Trump close to naming Bowman as Fed's top bank cop, signaling shift in regulatory stance: reports

She attracted a lot of attention last fall when she became the first Fed governor to dissent against a monetary policy decision since 2005.

She voted against a 50 basis point rate cut because she was worried inflation was not yet fully under control.

“I see the risk that the Committee’s larger policy action could be interpreted as a premature declaration of victory on our price stability mandate,” Bowman said at the time.

She also said she was worried that a 50 basis point reduction would send the signal that central bank policymakers see economic weakness ahead.

Bowman’s ascension was made possible by the exit of Barr, who said in January he would step down because “the risk of a dispute over the position could be a distraction from our mission.”

Fed watchers had expected Trump to demote Barr, who was a Joe Biden appointee and a Treasury official during the Barack Obama era, although it was not clear that Trump would have had the legal power to make such a move once he took office.

Barr’s term as vice chair for supervision was scheduled to end in July 2026. He has said that he would remain on the Fed board of governors, a separate term that doesn’t end until 2032. Bowman still would require Senate confirmation to assume her new role.

The White House has made it clear it wants more control over how the Fed supervises banks with an executive order last month that gives it a closer relationship with the agency.

The new order makes clear that monetary policy — the direction of interest rates — will remain under the Fed’s full control, but the Fed’s oversight of the country’s biggest banks will now have a closer connection to the policies and priorities of the White House.

Bessent last week said the failures of Silicon Valley Bank and other regional lenders that roiled the industry in March 2023 showed that Fed “supervisors did not fully appreciate Silicon Valley Bank’s vulnerabilities as it grew in size and complexity.”

“When risks were identified, they did not take sufficient steps to ensure that SVB fixed those problems quickly. The result was the third-largest bank failure in United States history. It was a supervisory failure.”

Going forward, Bessent said, “Our financial regulatory agenda must start with a fundamental refocusing of supervisors’ priorities. Leadership must drive a culture that focuses on material risk-taking, rather than box check checking.”

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

Read the latest financial and business news from Yahoo Finance