are available with the banks and they can reclaim their funds if banks are likely to face the severe crisis or shutdown. Further, if the CAMELS ratings are made public, then the banks try to keep their banks safe by resorting to the all possible options available.