Bowman details risk-focused bank supervision, regulatory reforms

Bowman highlighted the principle of regulatory and supervisory tailoring, adjusting approaches based on a bank's size, complexity, and risk profile.

For community banks, current work includes streamlining merger and acquisition processes and updating competitive analysis frameworks.

The Federal Reserve is also reviewing proposed changes to the community bank leverage ratio to provide greater flexibility while maintaining strict capital standards, nearly double minimum requirements.

These changes aim to enable community banks to focus on supporting local communities.

Additionally, the mutual bank capital framework will be revisited to ensure flexibility and safety.

This tailored approach recognizes the vital role community banks play in meeting U.S. economic needs, particularly in remote and rural areas.

For large banks, the Federal Reserve is modernizing regulations across four pillars of the capital framework.

Stress testing proposals now offer transparency by disclosing models and scenario designs, with final 2026 scenarios already published.

Changes to the enhanced supplementary leverage ratio (eSLR) for U.S. G-SIBs were finalized last fall, ensuring leverage requirements act as a backstop and do not impede low-risk activities.

The U.S. Basel III implementation is also advancing, aiming to reduce uncertainty and provide clarity for bank capital standards, including adjustments to mortgage capital treatment to support market liquidity and affordable homeownership.