Reporters Note: Governor Bowman must prove her independence from President Trump and the banking industry
On Thursday, the Senate Banking Committee will hold a confirmation hearing for Federal Reserve Governor Michelle Bowman to be the next vice chair for supervision, the lead role in developing policy recommendations for regulating the banks under Federal Reserve supervision. The nomination comes as the independence of financial regulators, including the Federal Reserve, is under attack by the Trump administration and as President Trump’s reckless and illogical use of across-the-board tariffs threaten the health of the U.S. economy. Across agencies, President Trump’s appointees have deep industry ties and have prioritized deregulation and other industry handouts over protecting the American people. At her confirmation hearing, Governor Bowman must prove her independence, both from President Trump and the banking industry she will be tasked with regulating. Senators voting on her nomination should consider the following:
Will Governor Bowman stand up to the Trump administration’s efforts to limit Federal Reserve independence?
President Trump’s executive order targeting independent federal agencies, including the supervisory functions of the Federal Reserve, puts the safety and soundness of individual financial institutions and financial stability more broadly at risk. Political independence allows the Federal Reserve to manage all risks banks and other financial institutions face and create for themselves and the broader economy, rather than turning a blind eye to risks that conflict with political priorities, whims, and personal interests. Risks from climate change, AI, or digital assets cannot be ignored simply because acknowledging these risks is unpopular with President Trump and his advisors. The next vice chair for supervision must stand up to the Trump administration’s attack on the Federal Reserve’s authority, rather than acquiesce to President Trump’s power grab.
Will Governor Bowman work for the American people or on behalf of the banking industry she will be tasked with regulating?
In her role as a Federal Reserve Governor, Bowman has been a roadblock in key Federal Reserve measures to ensure stability in the banking system and equitable access to credit across the country. Governor Bowman has been critical of the Basel III Endgame proposal to increase bank capital requirements, align U.S. regulation with global counterparts, and make the U.S. financial system more resilient to shocks. She opposed the Federal Reserve’s guidance requiring banks to consider climate-related financial risk, despite the threats climate change poses to the U.S. financial system and economy. Governor Bowman also opposed the 2023 rule expanding bank requirements under the Community Reinvestment Act, incentivizing banks to meet the credit needs of the low- and moderate-income communities in which they operate. Governor Bowman was the unanimous choice of state bankers associations for the role of vice chair for supervision. Popularity with an industry is not a qualification to regulate it. Preserving bank safety and soundness and promoting stability in the financial system must be prioritized over the short-term, profit-driven objectives of banks.
Will Governor Bowman address climate-related risks to the financial system and economy?
Climate change presents significant risks to the safety and soundness of banks, stability of the financial system, and the well functioning of the U.S. economy, through numerous channels. As Federal Reserve Chair Jerome Powell has testified, “If you fast forward 10 or 15 years, there will be regions of the country where you can’t get a mortgage, there won’t be ATMs, banks won’t have branches and things like that.” Access to credit and the availability of financial services for families and communities across the country must be a focus of the next vice chair for supervision. While climate scientists, as well as many banks and insurers agree we are on a path towards catastrophic warming, Governor Bowman believes “climate change is not a core risk to the safety and soundness of financial institutions” and “focusing our regulatory reform and guidance efforts on issues like climate change that do not represent core banking risks will only serve to further distract bank management and supervisors.”
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