Federal Reserve Vice Chair for Supervision Bowman announced that about 30% of the staff in its bank regulatory division will be cut.

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Michelle Bowman, the Federal Reserve's Vice Chair for Supervision, announced plans to restructure the agency’s supervision and examination department and reduce its staff by about 30%. According to media reports citing informed sources, Bowman told employees in an internal meeting on Thursday that most of the cuts are expected to be achieved through natural attrition, retirements, and voluntary departure incentives.

According to reports, a memo sent to employees stated that Bowman expects the overall size of the Supervision and Regulation (S&R) department to be reduced to about 350 employees, down approximately 30% from the previously approved staffing of nearly 500. This target is to be met by the end of 2026.

The Federal Reserve spokesperson declined to comment.

The adjustment to the department comes as Bowman and other U.S. regulators are working to relax a series of bank capital rules and refocus on bank supervision. It also aligns with the Federal Reserve’s plan to reduce its systemwide headcount by about 10% in the coming years, consistent with the broader effort during the Trump administration to shrink staff at major U.S. financial regulatory agencies.

On Thursday, Bowman emphasized that the department's staff should focus on banks' "material risks" rather than being distracted by procedural matters that have no substantial impact on the safety and soundness of banks. She also put forward other requests, including relying on the examination work of primary federal bank regulators and avoiding unnecessary duplication of supervision.

Bowman became the Fed’s top banking supervisor this June, after previously being praised by the banking industry for her efforts to cut regulation and adjust regulatory approaches. She has been leading the weakening of several Biden-era regulatory measures and has relaxed capital requirements for Wall Street banks.

However, some officials have raised criticism, including former Fed Vice Chair for Supervision Michael Barr. Barr believes that loosening supervision and weakening oversight of large Wall Street banks during the Trump era was a mistake. He stated earlier this month that the strong reforms implemented after the 2008 financial crisis have helped protect the U.S. economy.

Last week, the Federal Reserve presented a revised plan to other U.S. regulators. Some officials estimate the new plan would reduce the overall capital increase for most large banks to between 3% and 7%, far below the 19% increase in the 2023 proposal, and also lower than the 9% proposed in last year's compromise version. The Fed also plans to reform bank stress tests, allowing Wall Street to learn about the standards in advance and provide feedback.

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