Federal Reserve Governor Bowman: Bank regulation is preferable to capital rules

Federal Reserve Governor Bowman said the U.S. banking industry needs better regulation, not higher capital requirements, which could discourage lending and competition. She also reiterated the call for an independent review of recent bank failures. We need to consider whether examiners have the proper tools and support to identify important problems and require immediate correction, she said, adding that raising capital requirements would not address fundamental concerns about regulatory effectiveness. Federal Reserve Chairman Jerome Powell told Congress that several of the largest U.S. banks could face about a 20 percent increase in capital requirements that they would have to set aside. The changes are part of a reform of international capital rules that began more than 10 years ago in response to the 2008 financial crisis. With the collapse of several U.S. banks, they have become a top priority this year. Bowman reiterated his call for an independent third-party body to investigate the recent U.S. bank failures and criticized the Federal Reserve's internal measures to investigate the problems.