Bank regulators want to define 'unsafe' behavior for the first time

US bank regulators are proposing a new definition for "unsafe or unsound practice" for banks. This means they want to clearly state what kind of behavior can lead to penalties or forced changes.

For decades, bank regulators have used a vague standard to tell banks when their practices were risky or problematic. This allowed them flexibility, but also meant banks often didn't know exactly where the line was until they crossed it. A clear definition could make it easier for banks to understand what is expected, but also limit the regulators' ability to adapt to new kinds of risks.