Trump names Bowman as Fed's top bank cop, signaling shift in regulatory stance – Yahoo Finance
President Trump said Monday that Federal Reserve Governor Michelle Bowman will become the new vice-chairman of central bank oversight, using a former Kansas Bank Commissioner as a bank officer for the Federal Reserve.
Bowman has been able to monitor the huge US banks in a new direction as the Trump administration makes it clear they want to lift lenders restrictions and overhaul the regulatory framework introduced following the 2008 financial crisis.
“Our economy has been mismanaged for the past four years and it's a time of change,” Trump said in a social media post Monday. “Miki has the know-how to accomplish this. We are confident that we will achieve economic heights that we have never seen before in our country's history. ”
Treasury Secretary Scott Bessent has flagged what Washington is experiencing changes in the way banks are regulated, citing a “backward-looking” policy designed to address the failure of the 2008 financial crisis and the need for better coordination among bank watchdogs.
“We need financial regulators who sing at once from the same song sheet,” he said. In a speech earlier this monthcites “broken supervision culture.”
Bowman shows that she may be in favor of some changes. She opposed some of the proposals proposed by former vice-chairman supervisor Michael Burr. Michael Barr includes a new, controversial set of capital rules that would have required lenders to secure larger buffers for future losses.
This requirement is based on an international capital requirement known as Basel III, which was imposed over the decade following the 2008 financial crisis.
Michelle Bowman in the Federal Reserve System in 2019 ・Reuters/Reuters
The bank has fought the US proposal in a proactive public campaign last year, and even dropped hints about sueing regulators if they don't give way.
Bowman argues that the plan requires “substantial changes,” and that an increase in capital requirements on the scale proposed by regulators could seriously harm the economy.
She argues that the Fed wants to adjust capital requirements to the size and risk profile of banks, as regulators do now, and that she has not seen compelling evidence that changing this approach will strengthen the banking system.
The bank appears to be in favour of her appointment, but it still requires confirmation from the Senate.
“I'm excited to see Miki Bowman appointed,” Goldman Sachs CEO David Solomon said in an interview with Fox News last week.
“Bowman is a thoughtful, principled voice for sensible regulation and monetary policy, someone who understands the important role banks of all sizes play in our financial system and economy,” said Rob Nichols, CEO of the American Bankers Association, on Monday.
Bowman, 53, was appointed by Trump to the Federal Reserve Governor's Committee during his first term in office in November 2018 to fill his unexpired term ending in January 2020. She was re-appointed in January 2020 and serves a term ending in January 2034.
Treasury Secretary Scott Bescent called it an introduction to a regulatory framework following the rearward appearance of the 2008 financial crisis. (AP Photo/Seth Wenig) ・Associated Press
Prior to the Fed, she was a state banking commissioner in Kansas and vice president of Farmers & Drawers Bank, Council Grove, Kang.
Bowman previously worked for Senator Bob Doll of Kansas from 1995 to 1996 and Homeland Security Secretary Tom Ridge from 2003 to 2004, but added to other roles in Washington's policy world.
She attracted a lot of attention last fall when she became the first Fed governor to oppose monetary policy decisions since 2005.
She voted against a 50 basis point rate cut because she was worried that inflation might not be fully controlled yet.
“I think there is a risk that the Commission's larger policy measures could be interpreted as a premature declaration of victory in our price stability mandate,” Bowman said at the time.
She also said she was worried that the 50 basis points cut would signal central bank policymakers looking ahead to economic weakness.
Bowman's ascension was made possible by the bar exit in January, who said he would resign because “the risk of a conflict over position could be a distraction from our mission.”
Michael Burr, former vice-chairman of the Federal Reserve for oversight; Reuters/Evelyn Hockstein ・Reuters/Reuters
Fed Watchers had hoped Trump, a Barack Obama-era Joe Biden's appointee and Treasury official, would drop the bar, but it was not clear that he had the legal power to make such a move once Trump took office.
Burr's term as vice-chairman of the superintendent was scheduled to end in July 2026. He says he will remain on the Fed Committee, another term that will not end until 2032.
The White House revealed last month that the Fed wants more control over the way banks oversee banks with executive orders.
The new order reveals that monetary policy (the direction of interest rates) will remain under the full control of the Fed, but it makes clear that oversight of the Fed's country's largest banks is closely linked to White House policies and priorities.
In a speech earlier this month, Bessent said the failure of Silicon Valley Bank and other regional lenders that shook the industry in March 2023 was that the Fed “supervisors have not fully appreciated the vulnerability of Silicon Valley Bank as size and complexity have grown.”
“When the risks were identified, they did not take sufficient steps to ensure that the SVB would quickly fix these issues. As a result, it was the third largest bank failure in US history. It was a supervision failure.”
“Our financial regulatory challenges must begin with a fundamental recounting of supervisor priorities. Leadership must promote a culture that focuses on material risk taking, rather than box checks.”
David Hollerith is a senior reporter on Yahoo Finance, covering banking, crypto and other areas of finance.
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