Federal Reserve Vice Chair for Supervision Michelle Bowman is moving to significantly reshape the central bank's bank supervision unit. In October 2025, Bowman announced plans to reduce the unit's staff by approximately 30%. This reduction is expected to occur primarily through attrition, retirements, and voluntary separation incentives, rather than layoffs.
Bowman's initiative includes a broader effort to refocus supervision on issues that pose significant risk to lenders. She has indicated that the Fed is re-evaluating how it issues bank ratings, emphasizing that examination findings should concentrate on material financial risks. This aligns with a Trump-era push to scale back some regulatory oversight.
As part of this shift, the Federal Reserve has begun to ease some prior demands on banks to fix deficiencies. In February 2026, the supervision staff informed banks that examiners would review outstanding "matters requiring attention" (MRAs), which are private orders to correct flaws. Many of these MRAs have been deemed to focus on procedural or documentation deficiencies rather than actual threats to safety and soundness.
This new approach aims to prioritize risks that could lead to a bank's failure, moving away from an excessive focus on processes, procedures, and documentation. Bowman stated that this represents a shift from "siloed compliance exercises to unified, forward-looking risk assessments," requiring more sophisticated analysis from examination teams. The review of outstanding MRAs is expected to be completed by the end of June 2026, with some potentially downgraded to nonbinding supervisory observations if they do not meet new standards.
