On July 10, 2025, the Board of Governors of the Federal Reserve System (“FRB”) issued a request for comment on proposed revisions to its large financial institution (“LFI”) supervisory rating system (the “LFI Framework”).

If finalized as proposed, the revisions would allow large depository institution holding companies with only one “Deficient-1” rating in the three LFI rating components to be considered “well-managed.” Firms that are not “well managed” are not eligible for expedited processing of certain supervisory applications and face constraints on, among other things, expansionary activities and investments in and acquisitions of non-bank financial companies.

Although the FRB has proposed a set of specific revisions to the LFI Framework, it has also requested comment on a number of potential alternative revisions. The FRB has also invited comments on whether it should make changes to other supervisory ratings systems, including the CAMELS system.

Click here to read more about the proposed revisions.

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Photo of Randy Benjenk Randy Benjenk

Randy Benjenk is co-chair of Covington’s industry-leading Financial Services Group and focuses his practice on regulatory advice and advocacy. He represents domestic and foreign banks, fintech companies, and trade associations on compliance issues, corporate transactions, and public policy matters.

Chambers USA says Randy…

Randy Benjenk is co-chair of Covington’s industry-leading Financial Services Group and focuses his practice on regulatory advice and advocacy. He represents domestic and foreign banks, fintech companies, and trade associations on compliance issues, corporate transactions, and public policy matters.

Chambers USA says Randy has received “widespread praise” from clients, who describe him as “an outstanding bank regulatory lawyer” and say that “the quality of his legal work and his writing abilities were incredible” and “he’s very easy to work with, knowledgeable and efficient.”

Randy regularly advises clients on a wide range of regulatory matters, including:

Bank Activities and Prudential Regulation. Complex bank activities, structure, licensing, and prudential matters, often involving issues of first impression at the federal and state banking agencies.
Corporate Transactions. Mergers and acquisitions, spinoffs, charter conversions, debt and equity issuances, investments, strategic partnerships, de novo bank formations, and related regulatory applications and disclosures.
ESG and Anti-ESG Laws. Strategies for confronting the growing thicket of laws addressing the financial services industry’s Environment, Social, and Governance positions.
Private Equity Investments. Private equity investments in banks, bank investments in private funds, and fund structuring related to the Volcker Rule and Bank Holding Company Act.
Public Policy Matters. Regulatory and legislative policy matters, with an emphasis on changes arising out of U.S. banking legislation and international standards.
Crisis Response. Navigating extraordinary events, such as the COVID-19 pandemic and related governmental responses, and firm-specific matters.
Supervisory and Enforcement Matters. Compliance and safety and soundness issues that arise in the examination and enforcement contexts.

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Photo of Nikhil Gore Nikhil Gore

Nikhil V. Gore represents financial institutions, sovereigns, and global corporations in investigations, disputes, and regulatory advocacy before U.S. and international financial services regulators.

As co-chair of Covington’s financial services investigations and government enforcement practice, Nikhil leads anti-financial crime investigations, as well as a…

Nikhil V. Gore represents financial institutions, sovereigns, and global corporations in investigations, disputes, and regulatory advocacy before U.S. and international financial services regulators.

As co-chair of Covington’s financial services investigations and government enforcement practice, Nikhil leads anti-financial crime investigations, as well as a wide range of financial institution governance, control, safety and soundness, and consumer and market conduct matters. He has served as lead counsel for multiple major financial institutions in safety-and-soundness matters before the OCC and Federal Reserve; secured unprecedented outcomes for community banks challenging FDIC supervisory and enforcement actions; and represented global banking institutions in anti-financial crime investigations in Asia, Latin America and the Middle East.

Nikhil also counsels clients on a range of financial statutes and regulations, including those governing U.S. fiscal law and the investment and payment authorities of government agencies; the control of money laundering and the licensing of money transmission; and the combatting of terrorist financing.

In his disputes practice, Nikhil is part of the Covington team representing Ukraine in state-to-state arbitrations against the Russian Federation and was appointed by the Prosecutor-General of Ukraine to the Legal Task Force on Accountability for Russian War Crimes. He has handled treaty arbitrations and commercial disputes spanning Asia, Eastern Europe, North America, the Middle East, and Africa.

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Photo of Meghann Donahue Meghann Donahue

Meghann Donahue represents banks, nonbank financial institutions, and fintech companies in a broad range of enforcement, supervision, and regulatory matters involving federal and state banking agencies, including matters related to:

Safety and soundness issues, anti-money laundering requirements, and UDAAP and other consumer compliance…

Meghann Donahue represents banks, nonbank financial institutions, and fintech companies in a broad range of enforcement, supervision, and regulatory matters involving federal and state banking agencies, including matters related to:

Safety and soundness issues, anti-money laundering requirements, and UDAAP and other consumer compliance regulations;
Prudential regulatory matters, internal governance and controls, and risk management frameworks; and
Compliance with money transmission laws and licensing requirements.

