Bowman Speaks: Fed Wants to "Tidy Up" Bank Regulations
The "FOMC Member Bowman Speaks" event does not produce figures like economic data (Actual/Forecasts are usually NA). Because it is a speech, the "results" are read from the content of the statement and the policy direction conveyed to the market.
In her speech, Michelle Bowman emphasized that the Fed wants to modernize banking supervision and regulation to refocus on truly material financial risks—rather than subjective matters or those that stray from the core of system stability.
Bowman also highlighted the need for clearer, more consistent, and more transparent supervision, including strengthening the accountability of the examination process so that banks understand the assessment standards and expected follow-up actions.
One of the most highlighted points was the direction of changes to the supervisory framework: the Fed indicated it would remove "reputational risk" from the supervisory process and prepared a proposal to more clearly define "unsafe and unsound" practices to reduce room for wild interpretation.
Going forward, the market interpreted this message as a signal that the Fed wants more "measured" and efficient regulation, including plans to update the thresholds for bank categories deemed irrelevant to current economic and industrial developments.
Key Points (5 Points):
- "Bowman Speaks" is not a data release, so there are no results figures (NA)—what is assessed is the content of the speech.
- The Fed wants supervision to be more focused on material risks that impact stability.
- The policy direction encourages more transparent, consistent, and accountable supervision.
- The Fed is moving towards removing "reputational risk" from supervision and clarifying the definition of "unsafe and unsound."
- There are signs of regulatory updates, including bank category thresholds, to make them more relevant to current conditions. (asd)
Source: Newsmaker.
