New York Department of Financial Services Superintendent Adrienne Harris said the failure of Signature Bank two years ago has changed the way the department views supervision and when to elevate concerns about bank vulnerabilities.
Speaking at the Brookings Institution Tuesday, Harris — who previously served in the U.S. Treasury Department and the National Economic Council under President Obama — emphasized the need for proactive oversight and faster intervention when financial firms show signs of distress. Her department now uses enhanced escalation tactics to address persistent issues in banks with substandard CAMELS ratings in critical areas, as seen with Signature Bank before its collapse.
Harris compared persistent "3" ratings to a student persistently receiving "C" grades on exams, saying they should prompt a proactive response.
"If you had a kid who was getting C's in math semester after semester, you would have some sort of intervention," Harris said. "I felt the same way about these institutions. We looked at the exam process to see how many people had to be involved, how long it was taking [to respond to these deficiencies and] shrunk that down quite a bit so we could provide more real-time guidance to our banks."
NYDFS issued an
The immediate cause of Signature's failure was a rapid and massive run on deposits, triggered by the collapses of Silvergate and Silicon Valley Bank, which led to a $18.6 billion withdrawal according to the review. NYDFS also identified areas for improvement in its supervisory process, including updating policies to address risks in real-time, enhancing examination capacity, and improving operational stress testing for banks.
The CAMELS system — standing for capital adequacy, asset quality, management quality, earnings, liquidity, and sensitivity to market risk — is a metric widely used to assess a bank's overall health. Ratings range from 1, the strongest, to 5, indicating a critically weak position. While a rating of 3 suggests areas needing improvement but not immediate danger, Harris pointed out that Signature consistently received "threes" or worse in critical areas, such as liquidity risk management, before its collapse.
Harris also challenged the common narrative that the government's role is solely to shield consumers from corporations, while businesses see regulators as adversaries who don't understand their industries.
"You can protect consumers and markets and be good for business all at the same time and in fact, these things actually reinforce one another," she said. "Now it is harder to do them both than to do one or the other, but it's entirely possible … and so we've seen it in New York, it's part of my motivation for coming into this role."
Harris detailed her efforts to rebuild New York's financial regulatory workforce, particularly in bank examination. Upon taking office, she conducted a strategic analysis of staffing needs and identified critical gaps that could lead to regulatory failures.
"There isn't a regulator on the planet who will say they have enough staff," she remarked, noting that her department had historically prioritized enforcement actions over examinations.
To correct this imbalance, she launched a hiring initiative, adding nearly 200 new examiners and promoting accomplished staff, efforts she says are ongoing. Her focus on strengthening staff contrasts with the current federal hiring landscape, where the Trump administration's "efficiency" initiatives at agencies like the FDIC have led to hundreds of layoffs and nearly 200 rescinded job offers to prospective bank examiners. Harris encouraged former federal bank examiners to consider a career with NYDFS.
"We're putting our foot even more on the gas for hiring, so anybody who wants to come to New York and work at DFS, you are welcome," Harris said. "Come to New York!"
