US Fed plans sweeping bank supervision reforms to launch early next year
US Federal Reserve Vice Chair for Supervision Bowman announced a comprehensive overhaul of bank supervision, creating five new geographic regions with individual leaders to improve accountability and decision-making, targeting a start in early 2027.
The US Federal Reserve's Vice Chair for Supervision, Bowman, has announced plans for a comprehensive reform of the American banking supervision model, with the aim of launching the new system in early 2027.
Under the planned changes, the Fed will establish five new geographic regions for bank supervision, each led by a single director responsible for all supervisory activities in that area. Day-to-day work will continue to be carried out by staff at regional Federal Reserve banks. The Fed plans to recruit the regional directors in the coming months, drawing from both internal candidates and external hires.
Currently, Fed officials in Washington set policy, while actual supervision is conducted and overseen by the 12 regional Federal Reserve banks. Bowman said the existing structure weakens the crucial link between responsibility and authority. The reorganisation of supervisory functions, she argued, will create a culture that emphasises accountability and clarifies decision-making authority.
Bowman criticised the Fed's current approach to bank supervision for relying too heavily on various committees, which she said leads to delays in resolving problems at banks. She also noted that lines of responsibility among Fed staff are blurred. In practice, committees have become an excuse for shifting blame, and examiners lack the incentive to act quickly and decisively to address identified risks.