What happened
Vice Chair for Supervision Michelle W. Bowman spoke at the 2026 Community Banking Research Conference in St. Louis, Missouri on October 06, 2026. She said the Federal Reserve is working to modernize the bank regulatory and supervision framework. Bowman described these frameworks as the foundation for the long-term stability and success of the banking system and for community banks around the country. She opened by noting work under way to refocus supervision and update rules that affect community banks.
Targeted reforms to support community banks
Bowman outlined progress the Board has made since the conference two years earlier. The Federal Reserve has refocused supervision with its Statement of Supervisory Operating Principles to focus on risks that could lead to a material deterioration in a firm's financial condition and is improving coordination with federal and state banking agency counterparts. Together with the OCC and FDIC, the agencies updated the community bank leverage ratio to the statutory level of 8 percent. The Fed eliminated the Novel Activities Supervision Program. The Board is updating and indexing outdated asset thresholds, making supervisory ratings like the "M" rating in "CAMELS" more reflective of financial condition and financial risk, and issuing tools, guidance, and compliance guides such as a compliance guide for third-party risk-management guidelines.
Remaining issues: mergers, de novos and thresholds
Bowman said more work remains, citing mergers and acquisitions, de novo formation, and call report streamlining. She said the Federal Reserve's competitive analysis in bank mergers has a disproportionate effect on rural banks in small and underserved markets. She noted the FFIEC in June issued a statement reaffirming its support for de novo bank formation and that federal and state agencies should do more, including clarifying approval standards, adhering to processing timelines, and issuing conditional approvals where appropriate. The FFIEC issued a request for information on call report streamlining in December 2025. Bowman also described planned regulatory work on thresholds: the Board proposed revisions to Regulation O in July, noted Regulation O has not been comprehensively updated since 1979, and said the Board will consider updates to fixed-dollar asset thresholds later this year to account for inflation and economic growth, including a mechanism to update them every five years. She added the Board will consider broader structural reforms to bank portfolios defined by asset size and updates to the large bank tailoring framework, noting a community bank has been defined as a bank with assets of less than $10 billion for the past 15 years and that Congress has given federal banking agencies discretion to modify thresholds and tailor requirements based on size and complexity.
