Federal Reserve to centralize bank supervision in five-region structure

The Federal Reserve is set to overhaul its bank supervision structure, shifting from the current 12 regional reserve bank model to a new five-region system. Fed Vice Chair for Supervision Michelle Bowman announced the planned changes, which aim to centralize supervision under the Federal Reserve Board in Washington. The move could make bank examinations more consistent across the country, reducing variations in how institutions are assessed.

The proposed five-region structure does not eliminate the existing regional banks but reorganizes supervisory responsibilities. Bowman emphasized that the change would create a clearer framework for overseeing banks nationwide, potentially benefiting institutions operating in multiple regions. The Fed has been reviewing its bank supervision framework this year, including updates to stress testing and other banking rules.

Bowman's comments focused solely on bank regulation and supervision, avoiding any discussion of monetary policy or economic outlook. The Fed has been making broader efforts to update its regulatory framework, with changes involving stress tests, capital requirements, and other banking rules. The next details on implementation will determine whether the five-region model represents a significant shift in US bank supervision.