Federal Reserve Governor Michelle Bowman is set to become the next Vice Chair for Bank Supervision, replacing Michael Barr, as reported by the Wall Street Journal. Although President Trump has not yet made an official announcement, sources close to him have indicated that Michelle is the frontrunner for the position. Michelle, who has been a member of the Fed’s Board of Governors since 2018, has a strong background in community banking and bank regulation.
Prior to her role at the Fed, Michelle worked at her family’s bank in Kansas and later served as the Kansas banking commissioner. Her current position at the Fed is specifically designated for individuals with experience in community banking, making her a natural fit for the role of Vice Chair for Bank Supervision.
Some Republicans have expressed frustration with current Fed Chair Jerome Powell’s reluctance to fill the vice chair position. Powell has referred to the position as a “liability”, citing concerns that political influences could impact regulatory decisions. However, with Barr’s recent resignation, there is a sense of urgency among lawmakers to appoint a new Vice Chair before Trump selects a new Fed chair next year.
Michelle’s appointment comes at a time of transition within the Fed, as Barr’s departure has opened up opportunities to reshape regulatory policies. During Barr’s tenure, he advocated for stringent banking regulations, often facing resistance from the industry and even from some of his colleagues at the Fed. Michelle, on the other hand, has been vocal in her opposition to Barr’s regulatory agenda, believing that excessive regulations could hinder banks and impede economic growth.
One of the key areas of contention under Barr’s leadership was capital requirements for large banks. With Michelle expected to assume the role of Vice Chair for Bank Supervision, there may be a shift in the approach to rewriting these rules. Republicans have also voiced concerns about Powell’s dual role in setting regulatory policy, emphasizing the need for a Vice Chair that aligns with Trump’s vision for regulatory reform.
The Vice Chair for Bank Supervision plays a crucial role in overseeing bank examiners and shaping regulatory policies on a day-to-day basis. While major regulatory changes require a majority vote from the Fed’s board, the Vice Chair has the ability to influence how regulations are enforced. Michelle’s stance on banking regulation is seen as pivotal, particularly in light of ongoing legal battles within the banking industry over regulatory rules.
In addition to her focus on banking regulation, Michelle has taken a hawkish stance on interest rates, advocating for measures to combat inflation. She was the lone dissenter in the Fed’s decision to cut rates in September, citing concerns about the potential impact on inflation. In a recent speech at a Fed event, Michelle emphasized the importance of shifting focus towards labor markets and the broader economy in the months ahead.
With Michelle’s expected appointment as Vice Chair for Bank Supervision, there is anticipation for a shift in regulatory policies and a renewed emphasis on supporting small and mid-sized banks. Her background in community banking and her stance on key economic issues make her a strong candidate for the role, as the Fed navigates a changing economic landscape.