Bowman Says Fed Is Restructuring Bank Supervision, Updating Community Bank Rules
By CU Today Staff —
ST. LOUIS—Federal Reserve Vice Chair for Supervision Michelle Bowman said Tuesday the central bank is restructuring its supervision function and pursuing a series of regulatory changes aimed at modernizing oversight and reducing unnecessary burdens on community banks.
Bowman delivered the remarks at the 2026 Community Banking Research Conference in St. Louis, sponsored by the Federal Reserve System, Conference of State Bank Supervisors and Federal Deposit Insurance Corp.
Bowman said the Fed has already refocused supervision on risks that could materially damage a bank’s financial condition, while regulators have lowered the community bank leverage ratio to the statutory 8% level and eliminated the Novel Activities Supervision Program. She also said regulators need to modernize merger reviews, encourage de novo bank formation and streamline call-report requirements. On mergers, Bowman said the Fed’s current analysis can understate competition from credit unions, nonbank lenders, farm credit institutions and branchless banks, particularly in rural markets.
Bowman said the Fed later this year will consider updating fixed-dollar asset thresholds in its regulations for inflation and economic growth, with future adjustments every five years, as well as broader changes to supervisory categories based on asset size. She said the current $10-billion community-bank threshold can push relatively simple institutions into supervisory regimes designed for more complex banks.
Bowman also announced that the Fed is beginning to restructure its supervision function into five regions, each led by a regional leader accountable for supervisory activity in that region. Examiners will remain at existing Reserve Bank locations, but the regions will follow state lines rather than Federal Reserve district boundaries, a change Bowman said should improve coordination with state and federal regulators while clarifying accountability and decision-making.
“This approach clarifies accountability and decision making and enables a consistent application of supervision,” Bowman said.
Originally reported by CU Today.