Bowman's Confirmation Signals Shift to Lenient Bank Regulation

On Wednesday, the U.S. Senate confirmed Michelle Bowman as the Vice Chair for Supervision of the Federal Reserve, a move that signals a shift towards more lenient regulation under the leadership of President Trump. Bowman, a fifth-generation banker and Republican, has long advocated for more "tailored" regulation in her speeches. Compared to her predecessor, Michael Barr, she suggests a significant change in regulatory focus and a more amicable relationship with the banking industry. Bowman frequently disagreed with Barr on issues such as bank regulation, stress test reforms, and capital rules.

In April, Bowman told Congress that current regulations are too complex and redundant. She stated that if confirmed, she would prioritize regulatory reform and focus on regulatory priorities, restore differentiated supervision, ensure a viable path for innovation in the banking system, and promote transparency and accountability in regulation. Bowman has also expressed the need for greater coordination among financial regulatory agencies. According to insiders, this work has already begun, with U.S. Treasury Secretary Janet Yellen inviting Bowman and other regulators to private meetings aimed at streamlining regulatory processes. Bowman has also hired advisors from Goldman Sachs, a prominent Wall Street law firm, and a large bank lobbying group.

Bowman plans to collaborate with officials from the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) to reintroduce a landmark U.S. bank capital proposal known as "Basel III Endgame." She has strongly criticized the initial draft of the proposal, which would increase the capital requirements for the largest banks by 19% to enhance their resilience and prevent financial crises. Bowman is also working with other regulatory bodies to explore the possibility of adjusting the Supplementary Leverage Ratio (SLR). Critics argue that the current SLR rules restrict banks from purchasing traditionally safe assets like U.S. Treasury bonds. In May, Yellen suggested that regulators might ease this capital rule by the summer.

Dennis Kelleher, president of the Washington-based consumer advocacy group Better Markets, stated that Bowman's role is to protect the jobs and savings of ordinary Americans from the risks of Wall Street. However, he noted that Bowman's views are the opposite. While she claims to care about the economy of ordinary people, she firmly supports the banking industry's broad, deep, and blind deregulation demands. On the other hand, industry organizations like the Independent Community Bankers of America have stated that Bowman's real-world experience allows her to deeply understand how one-size-fits-all regulatory measures hinder access to credit for those who need it most, regardless of the complexity or risk profile of the banks.