FRB Governor Bowman Criticizes New Banking Rules
Federal Reserve Board ("FRB") Governor Michelle W. Bowman criticized proposed new capital requirements for banks with more than $100 billion in assets, arguing that the increases were not supported by facts and analysis and could lead to reduced credit availability and increased cost of credit.
In her remarks on "Bank Supervision and Regulation" before the 2023 Ohio Bankers League, Ms. Bowman suggested that the FRB examine the efficiency and scope of the proposed requirements and consider whether it has met the "appropriate standards" of due process and public engagement.
Further, Ms. Bowman criticized a new rule implementing the Community Reinvestment Act (CRA) arguing that it was "unnecessarily complex" and could disincentivize banks from supporting their communities. She underscored the importance of rules being "straightforward and clear" in encouraging banks to meet their respective communities' credit needs.
Ms. Bowman also criticized a proposed rule amendment to the regulatory cap on debit card interchange fees. She stated that the change could cause an increase in costs for banking products and services, while the benefits to consumers may not be realized.
Lastly, Ms. Bowman criticized recent guidance directing banks' approach to climate-related financial risks, arguing that it could create confusion regarding supervisory expectations and result in increased compliance cost and burden. She recommended that the FRB not exceed its authority by pursuing climate policies.
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