The surprise departure of Federal Reserve Vice Chairman of Supervision Michael Barr is focusing new attention on Michelle Bowman, named by analysts as the person most likely to become the Fed’s new top banking cop.
The conservative Federal Reserve governor and former Kansas state banking commissioner “seems the most likely choice,” Brian Gardner, chief policy strategist at Stifel in Washington, said in a note Monday.
Bowman “is the logical candidate,” TD Cowen’s Jaret Seiberg added in a separate note.
Helping Bowman’s chances, analysts say, is that there is currently no empty seat on the Federal Reserve board of governors that Trump could fill with an outsider. Barr said he will remain as Federal Reserve governor until his term ends in 2032.
Therefore, Trump has to leave the position of vice president for supervision of the Fed empty until Fed Governor Adriana Kugler’s term expires on January 31, 2026, or nominate an existing Fed governor to the position.
Bowman, if selected, could take regulation of the nation’s largest banks in a new direction.
He opposed some of the proposals put forward by Barr, including a controversial new set of capital rules proposed by top banking 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 imposed in the decade after the 2008 financial crisis.
Banks have been fighting this US proposal for the past year in an aggressive public campaign and even dropping hints about suing regulators if they don’t get their way.
Bowman has argued that the plan needed “substantial changes” and that an increase in capital requirements on the scale proposed by regulators could significantly harm the economy.
He wanted the Federal Reserve to tailor capital requirements to a bank’s size and risk profile as the regulator does now, arguing that it has seen no compelling evidence that changing this approach would strengthen the banking system.
Bowman “would lead any rewrite of B3 in a different direction,” said Stifel’s Gardner. “If there were any doubt,” the Basel proposal initially promoted by Barr “is dead.”
But TD Cowen’s Seiberg said “this is less of a victory for the big banks than it seems.”
He noted that “Democrats will retain their majority on the Federal Reserve Board through early 2026. And it’s hard for us to see much being done on the deregulatory side this year, given the need to confirm new regulators.”
Bowman was appointed to the Federal Reserve Board of Governors by Trump during his first term in November 2018, to fill an unexpired term that ends in January 2020. She was re-elected in January 2020 and is serving a term that ends in January of 2034.