Bowman’s comments on refining supervisory and regulatory efforts | Orrick, Herrington & Sutcliffe LLP

On May 17, Fed Governor Michelle Bowman delivered a speech before the Pennsylvania Bankers Association, focusing on bank regulatory reform, engagement opportunities, bank mergers and acquisitions, third-party risk management, regulation under EGRRA, and setting priorities for bank regulation and supervision.

Bowman stressed that inspectors and bank managers should focus on central banking issues such as credit risk, interest rate risk and liquidity risk because, in her opinion, “the current period of regulatory reform is more controversial than in the past.” Bowman suggested that bank stakeholders engage in gathering feedback on newer reforms, highlighting the difficulty of keeping up with changes in requirements and the need to keep policymakers informed.

Bowman raised concerns about a proposal to change the way banking agencies evaluate bank merger applications. She countered the notion that agencies automatically approve mergers, pointing out that banks take a lot of time and effort in the application process. Bowman acknowledged that there is room for improvement when it comes to taking regulatory action in a timely manner while ensuring applications are thoroughly processed.

Bowman also commented on the importance of public comment as the Fed reviews its regulations to identify outdated, unnecessary or unduly burdensome regulations under EGRRA. It also recognized the importance of climate risk, but noted that it did not pose a fundamental threat to the stability of financial institutions.