Fed to Restructure Bank Supervision with New Regional Leaders

Federal Reserve Vice Chair for Supervision Michelle Bowman announced plans to overhaul the central bank’s supervision structure, aiming to create a more accountable system for overseeing U.S. banks. The new model will establish five geographic regions, each led by a designated regional leader, replacing the current system where Washington sets policy and regional Fed banks conduct supervision. Bowman argued that the existing structure lacked accountability, citing an independent review of the Silicon Valley Bank collapse, which found that Fed examiners were slow to act.

Under the new regime, regional leaders will oversee all supervisory activities, though the actual supervision will still be carried out by staff at the regional Reserve Banks. Bowman plans to begin interviewing for these leadership roles early next year. She also criticized the Fed’s heavy reliance on committees for bank supervision, stating that these committees often delayed decisions and muddied responsibilities, allowing examiners to avoid taking prompt action against identified risks.

Bowman, who took on the top regulatory role at the Fed in 2025, has already made significant changes to bank oversight, including replacing supervisory leaders, reducing staff, and issuing new guidelines to streamline examinations. She emphasized that examiners should focus on material financial risks rather than minor procedural issues. Additionally, Bowman announced that the Fed will consider updating asset thresholds later this year, which determine when banks face stricter regulations on capital, liquidity, and stress testing. The thresholds could be adjusted to account for inflation and economic growth, a move that analysts believe would benefit large banks.