Meghann is also active in the firm’s Fintech Initiative, through which she counsels clients on issues related to bank-fintech partnerships and regulatory compliance for innovative products and services.

Before rejoining Covington in 2024, Meghann served as Associate General Counsel for the Federal Reserve Bank of New York, where she supervised and conducted enforcement investigations of financial institutions, advised on enforcement actions arising out of bank examinations, and counseled bank examiners on matters involving a wide array of unsafe and unsound practices, regulatory violations, and remediation at supervised institutions.

Meghann advised on dozens of public and nonpublic enforcement actions with financial institutions and led enforcement investigations resulting in the Federal Reserve’s first civil money penalties for anti-money laundering non-compliance and Volcker Rule violations. Meghann’s experience includes investigations and actions concerning Bank Secrecy Act and OFAC sanctions compliance, consumer compliance, risk management and internal controls, fraud, misconduct, and whistleblower complaints. Meghann routinely liaised with Federal Reserve Board enforcement officials and other domestic and international regulators, and she advised bank examiners on supervisory findings and bank regulatory developments.

Meghann also managed a portfolio of litigations, subpoenas, and oversight inquiries related to New York Fed operations, including payments and foreign central bank accounts. She provided counsel on internal investigations and compliance-related matters and spearheaded the creation of New York Fed’s pro bono legal services program.

In addition to her work at Covington, Meghann serves on the Board of Trustees for the State YMCA of Michigan.

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Photo of Mike Nonaka Mike Nonaka

Michael Nonaka, co-chair of the firm’s Fintech Initiative and former co-chair of the Financial Services Group, advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating…

Michael Nonaka, co-chair of the firm’s Fintech Initiative and former co-chair of the Financial Services Group, advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and applications matters for banks and other financial institutions, the development of partnerships and platforms to provide innovative financial products and services, and a broad range of compliance areas such as anti-money laundering, financial privacy, cybersecurity, and consumer protection. He also works closely with banks and their directors and senior leadership teams on sensitive supervisory and strategic matters.

Mike works with a number of banks, lending companies, money transmitters, payments firms, technology companies, and service providers on innovative technologies such as bitcoin and other cryptocurrencies, blockchain, big data, cloud computing, same day payments, and online lending. He has assisted numerous banks and fintech companies with the launch of innovative deposit and loan products, technology services, and cryptocurrency-related products and services.

Mike has advised a number of clients on compliance with TILA, ECOA, TISA, HMDA, FCRA, EFTA, GLBA, FDCPA, CRA, BSA, USA PATRIOT Act, FTC Act, Reg. K, Reg. O, Reg. W, Reg. Y, state money transmitter laws, state licensed lender laws, state unclaimed property laws, state prepaid access laws, and other federal and state laws and regulations.

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Photo of Karen Solomon Karen Solomon

Karen Solomon advises clients on a broad range of financial services regulatory matters. Karen’s extensive experience working in agencies that supervise national banks and Federal savings associations enables her to offer an informed, practical approach to addressing regulatory issues.

Before joining Covington, Karen …

Karen Solomon advises clients on a broad range of financial services regulatory matters. Karen’s extensive experience working in agencies that supervise national banks and Federal savings associations enables her to offer an informed, practical approach to addressing regulatory issues.

Before joining Covington, Karen served as the Acting Senior Deputy Comptroller and Chief Counsel at the Office of the Comptroller of the Currency (OCC). In that role and in her prior role as Deputy Chief Counsel, Karen’s work included developing and drafting regulations and advising on issues involving bank powers, structure, compliance, and preemption as well as on licensing, legislative, and litigation-related matters. She had a leadership role in key OCC initiatives, including the agency’s implementation of the Volcker rule, recent fintech chartering initiative, and federal preemption efforts. She also worked extensively with other Federal agencies on joint or collaborative regulatory projects. Karen joined the OCC in 1995. Before that, she was Deputy Chief Counsel at the Office of Thrift Supervision (OTS) and, earlier, held senior positions at the OTS’s predecessor agency, the Federal Home Loan Bank Board.

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Photo of Tyler Smith Tyler Smith

Tyler Smith is an associate in the Financial Services group. His practice focuses on assisting banks and non-bank financial services companies in connection with enforcement, compliance and regulatory matters.

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