Federal Reserve Vice Chair for Supervision Bowman: Plans to Reform and Ease Bank Regulations

The Federal Reserve's new top regulatory official, Bowman, has set an ambitious agenda aimed at revisiting and easing several banking rules and regulatory policies that she believes have become overly burdensome and unnecessary. Bowman stated that the Federal Reserve will reconsider its rule-making approach and how it regulates some of the largest and most complex banks in the United States. She noted that the plethora of rules introduced since the 2008 financial crisis warrants reevaluation. Bowman specifically pointed out that the Federal Reserve will consider revising its ratings for large banks, highlighting that two-thirds of large banks are still rated unsatisfactory by Federal Reserve regulators, even if they meet all capital and liquidity requirements. She stated that the proposed reforms will address this peculiar mismatch by adopting a more reasonable approach, reducing the subjective rating weight for banks that have demonstrated resilience. She also mentioned that the Federal Reserve will reconsider its rating framework for small banks to ensure it primarily focuses on significant risks rather than regulatory judgment. Bowman also stated that the Federal Reserve will rigorously review the so-called "horizontal reviews," where regulators conduct in-depth examinations of multiple banks on a specific issue. She believes that this approach actually leads to competition among banks and overlooks their unique characteristics when identifying deficiencies.