Federal Reserve Vice Chairperson of Supervision Bowman: Proposed reform and deregulation of banks

The Federal Reserve's new top regulator, Bowman, has set out an ambitious agenda to revisit and relax a number of banking rules and regulatory policies that she believes have become too onerous and unnecessary. Bowman said the Fed will rethink the way it sets its rules and how it regulates some of the largest and most complex banks in the United States. She noted that a large number of rules introduced since the 2008 financial crisis merit reconsideration. In particular, Bowman noted that the Fed will consider revising its ratings for large banks, noting that two-thirds of large banks are still rated unsatisfactory by Fed regulators even if they meet all their capital and liquidity requirements. She said the proposed changes would address this strange mismatch by taking a more rational approach, by reducing some of the subjective rating weights for banks that have shown resilience. She also said the Fed would rethink its rating framework for smaller banks to ensure it focused primarily on significant risk rather than regulatory judgment. Ms Baumann also said the Fed would scrutinise so-called "horizontal reviews", in which regulators conduct in-depth reviews of multiple banks on a particular issue. This approach, she argued, would effectively lead to competition among banks and would ignore their individual uniqueness when identifying flaws.