Credit Risk Management

Credit risk arises from the potential that a borrower or counterparty will fail to perform on an obligation. For most banks, loans are the largest and most obvious source of credit risk. However, there are other sources of credit risk both on and off the balance sheet. Off-balance sheet items include letters of credit unfunded loan commitments, and lines of credit. Other products, activities, and services that expose a bank to credit risk are credit derivatives, foreign exchange, and cash management services.

Policy Letters

Agricultural Credit

Supervisory Expectations for Risk Management of Agricultural Credit Risk

Applicability of the Interagency Policy Statement on Documentation of Loans to Small and Medium-sized Businesses and Farms to the Activities of U.S. Branches and Agencies of Foreign Banks

Counterparty Credit Risk

Interagency Guidance on Leveraged Lending

Interagency Counterparty Credit Risk Management Guidance

Supervisory Guidance Regarding Counterparty Credit Risk Management

Risk Management and Capital Adequacy of Exposures Arising from Secondary Market Credit Activities

Examining Risk Management and Internal Controls for Trading Activities of Banking Organizations

Country Risk / ICERC

Revisions to the Guide to the Interagency Country Exposure Review Committee (ICERC) Process

Interagency Guidance on Country Risk Management

General Credit-Related and Examination Activities

Frequently Asked Questions on the Current Expected Credit Losses Methodology (CECL)

Supervisory Expectations for Risk Management of Reserve-Based Energy Lending Risk

Interagency Guidance on the New Accounting Standard on Financial Instruments – Credit Losses

Examiner Loan Sampling Requirements for State Member Bank and Credit Extending Nonbank Subsidiaries of Banking Organizations with $10-$50 Billion in Total Consolidated Assets

Revisions to the Required Data Fields for the Interagency Loan Data Request

Disposal of Problem Assets through Exchanges

Interagency Statement on Meeting the Needs of Creditworthy Small Business Borrowers

Interagency Guidance on Overdraft Protection Programs

Bank Holding Company Rating System

Supervision of State-Chartered Banks

Loan Write-Up Standards for Assets Criticized During Examinations

Minimum Documentation Standards for Loan Line Sheets

Uniform Financial Institutions Rating System

Interagency Uniform Core Report of Examination

Applicability of the Interagency Policy Statement on Documentation of Loans to Small and Medium-sized Businesses and Farms to the Activities of U.S. Branches and Agencies of Foreign Banks

Notification to State Member Banks on Federal Reserve Confirmations of Charge-offs Declared for Tax Purposes

Retail Credits

Guidance on Private Student Loans with Graduated Repayment Terms at Origination

Interagency Guidance on Home Equity Lines of Credit Nearing Their End-of-Draw Periods

Interagency Statement on Supervisory Approach for Qualified and Non-Qualified Mortgage Loans

Interagency Statement on Meeting the Needs of Creditworthy Small Business Borrowers

Interagency FAQs on the Agencies' Appraisal Regulations and Interagency Statement on Independence of Appraisal and Evaluation Functions

Account Management and Loss Allowance Methodology for Credit Card Lending

Revised Uniform Retail Credit Classification and Account Management Policy

Interagency Statement on Appraisals for Affordable Housing Loans

Risk Management and Underwriting

Guidance on Private Student Loans with Graduated Repayment Terms at Origination

Interagency Guidance on Home Equity Lines of Credit Nearing Their End-of-Draw Periods

Guidance on Managing Outsourcing Risk

Uniform Agreement on the Classification and Appraisal of Securities Held by Depository Institutions

Interagency Supervisory Guidance Addressing Certain Issues Related to Troubled Debt Restructurings

Interagency Guidance on Leveraged Lending

Guidance on a Lender’s Decision to Discontinue Foreclosure Proceedings

Underwriting Standards for Small Business Loans Originated under the Small Business Lending Fund Program

Interagency Statement on Sound Practices Concerning Elevated Risk Complex Structured Finance Activities

Interagency Credit Risk Management Guidance for Home Equity Lending

Interagency Policy on Banks/Thrifts Providing Financial Support to Funds Advised by the Banking Organization

Framework for Assessing Consumer Compliance Risk at Bank Holding Companies

Interagency Advisory on the Use of the Federal Reserve's Primary Credit Program in Effective Liquidity Management

Risk Management and Valuation of Mortgage Servicing Assets Arising from Mortgage Banking Activities

Derivative Contracts Hedging Trust Preferred Stock

Interagency Guidance on Loans Held for Sale

Sound Credit Risk Management and the Use of Internal Credit Risk Ratings at Large Banking Organizations

Lending Standards for Commercial Loans

Risk Management and Capital Adequacy of Exposures Arising from Secondary Market Credit Activities

Shared National Credits

Shared National Credit Program - Interagency Agreement

Additional Resources

Manual References

  • Bank Holding Company Supervision Manual
    • Section 2010.2, "Supervision of Subsidiaries (Loan Administration and Lending Standards)"
    • Section 2010.10, "Supervision of Subsidiaries (Internal Loan Review)"
    • Section 2050.0, "Extensions of Credit to BHC Officials"
    • Section 2122.0, "Internal Credit-Risk Ratings at Large Banking Organizations"
    • Section 4090.0, "Country Risk"
  • Commercial Bank Examination Manual
    • Section 2025.1, "Counterparty Credit Risk Management"
    • Section 2040.1, "Loan Portfolio Management"
    • Section 2045.1, "Loan Participations, the Agreements and Participants"
    • Section 2080.1, "Commercial and Industrial Loans"
    • Section 2082.1, "Loan-Sampling Program for Certain Community Banks"
    • Section 2110.1, "Floor-Plan Loans"
    • Section 2115.1, "Leveraged Financing"
    • Section 2120.1, "Direct Financing Leases"
    • Section 2130.1, "Consumer Credit"
    • Section 2140.1, "Agricultural Loans"
    • Section 2142.1, "Agricultural Credit-Risk Management"
    • Section 2200.1, "Other Real Estate Owned"
    • Section 7020.1, "International – Loan Portfolio Management"
    • Section 7040.1, "International – Country Risk and Transfer Risk"
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Last Update: May 19, 2017