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Federal Reserve Governor Michelle Bowman said US banks need better supervision rather than higher capital requirements because they could stunt lending and competition, and she repeated her calls for an independent review of recent bank failures.
“We need to consider whether examiners have the appropriate tools and support to identify important issues and demand prompt remediation,” she said Sunday, according to a transcript of her remarks at an event in Austria. “Increasing capital requirements simply does not get at this underlying concern about the effectiveness of supervision.”
Fed Chairman Jerome Powell told Congress on Thursday that the country’s largest lenders could face an increase of about 20% in capital requirements they have to set aside.
The changes are part of an international overhaul of capital rules that started more than a decade ago in response to the financial crisis of 2008. They’ve become a priority this year with the collapse of several banks in the US.
Bowman renewed her call for an independent third party to examine recent US bank failures and criticized internal efforts by the Fed to investigate the issues.
“There is a genuine question whether these efforts provide a sufficient accounting of what occurred,” she said, adding that much of the work has been “relying on a limited number of unattributed source interviews, and completed on an expedited timeframe with a limited scope” and without the input of all the central bank’s governors.