Fed Vice Chair Details Plan to Tailor Bank Regulation and Supervision

Federal Reserve Vice Chair for Supervision Michelle W. Bowman outlined upcoming regulatory initiatives designed to tailor banking requirements and shift examiner focus toward material financial risks.

In remarks before the Federal Reserve Bank of Atlanta's 2026 Banking Outlook Conference, Ms. Bowman emphasized the importance of "regulatory and supervisory tailoring" to adjust oversight based on a bank's size, complexity, and risk profile. For community banks, she highlighted ongoing efforts to streamline merger and acquisition applications and revise the community bank leverage ratio. For large banks, she noted the Federal Reserve is actively working to modernize the four pillars of the capital framework, which include "stress testing, the supplementary leverage ratio (SLR), Basel III [implementation], and the G-SIB surcharge."

To improve the supervisory process, Ms. Bowman described a transition from "siloed compliance exercises to unified, forward-looking risk assessments." She stated that examiners are being directed to prioritize "core and material financial risks" that could lead to an institution's failure, rather than focusing on immaterial policy documentation gaps or committee attendance. To implement this shift, she announced a comprehensive review of all outstanding safety and soundness "matters requiring attention," noting that the Fed expects to downgrade purely procedural findings to "nonbinding supervisory observations" by the end of June.