Trump nominates Bowman as Vice Chair for Supervision at the Federal Reserve, expected to ease regulations

U.S. President Donald Trump announced on Monday the nomination of Federal Reserve Governor Michelle ‘Miki’ Bowman as the Vice Chair for Supervision at the Federal Reserve. This decision has been welcomed by Wall Street banks and small to medium-sized lending institutions, as Bowman is expected to adopt a more lenient stance on regulatory policies.

Trump stated on social media on Monday:

“I am pleased to announce that Michelle ‘Miki’ Bowman will serve as the new Vice Chair for Supervision at the Federal Reserve. Miki has been doing an outstanding job on the Federal Reserve Board since 2018 and has extensive expertise in inflation, regulation, and banking.

For the past four years, our economic management has been poor, and now is the time for change. Miki has the ‘expertise’ to accomplish this task. I believe that under her leadership, we will achieve unprecedented economic peaks in our nation's history.”

Expected to Relax Bank Regulations

Media reports had previously indicated that Trump was expected to formally nominate Bowman for the position soon. The former Vice Chair for Supervision, Michael Barr, resigned earlier to avoid a potential conflict with the Trump administration over the position but remains a board member.

In fact, Federal Reserve Chairman Jerome Powell is not particularly supportive of the Vice Chair for Supervision position. During a congressional hearing in February, Powell stated that he believes the establishment of the Vice Chair for Supervision position has brought “volatility” to the Federal Reserve. This position was introduced as part of regulatory reforms following the 2008 financial crisis.

Analysts believe that if the U.S. Senate confirms the nomination, Bowman is expected to adopt a more lenient policy on bank regulation than her predecessor Barr, as she has long criticized the “Basel III Endgame” rules that require banks to hold more capital. These rules, proposed by Barr, aim to reform the way large banks assess risk, while Bowman argues that the capital burden on banks should be reduced.

Under Bowman’s criticism, large banks have actively lobbied to weaken these rules. Due to differing opinions among regulatory officials, the rules have yet to advance.

Additionally, Bowman has suggested that the Federal Reserve should increase the transparency and predictability of its annual “large bank stress tests.” The Federal Reserve recently announced plans for significant adjustments to the stress tests, while large banks have filed lawsuits against this.

Comes from a Banking Family, Welcomed by Wall Street

Bowman comes from a family with five generations in the banking industry, having served as the Kansas State Bank Commissioner and as Vice President at Farmers & Drovers Bank. She joined the Federal Reserve Board in 2018 during Trump’s first term and has served as the chair of the Subcommittee on Smaller Regional and Community Banking As the top bank regulator of the Federal Reserve, Bowman must deal with an executive order issued by Trump that requires the Federal Reserve to submit drafts related to regulation for White House review and to consult with the government when setting priorities and plans. However, the order exempts the Federal Reserve's work on monetary policy.

Some executives from large banks have welcomed Bowman's nomination.

Goldman Sachs CEO David Solomon stated in a media interview last week:

"The banking industry is excited about Bowman's appointment, which will help the banking industry move forward and focus on its core mission of injecting capital into the market and supporting economic growth."

Aaron Klein from the Brookings Institution stated that Bowman is an "experienced insider" who will help the Federal Reserve maintain policy coherence.

Ian Katz, managing director of Capital Alpha Partners, said:

"This is a significant change; compared to Barr, Bowman's policy stance is more aligned with the Republican Party. However, she does not belong to the extreme positions but aligns with the Federal Reserve's consistent Republican tradition."