Fed’s Bowman Sees ‘Troubling Trend’ of Bank Oversight Inaction

Federal Reserve Governor Michelle Bowman called for less opacity in bank oversight, saying the supervisory and regulatory approach needs updating so it better serves the financial system.

“The greater flexibility afforded in the supervisory process can lead to poor outcomes, often caused by the temptation to use inaction and opacity as supervisory tools,” she said Monday in prepared remarks for an American Bankers Association conference for community bankers in Phoenix. “These tools, inaction and opacity, are not appropriate and must be subject to appropriate scrutiny or purged from the toolkit altogether.”

Michelle Bowman, governor of the US Federal Reserve

Photographer: Al Drago/Bloomberg

Bowman pointed to several areas she believes should ...