Federal Reserve Governor Michelle Bowman said the central bank’s controversial proposal to boost lenders’ capital needs “substantive changes” and the Fed should seek comment on any revised plan, a move that would delay its finalization, Bloomberg News reported. Bowman, who last year voted against issuing the proposal for public comment, said she is “cautiously optimistic” that officials can work toward a compromise that would garner broader support for the plan led by Vice Chair for Supervision Michael Barr. Bowman’s colleague, Christopher Waller, who also voted against issuing the proposal last year, said Tuesday it needs a “major overhaul” and may have to be scrapped altogether. Given the significant pushback on the rule from a variety of stakeholders, “agencies are obligated to think carefully about the best path forward,” Bowman said yesterday. Federal regulators in July unveiled a long-awaited plan that would require the biggest lenders to increase their capital levels by 19%, a move aimed at preventing future bank failures and another financial crisis. Since then, regulators have faced one of Wall Street’s strongest lobbying campaigns. Banks say the plan overstates how much cushion lenders would need and claim it will make them less competitive and home and business loans less affordable. Supporters say the proposal incorporates lessons from the 2008 financial crisis and the 2023 banking turmoil, which featured three of the industry’s four biggest failures.
