Bowman remarks on fine tuning supervisory and regulatory efforts

Bank Regulatory Federal Reserve Climate-Related Financial Risks

On May 17, Fed Governor Michelle Bowman delivered a speech to the Pennsylvania Bankers Association focusing on bank regulatory reform, opportunities for engagement, bank mergers and acquisitions, third party risk management, regulations under the EGRPRA, and prioritization within bank regulation and supervision.

Bowman highlighted the need for bank examiners and managers to concentrate on central banking concerns such as credit, interest rate, and liquidity risks, since she opined “[t]he current period of regulatory reform feels more contentious than in the past.” Bowman suggested bank stakeholders engaged in feedback regarding newer reform efforts, highlighting difficulties with keeping up with requirement changes, and the need to inform policymakers.

Bowman stated reservations on proposals to change how banking agencies assess bank merger requests. She countered the notion that agencies give automatic approval to mergers, pointing out the extensive time and effort required by banks during the application process. Bowman conceded that there was room for improvement in achieving timely regulatory actions while still ensuring a thorough examination of applications.

Bowman also commented on the importance of public comment in the Fed’s review of its regulations to identify outdated, unnecessary, or overly burdensome regulations in accordance with the EGRPRA. She also acknowledged the significance of climate risk but noted it did not pose a fundamental threat to the stability of financial institutions.