WASHINGTON — Bank groups in all 50 states, plus Puerto Rico, asked Treasury Secretary Scott Bessent to choose Federal Reserve Gov. Michelle Bowman as the central bank’s vice chair for supervision in a letter sent Thursday.
The state banker associations’ letter, seen by American Banker, praised Bowman’s community banking experience. Bowman previously served as a vice president at her family bank, Farmers & Drovers Bank, in Council Grove, Kansas.
“Since joining the Board of Governors, Governor Bowman has stood in the breach as a voice of reason and common sense, recognizing the criticality of strong prudential oversight while also understanding the necessity for supervisory balance and right-sizing of regulation for banks playing different roles in the economy,” the state bank associations said in the letter.
The groups criticized bank regulation under the Biden administration, and called for a drastically different approach under President Donald Trump.
“For the last four years, most agency leaders making regulatory decisions about banking have had NO actual banking experience,” the groups said. “Lacking the proper background, these lawyers, academics and bureaucrats have not fully understood the consequences of their decisions — not just on banks, but on the economy, hardworking Americans, and the communities they serve.”
Bowman as a Fed governor has repeatedly championed lower regulation for community banks in her current term on the board of governors in a seat reserved for someone specifically with community banking or bank supervision experience.
“Policymakers have an important responsibility to make sure that the community banking model remains viable into the future,” Bowman said in an October speech. “To function effectively, the banking system requires the presence of banks of all sizes — larger, regional, and community banks. This diversity of our financial institutions is the greatest strength of our banking system, and it can easily be imperiled by insufficiently targeted regulation, supervision, and guidance.”
Bessent, the hedge fund billionaire who was sworn in as President Donald Trump’s Treasury Secretary this week, is likely to play a large role in recommending picks to financial regulatory agencies in the Trump administration, despite wielding very little hard power over how the prudential regulators operate.
Trump posted on social media after the Fed didn’t cut its benchmark interest rate that “Treasury is going to lead the effort to cut unnecessary Regulation [sic],” as he complained that the Fed has “done a terrible job” on bank regulation.
The state bank groups said that whoever Trump picks to be the Fed’s top bank regulator should be someone who shares Trump’s “worldview that Washington does not always know best.”
Bowman, the groups said, could
“Having already been confirmed by the U.S. Senate, Governor Bowman can immediately step into the role of Vice Chairman and be effective on an acting basis from day one,” the bank groups said. “We have great confidence in her ability to serve in this capacity and strongly recommend the President nominate Governor Bowman for a full term as Vice Chairman for Supervision.”
The current vice chair for supervision, Michael Barr, will resign as the Fed’s top bank cop in February, although he plans to remain on the central bank’s board. His continued presence on the board means that, if the Trump administration wants to move quickly to put its own stamp on regulation, the president needs to pick someone already on the board.
