In testimony delivered at the hearing on her nomination to serve as the Vice Chair for Supervision of the US Federal Reserve System last week, Fed Governor Michelle Bowman laid out four priorities: refocusing supervision, restoring regulatory tailoring, fostering innovation, and promoting transparency.
Bowman argued that supervision must be grounded in applicable law and focus on core risks. "Supervisory expectations should not surprise regulated firms," she stated, adding that while supervision cannot remove risk, it should promote responsible risk management and protect the financial system in case of bank failures.
She called for a pragmatic regulatory approach that considers cost, market impact, and unintended consequences. Bowman emphasized tailoring for community and regional banks, saying it “is fundamental to ensuring we maintain and enhance the diversity of the U.S. banking system.”
She also supported innovation and urged regulators to encourage new technologies. Closing her testimony, she pledged to approach her role with "openness and humility," making decisions informed by broad stakeholder input across the financial landscape.
In an article for our 2024 Compendium, Bowman argued that banking sector overseers should hold themselves to the same high standards of conduct they encourage in the industry — and that they must do so in a manner independent of political pressure and mindful of public accountability.
"Accountability is no less important for bank regulators than it is for banks," Bowman wrote. "Bank regulators serve an important public function, and as we have seen in the past year, the stakes are high. Bank failures and stress in the banking system pose significant risks, not only to the bank customers, depositors, and creditors of a failed bank, but also to the broader financial system, the US economy, and US taxpayers." ▸ Read More
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