The sudden departure of Federal Reserve Vice Chairman for Supervision Michael Barr has focused new attention on Michelle Bowman, whom analysts have described as the person most likely to become the Fed’s new chief banking police.
The conservative Fed governor and former Kansas state banking commissioner “seems like the most likely choice,” Brian Gardner, chief policy strategist at Stifel Washington, said in a note Monday.
TD Coin’s Jarrett Seberg added that Bowman “is the logical candidate.”
What enhances Bowman’s chances, according to analysts, is that there is currently no empty seat on the Federal Reserve Board of Governors for Trump to fill with an outsider. Barr said he will remain governor of the Federal Reserve until his term ends in 2032.
So Trump must either leave the position of Fed Vice Chairman for Supervision empty until Fed Governor Adriana Kugler’s term expires on January 31, 2026, or nominate the current Fed Governor to the position.
Bowman, if selected, could take regulation of the nation’s largest banks in a new direction.
She opposed some of Barr’s proposals, including a new set of controversial capital rules proposed by top bank regulators that would require lenders to set aside larger reserves for future losses.
The requirements are based on an international set of capital requirements known as Basel III that were imposed in the decade following the 2008 financial crisis.
Banks have been resisting this US proposal over the past year in an aggressive public campaign, and have even dropped hints about suing regulators if they don’t get their way.
Bowman argued that the plan needed “fundamental changes” and that increasing capital requirements on the scale proposed by regulators could significantly harm the economy.
It wanted the Fed to tailor capital requirements to a bank’s size and risk profile as the regulator now does, arguing that it had not seen convincing evidence that changing that approach would strengthen the banking system.
“Any rewrite of B3 will be led by Bowman in a different direction,” Stifel’s Gardner said. If there was any doubt, the Basel proposal initially pushed by Barr is “dead.”
But TD Coin’s Seiberg said “this is not as much of a victory for the big banks as it may seem.”
“Democrats will maintain their majority on the Fed until early 2026. It is difficult for us to see much getting done on the deregulation side this year given the need to confirm new regulators,” he noted.
Bowman was appointed to the Federal Reserve Board of Governors by Trump during his first term in November 2018 to fill an unexpired term expiring in January 2020. She was reappointed in January 2020 and is serving a term expiring in January 2034.
Before the Fed, she was a commissioner of the Kansas State Bank and vice president of Farmers & Drovers Bank in Council Grove, Kansas.
Bowman also previously worked for Senator Bob Dole of Kansas from 1995 to 1996 and Homeland Security Secretary Tom Ridge from 2003 to 2004, in addition to other roles in Washington policy circles.
She attracted a lot of attention last fall when she became the first Fed governor to dissent from a monetary policy decision since 2005.
She voted against a 50 basis point rate cut because she was concerned that inflation was not yet fully under control.
“I see the risk that the committee’s larger policy action may be interpreted as a premature declaration of victory on our price stability mandate,” Bowman said at the time.
She also said she was concerned that a 50 basis point cut would send a signal that central bank policymakers see economic weakness ahead.
Bowman voted for a smaller cut in December despite evidence that inflation remained stuck at the same level as last fall.
Bowman is expected to make some new comments on monetary policy and bank regulation during his talk on Thursday.
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