On October 6, 2026, Federal Reserve Vice Chair for Supervision Michelle Bowman delivered a speech at the Community Banking Research Conference in St. Louis outlining the next phase of the Federal Reserve’s regulatory and supervisory reforms. The most significant announcement was an organizational change: the Federal Reserve will begin realigning its supervisory function into five regions, rather than the current alignment along the twelve Reserve Bank districts, with a regional leader accountable for supervisory activity in each region. Vice Chair Bowman also previewed further changes to regulatory thresholds and the large bank tailoring framework, while discussing ongoing work on supervisory ratings and community bank regulation.
A new structure for supervision
Vice Chair Bowman linked the reorganization to concerns identified in the Starling Advisory Group’s preliminary independent review of Silicon Valley Bank’s failure. As she described it, the existing structure separates responsibility for supervision at the Vice Chair for Supervision level from its execution by the Reserve Banks. A proliferation of committees has further complicated decision making, delayed action and obscured accountability.
The new structure, informed by the Conference of State Bank Supervisors’ regional approach, will follow state boundaries rather than Reserve Bank District boundaries. Each regional leader will be accountable for all supervisory activity within the region. Existing Reserve Bank locations will continue to support the supervisory function, and examiners will remain in those locations and continue supervising their current banks.
Bowman expects the changes to improve coordination with state and federal regulators, simplify leadership and promote consistent supervision. For supervised institutions, the practical significance will depend on how the new structure changes escalation, decision making and coordination across examination teams.
Updating thresholds and tailoring
Bowman also announced that the Board will consider proposals later this year to update fixed-dollar asset thresholds for inflation and economic growth and introduce a mechanism for adjustments every five years. Her rationale is that static thresholds can cease to reflect the policy judgments underlying them, imposing requirements that are no longer appropriately calibrated.
She pointed to the July proposal to modernize Regulation O as an example of this work. According to Bowman, the insider lending regulation has not been comprehensively updated since 1979, and its original transaction limits now impose administrative burdens beyond what is necessary for safety and soundness.
Separately, the FRB will consider broader changes to supervisory portfolios defined by asset size and to the large bank tailoring framework. Bowman questioned the continued suitability of the $10 billion community bank threshold, particularly where a bank’s growth places a straightforward business model into a supervisory tier designed for more complex institutions. She favors expanding community bank treatment for institutions engaged in traditional relationship banking, while recognizing that a bank’s activities and risk profile could justify movement in either direction. The speech provides no replacement threshold or specific changes to the large bank categories.
Financial risk and supervisory ratings
A recurring theme was supervision focused on risks capable of producing material financial harm. Vice Bowman described the Statement of Supervisory Operating Principles as the starting point for a cultural change, supported by examiner training, outreach and structural reforms. Examiners are expected to identify material vulnerabilities early, exercise reasoned judgment and take proportionate action.
Vice Chair Bowman also emphasized that supervisory expectations should be clear and communicated in advance. She cited the publication of LISCC examination manuals and community bank third-party risk-management guidance as steps toward greater transparency.
The agencies and state regulators, working through the FFIEC, are moving toward finalizing revisions to CAMELS. Bowman described the proposal as clarifying rating components and their contribution to composite ratings, with greater emphasis on material financial risks. In particular, the Management component would no longer singularly drive the composite rating. These remain proposed revisions; the speech does not announce a final CAMELS framework.
Additional community bank priorities
Bowman reviewed completed initiatives, including reducing the community bank leverage ratio to 8 percent and eliminating the Novel Activities Supervision Program. She then identified three areas requiring further work.
First, she criticized the Federal Reserve’s bank merger competitive analysis for understating competition from credit unions, nonbank lenders, farm credit institutions and branchless banks, especially in rural and underserved markets. Second, she called for more concrete support for de novo formation through clearer approval standards, reasonable processing timelines and conditional approvals where appropriate. Third, she highlighted the FFIEC’s December 2025 request for information on streamlining call reports. The speech does not announce new merger standards, binding application deadlines or final reporting changes.
Final thoughts
The speech moves Vice Chair Bowman’s reform agenda into the organization of supervision itself. Its significance extends beyond community banks, given the planned changes to supervisory leadership and the large bank tailoring framework. Institutions should watch for the forthcoming threshold and tailoring proposals and the details of the regional realignment. Whether the reforms produce more consistent and timely supervision will turn on their implementation. Vice Chair Bowman’s stated objective remains risk-focused oversight supported by strong capital and liquidity.
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