In comment letters, bankers have panned a proposal by bank and thrift regulators that would add a sixth component to the Camel rating system.

"The addition of the new measurement ... will undoubtedly add to the already overwhelming burden placed on our banks," wrote Charles L. Saeman , executive vice president of State Bank of Cross Plains, Wis. "No change in the rating system is needed."

The proposal, published July 18 in the Federal Register, would require examiners to gauge how well institutions protect themselves against shifts in interest rates and foreign currency values, and fluctuations in securities portfolios.

Banks' management of these risks would become the sixth component of Camel - an "S," for "sensitivity to market risks."

It would join the five elements from which the 18-year-old interagency rating system takes its name: capital, asset quality, management, earnings, and liquidity.

Regulators are expected to issue a final ruling before year's end.

In a majority of the 47 comment letters, bankers, industry representatives, and state regulators said examiners already evaluate risk management adequately, in the "M" component of Camel.

"Is someone in Washington trying to justify their job/budget by creating more regulatory burden for the industry?" wrote John M. Crockett, deputy commissioner for the Virginia Bureau of Financial Institutions. "I am a firm believer in the old adage, 'If it's not broken, don't fix it.' I see Camel in this category."

"It is not necessary to have a stand-alone sixth component to restate the findings of the other five," added Jill D. Hanna, vice president of North Akron (Ohio) Savings Association.

Regulators also plan to increase their focus on how well banks identify, measure, and control risks that crop up under each of the six components. Like the current system, institutions would be rated in each category from 1 - the highest grade - to 5.

But under the proposal, examiners would take into account institutions' risk management when arriving at each of these six component ratings. For example, under the "asset quality" component, supervisors would scrutinize the credit risk associated with a bank's loans and investments.

Several bankers argued that this new emphasis would make the rating system inconsistent and too subjective.

"As the focus of examinations changes ... many banks may be left confused and unable to attain satisfactory ratings," said Robert C. Smith, president of Soy Capital Bank and Trust Co., Decatur, Ill.

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