WASHINGTON, 2025-06-09
Bowman Signals Regulatory Shift
Federal Reserve Vice Chair Michelle Bowman is proposing changes to ease regulations on banks, potentially reshaping capital requirements and bank oversight.
- Bowman wants to review bank capital requirements.
- She’s targeting the enhanced supplementary leverage ratio (eSLR).
- The Fed will host a conference in July to discuss capital standards.
In a notable shift, Federal Reserve Vice Chair for Supervision Michelle Bowman has signaled a potential easing of regulatory pressure on banks. Bowman, speaking at Georgetown University’s Psaros Center for Financial Markets and Policy, wants to revisit existing capital rules, including the enhanced supplementary leverage ratio (eSLR).
“Our goal should not be to prevent banks from failing or even eliminate the risk that they will. Our goal should be to make banks safe to fail, meaning that they can be allowed to fail without threatening to destabilize the rest of the banking system,” Bowman said.
Bowman specifically highlighted the eSLR as a potential source of market distortion, arguing that it now hinders low-risk activities such as Treasury market intermediation. The Fed is expected to propose changes to eSLR’s original calibration.
To address these issues, the Fed will host a July conference. The focus will be on whether current capital standards—including the leverage ratio, GSIB surcharge, Basel III reforms, and stress testing—are achieving their intended outcomes.
Bowman also addressed the bank application process, advocating for faster timelines and clearer standards, particularly for new bank formations. “Streamlining the applications for de novo formation, and establishing clearer standards for approval, may encourage more de novo activity,” she said.
Her remarks come amid growing pressure from the banking industry and lawmakers to scale back regulations. The goal is to reduce burdens while maintaining financial stability.
