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Federal Reserve Speeches·

Bowman, Modernizing the Regulatory and Supervisory Landscape

  • The Federal Reserve has refocused supervision on risks leading to material financial deterioration via the Statement of Supervisory Operating Principles.
  • The community bank leverage ratio was updated to the statutory 8 percent level in coordination with the OCC & FDIC.
  • The Novel Activities Supervision Program was eliminated to remove barriers to community bank innovation.
  • Efforts are underway to update & index outdated asset thresholds, including the $10 billion definition of a community bank, to reflect economic growth.
  • Proposed revisions to Regulation O aim to reduce administrative burdens on community banks regarding credit extensions to insiders.
  • Future regulatory updates will include a mechanism to adjust fixed-dollar thresholds every five years.
  • The CAMELS rating system is being revised to focus on material financial risks & ensure the Management ("M") rating does not singularly drive composite scores.
  • The Federal Reserve is restructuring its supervisory function into five regions aligned with state boundaries to improve accountability & decision-making.
  • Mergers & acquisitions analysis for rural banks is being criticized for underestimating competition from nonbank lenders & credit unions.
  • Support for de novo bank formation is being strengthened through clarifications on approval standards & processing timelines.
  • The FFIEC has issued a request for information to streamline the call report & reduce reporting burdens on banks.
  • The supervisory culture is shifting from process-focused checklists to risk-focused judgment & transparent expectations.
  • New guidance has been issued for third-party risk management, including a specific guide tailored to community banks.
  • The restructuring aims to resolve the mismatch between supervisory authority & accountability highlighted in the Silicon Valley Bank review.