KANSAS CITY, Mo.—Federal Reserve Vice Chair for Supervision Michelle Bowman said bank regulators must move more aggressively to eliminate outdated and burdensome rules as part of the ongoing Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) review, telling industry participants the current process cannot result in “another underwhelming outcome.”
She delivered the remarks Thursday at a public outreach meeting at the Federal Reserve Bank of Kansas City.
Bowman emphasized the need for a more pragmatic regulatory framework that adapts as markets evolve, cautioning that overlapping and outdated rules have increasingly weighed on banks—particularly community institutions—and in some cases pushed financial activities outside the regulated sector. She urged regulators to focus on “system maintenance,” noting many regulations have not been comprehensively reviewed in more than 20 years and should be updated to reflect economic growth, inflation, and changes in banking practices.
In comments that will resonate with financial institutions, Bowman highlighted several reform priorities: simplifying capital requirements and considering changes to the Community Bank Leverage Ratio; reducing volatility in stress-testing outcomes; improving transparency for mutual institutions issuing capital instruments; streamlining merger, acquisition, and de-novo approvals; and cutting back on data-collection burdens such as Call Report requirements. She also pointed to ongoing efforts to modernize supervisory ratings—including CAMELS—and reaffirmed that the Fed has ended use of reputational risk in supervision.
Bowman reiterated that regulatory tailoring remains essential to ensure rules match a bank’s size and risk profile, and stressed greater support for innovation in the banking system. The Fed, she said, is committed to focusing supervisory attention on material financial risks rather than documentation issues and to removing “hidden costs” that arise through supervisory practices rather than formal rulemaking.
“We must strike the right balance,” Bowman said, calling on financial institutions and stakeholders to continue providing feedback. “Our responsibility is to promote safety and soundness and consider the broader context of promoting an effective and efficient banking system that supports market functioning and encourages economic growth, business creation and expansion, and opportunity.”