"In a set of sweeping changes, the principles call for bank examiners to focus on material financial risks and to "not become distracted from this priority by devoting excessive attention to processes, procedures, and documentation." The guidelines are set out in a memo originally distributed to Fed employees Oct. 29 but released Tuesday. Michelle Bowman, the Fed's vice chair for supervision, said the principles will "sharpen" the central bank's focus and build "a more effective supervisory framework." "By anchoring our work in material financial risks, we strengthen the banking system's foundation while upholding transparency, accountability, and fairness," Bowman said in a written statement. Bowman was named vice chair by President Donald Trump in March."
"Also Tuesday, Fed governor Michael Barr, who preceded Bowman as the vice chair for supervision, sharply criticized the changes in banking oversight at the Fed and at other agencies this year. "We are now, I believe, at a moment of inflection in the regulatory and supervisory approaches that help keep banks healthy," Barr said in a speech. "There are growing pressures to weaken supervision ... in ways that will make it harder for examiners to act before it is too late to prevent a build-up of excessive risk.""
The Federal Reserve released new supervisory principles instructing examiners to focus on material financial risks and avoid excessive attention to processes, procedures, and documentation. The guidelines aim to sharpen the central bank's focus and build a more effective supervisory framework, with officials stating that anchoring work in material risks strengthens the banking system while upholding transparency, accountability, and fairness. The changes drew praise from industry groups and criticism from former supervisors. Since the current administration took office, federal regulators have been rolling back regulations, and the announcement matches a similar move by another federal regulator.
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