Fed’s Bowman: Bank Regulation Changes Proposed
- Federal Reserve Vice Chair for Supervision Michelle Bowman is pushing for a more flexible approach to bank regulation, suggesting a review of existing capital requirements and changes to...
- Bowman specifically targeted the enhanced supplementary leverage ratio (eSLR), claiming it might very well be creating "market distortions." While the eSLR was initially intended to bolster capital reserves,...
- The Federal Reserve is considering a proposal to revise the eSLR, acknowledging that its original calibration was based on substantially lower reserve levels.
Is the landscape of bank regulation about to shift? fed’s Bowman is advocating for changes, including a review of current capital requirements, suggesting that some regulations may be creating market distortions. She specifically targets the enhanced supplementary leverage ratio (eSLR), arguing it may be hindering low-risk activities. bowman also proposes reforms to bank merger oversight, hoping to streamline the request process for new banks. News Directory 3 keeps you informed on the crucial moves impacting the financial sector. The Federal Reserve will host a conference in July to discuss these potential alterations. Wondering how these proposed changes will affect the industry? Discover what’s next …
Bowman Advocates Easing Bank Regulations, cites Market Distortions
Updated June 10, 2025
Federal Reserve Vice Chair for Supervision Michelle Bowman is pushing for a more flexible approach to bank regulation, suggesting a review of existing capital requirements and changes to how bank mergers and new charters are handled. Speaking at Georgetown University, bowman argued that some regulations may no longer align with today’s economic conditions and financial landscape.
Bowman specifically targeted the enhanced supplementary leverage ratio (eSLR), claiming it might very well be creating “market distortions.” While the eSLR was initially intended to bolster capital reserves, Bowman believes it now excessively restricts banks, hindering low-risk activities like Treasury market intermediation. She emphasized the importance of allowing banks to fail safely without destabilizing the broader financial system, a key aspect of bank regulation.
The Federal Reserve is considering a proposal to revise the eSLR, acknowledging that its original calibration was based on substantially lower reserve levels. though, Bowman indicated that a extensive review of the entire capital framework might be necesary to ensure effective capital requirements.
To facilitate this discussion,the Fed will host a conference in July. The focus will be on evaluating whether current capital standards—including the leverage ratio, GSIB surcharge, Basel III reforms, and stress testing—are working together effectively to achieve their intended policy goals. This is part of a broader effort to refine bank merger oversight.
Bowman also highlighted inefficiencies in the bank application process, advocating for quicker turnaround times and clearer guidelines, particularly for new bank formations. She believes that streamlining the application process and establishing obvious approval standards could encourage more new banks to form.
“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,” she said.
What’s next
Bowman’s comments reflect growing pressure from the banking industry and lawmakers to ease regulations perceived as overly burdensome or outdated, while still preserving the stability of the financial system.