Federal Reserve Vice Chair for Bank Supervision Michelle Bowman announced that she will cut about 30% of the members of her bank supervision department

Michelle Bowman, the Vice Chair responsible for bank supervision at the Federal Reserve, announced plans to restructure the agency's supervision and examination department, reducing the number of employees in that department by about 30%. According to media reports citing informed sources, Bowman stated in an internal meeting with employees on Thursday that this reduction is expected to primarily occur through natural attrition, retirements, and voluntary departure incentives.

Reportedly, according to a memorandum sent to employees, Bowman anticipates that the overall size of the Supervision and Regulation (S&R) department will shrink to about 350 employees, a reduction of approximately 30% from the nearly 500 positions previously approved, with the goal to be achieved by the end of 2026.

A Federal Reserve spokesperson declined to comment on this matter.

The adjustment in the department comes as Bowman and other U.S. regulators strive to relax a series of bank capital regulations and refocus bank supervision. This also aligns with the Federal Reserve's plan to reduce its system-wide workforce by about 10% over the next few years, consistent with the broader direction of the Trump administration to downsize major U.S. financial regulatory agencies.

On Thursday, Bowman emphasized that the department's employees should focus on the "substantive risks" of banks, rather than being distracted by procedural matters that have no substantial impact on the safety and soundness of banks. Bowman also proposed other requirements, including relying on the examination work of the banks' primary federal regulators and avoiding unnecessary duplicative regulation.

Bowman became the Federal Reserve's top bank regulator in June of this year, having previously received praise from the banking industry for her efforts to reduce regulation and adjust regulatory approaches. She has been leading the effort to weaken several regulatory measures from the Biden administration and relax capital requirements for Wall Street banks.

However, some officials have criticized this approach, including former Federal Reserve Vice Chair for Supervision Michael Barr. Barr believes that the deregulation and weakening of oversight of large Wall Street banks during the Trump administration was a mistake. He stated earlier this month that the strong reforms implemented after the 2008 financial crisis have helped protect the U.S. economy.

Last week, the Federal Reserve presented a revised proposal to other U.S. regulators, with some officials estimating that the new proposal would reduce the overall capital increase for most large banks to between 3% and 7%, a figure significantly lower than the 19% increase proposed in 2023 and below the 9% increase suggested in last year's compromise version. The Federal Reserve also plans to reform bank stress tests, allowing Wall Street to be informed of the standards in advance and provide feedback