Federal Reserve Overhauls Bank Supervision to Increase Accountability

Federal Reserve Vice Chair for Supervision Michelle Bowman announced a restructuring of the central bank's bank supervision model to increase accountability and streamline decision-making. The overhaul replaces a system where 12 regional bank presidents oversaw examinations with five new geographic regions, each managed by a regional leader.

Bowman based the decision on an independent review of the Silicon Valley Bank collapse, which concluded that examiners were too slow to act. She criticized the previous reliance on committees, stating they became a source for "plausible deniability" and discouraged examiners from taking prompt action to address identified risks.

As part of the broader regulatory update, the Federal Reserve will consider revising asset thresholds later this year to determine when banks must follow stricter capital and liquidity rules. This may include a new mechanism to adjust these thresholds every five years to account for inflation and economic growth.