Al Drago/Bloomberg via Getty Images
Takeaways
- President Donald Trump nominated Federal Reserve Governor Michelle Bowman to be the central bank's vice chair for supervision.
- Bowman will be a supervisor who is more friendly to the industry than her predecessor.
- One analyst foresees the Trump administration will usher in "a new era for bank regulation."
The Federal Reserve’s newly-appointed head of bank supervision is promising to be pragmatic. This change has been welcomed by the banking industry, who felt that the previous administration had overstepped its bounds at times.
President Donald Trump nominated Fed Governor Michelle Bowman to be the central bank's vice chair for supervision on Monday. The four-year role requires Senate approval, which analysts believe is likely.
Capital Alpha Partners analyst Ian Katz said that her selection would be “a major, bank-friendly change” from the appointee of former President Joe Biden. Bowman's predecessor, Michael Barr, remains on the Fed board but left its top regulatory post last month. The board votes on the Fed’s rate policies and also the regulation of the country’s financial system.
Bowman Will Be 'Pragmatic,' She Says
Bowman, the Fed’s top banker, is expected to help create a new proposal more acceptable to the industry. He will also manage the central banks stress tests for banks and oversee its rules for the consumers.
Bowman stated in a press release that she would use her “hands-on” experience as a banker, regulator and to help shape the financial policies.
Bowman said, “If confirmed, a transparent and tailored regulatory framework for banks that encourages innovation will be implemented to promote a safe and secure banking system.”
Bowman joined the Fed when Trump nominated to her a position on the seven-member central bank board. Her term at the Fed ends in 2034. She will be appointed vice chair of supervision for four years.
Before joining the Fed, Bowman was the Kansas bank commissioner, overseeing the state's banking system along with mortgage companies and other lenders. She had earlier been a vice president at her family’s bank, Kansas-based Farmers & Drovers Bank, which she joined after an earlier career in Washington D.C.
Trump said that Bowman had the “know-how” to do it in a Truth Social Post.
Banking Groups Praise Bowman's Nomination
The Independent Community Bankers of America – a trade group that represents smaller banks – praised her for her nomination.
Rebeca Rainey, President and CEO of ICBA said, “Governor Bowman championed regulations which prioritize safety and soundness. He also ensured that reforms were clearly targeted at the stresses in the system. Rules that follow administrative procedures meticulously maximize transparency and avoid any confusion that could hinder access to credit.”
Rob Nichols is the president and CEO at the American Bankers Association. He urged the Senate “to quickly confirm her” as a “thoughtful, principled voice in support of sensible regulatory and monetary policies.”
Analysts Expect This to Be a 'New Era' for Policy
The Fed’s board approves the vast majority its regulatory decisions, but some of those that are more controversial spark dissent.
Bowman was not in agreement with some decisions taken by the Biden administration. Bowman dissented on a few decisions during the Biden administration.
Now, dissents will likely be the opposite. In January, two Biden-appointed Fed Board members dissented on a decision to withdraw the Fed from the Network of Central Banks and Supervisors (RCBS) for Greening the Financial System. The group is an international collaboration between financial regulators around the world that aims to combat climate-related financial risks.
Betsy Graseck wrote in a note to Morgan Stanley clients that “a new era is dawning for bank regulation.” She cited a speech by Treasury Secretary Scott Bessent this month, who claimed that banks were “weighed down” by excessive regulatory requirements and a broken supervision culture.
Graseck said that changes in bank regulations are never quick, but “the direction of travel appears clear.”
She wrote that the Trump administration was looking for a tailored, less onerous regulatory approach to support lending, corporate activity and bank earnings growth.
