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Michelle Bowman: Reflections on Regulation

Michelle Bowman: Reflections on Regulation

by Starling Insights

Starling Insights Editorial Board

Mar 27, 2024

Observations

In a recent speech at a New Jersey Bankers Association forum, Michelle Bowman, a member of the Board of Governors of the US Federal Reserve System, emphasized the importance of engaging with stakeholders to ensure that regulation and supervision are effective, transparent, and fair.

Bowman highlighted shifts in supervisory practices following the banking turmoil of 2023, and argued that the Fed must work toward more effective and consistent supervision tailored to each institution. However, the bank failures cannot be taken as a "blank check" to remake supervision into a "blunt instrument," Bowman argued. "Conducting supervision in a manner that respects due process and provides transparency around supervisory expectations can help us accomplish these goals," she said.

Bowman also discussed other notable developments in the regulation of bank mergers and acquisitions (M&A) and liquidity. She expressed concerns about regulatory reforms potentially impeding the efficiency of bank M&A transactions and emphasized the need for speed and timeliness in application processing. Bowman also cautioned against overly burdensome liquidity requirements that could limit lending capacity and business operations. 

In closing, Bowman stressed the importance of stakeholder engagement in shaping regulatory reform efforts. "Policymakers cannot fulfill the responsibility of promoting a safe and sound banking system if we ignore efficiency, tailoring, and appropriate calibration of requirements in the reform agenda," she concluded. “These tenets should be central to the reform process.”

In an article for Starling Insights' recent "Physician, Heal Thyself," Deeper Dive, Michelle 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.  ▸ Get the Report

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