Fed Official Champions Risk-Based Oversight and Innovation in Banking

In a House Financial Services Committee hearing, Vice Chair for Supervision Michelle Bowman says the U.S. banking system remains sound with strong capital and liquidity, even as nonbank lending grows and AI-enabled cyber risks rise. She outlines reforms to simplify the community bank leverage ratio, modernize the capital framework, and tailor supervision to risk, while preserving CAMELS revisions, stress testing, and a framework that supports responsible innovation. The testimony also covers tokenized-securities capital treatment, model-risk management, and ongoing efforts on stablecoins under the GENIUS Act, payments fraud, liquidity rules, and international coordination via the FSB. Bowman emphasizes calibrating regulatory thresholds to growth, reviewing Regulation O, and balancing safety with economic growth and innovation.