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Author: Zhao Yuhe, Wall Street News
Michelle Bowman, one of the next Fed chairman candidates and chiefly banking supervision, told the media on Tuesday that she is currently focusing on the regulatory responsibilities at hand, including pushing for amendments to capital rules for large banks and combating the so-called “debanking.”
Regarding the outside world’s concerns about whether she intends to take over as Fed chairman, Bowman avoided it, saying that she “focused on her current job.”
She reiterated her position of supporting interest rate cuts and clearly called on the banking industry and regulators to actively adopt emerging technologies such as artificial intelligence, blockchain and cryptocurrencies, otherwise the banking system may be marginalized in the future economy.
Focus on regulatory responsibilities
Bowman said she is currently focusing on the regulatory responsibilities at hand, including pushing for amendments to capital rules for large banks and combating the so-called “debanking”.
Bowman said:
“I have a huge work plan that we are moving forward quickly and obviously we need to complete the bank capital rule reform recommendations in the near future.”
When asked if he was interested in taking on the post of Fed chair (rather than his current vice chairman of regulation), Bowman did not respond positively.According to media, she is being considered by US President Trump as one of the candidates for the chairman of the Federal Reserve.
“I’m really just focusing on the job I’m doing now.”
She said the Fed is reviewing several capital rules and plans to re-propose some key measures, but these proposals will not change due to whether to change the chairman candidate.
Bowman has started the formulation of a new capital rule that will be risk-based and will be less burdened on large U.S. banks than the Biden administration version.According to media reports, regulators are basically abandoning the 1087-page version proposed two years ago and plan to announce new plans as early as the first quarter of 2026.
The latest plan is reportedly inspired mainly by Bowman’s comprehensive review of bank capital rules held in July.The review is designed to ensure that overall capital requirements are coordinated with other proposals officials are considering, such as relaxing key leverage rules.
She said regulators are awaiting public feedback on their proposals.The proposal could reduce capital requirements for large bank subsidiaries by up to 27%.The comment period will end on August 26.
Seeking to reduce regulatory reviews related to “reputation risk”
Earlier, the Fed had promised its reviewers would no longer consider “reputation risks” in bank reviews, amid pressure from bank groups and Republican lawmakers to call for an end to unfair practices.
In another speech on the day, Bowman said she would seek to reduce regulatory scrutiny related to “reputation risks” and hinted that new relevant rules may be formulated.
Earlier, the Federal Reserve and other bank regulators have promised that their reviewers will no longer consider the factor of “reputation risk” when conducting bank reviews.Critics believe this approach is unfair.
Trump has been criticizing the “debanization” practice of depriving certain individuals and businesses of banking services for ideological reasons.Some consumer rights activists believe the issue is exaggerated and question whether there is really evidence that bank regulators have forced banks to stop serving specific customers simply because of ideological factors.
Earlier this month, Trump signed an executive order requiring bank regulators to remove “reputation risk” content from guidance and training materials and identify banks that illegally refuse to provide financial services to their clients.The order comes after he claimed that the bank had refused to provide services to it because of discrimination in the past.
Reaffirm your support for interest rate cuts
Bowman also reiterated her stance on supporting the rate cut on Tuesday, saying her views had not changed even when she disagrees with the rest of the Fed’s board in July.
“The outside world already knows my position, that’s it. I haven’t changed my opinion.”
At the July meeting, the FOMC voted to keep interest rates unchanged in the range of 4.25% to 4.5%.Bowman, along with Christopher Waller, became the first Fed director to confront most opinions and raise objections in 30 years.
The objection comes after the White House put huge pressure on the Fed in the past few months urging it to cut interest rates.Media said Fed board member Adriana Kugler resigned earlier this month and is also considered part of the pressure movement.
President Trump then appointed Stephen Miran, chairman of the White House Economic Advisory Council, to replace her, and many analysts believe Milan will be more willing to respond to Trump’s monetary policy claims, especially in terms of rate cuts.
The futures market currently predicts a 25 basis point rate cut in September, but the uncertainty in the market is greater than usual.CME’s “Feder Watch” prediction algorithm shows that the likelihood of a rate cut next month is 83%.Usually, the predictions of this algorithm are only a few percentage points different from the consensus results.
Calls on banks and regulators to change their attitudes towards cryptocurrencies and AI
Bowman also spoke at a Wyoming blockchain workshop on Tuesday, saying that banking and regulators must embrace the benefits of new technologies such as artificial intelligence and cryptocurrencies, or its role in the economy is likely to decline.
Ideally, regulators should allow these new uses to “scalate in a way that benefits the banking system”, she said.
“Change is coming. If we don’t take this attitude, it’s possible that the banking system will become less important to consumers, businesses and the economy as a whole.”
She called on the banking industry to help regulators better understand blockchain and digital assets, as well as the potential of new technologies in dealing with issues such as fraud.
“I also want to encourage industry to engage more with regulators to help us understand blockchain and its potential in solving other issues. I promise to change our attitude and culture toward acceptance and integration of technology, new products and new services.”
Calls to allow Fed employees to hold small amounts of cryptocurrency products
Bowman also said Fed employees should be allowed to hold small amounts of cryptocurrency products, citing the actual experience helps employees better understand and regulate activities in these financial markets, and relaxing employee investment restrictions will also help attract and retain bank reviewers with expertise.
She noted that allowing employees to hold “de minimis” cryptocurrencies and other digital assets will help them build a practical understanding of these products.
“Nothing can replace personally operating and understanding the holding and transfer process of these assets. I certainly wouldn’t trust someone who has never worn a snowboard to teach me skiing – no matter how many books he read or even how many articles he wrote.”
Bowman did not specify the holding amount or asset type she referred to, but analysts believe that her statement once again shows that regulators are more friendly to the crypto industry under the Trump administration.Previously, after long-term requirements for banks to cross numerous review thresholds before entering the field, the Federal Reserve and other bank regulators have taken several measures to relax restrictions on banks engaging in crypto businesses.
