WASHINGTON, DC — On Monday, March 17, President Donald Trump selected Federal Reserve Governor Michelle Bowman to serve as the central bank's vice chair for supervision, a critical position responsible for overseeing the nation's largest financial institutions. This nomination has triggered immediate concerns among financial stability and climate-related financial risk advocates.
Bowman, who has served on the Fed Board since 2018, has a record of opposing regulations and has been a vocal critic of stronger capital requirements for major financial institutions. Her potential elevation to the supervisory role—a position created by the Dodd-Frank Act following the 2008 financial crisis—signals a dramatic shift toward weakened regulatory frameworks for big Wall Street banks that will increase systemic financial risks to the US economy, raising significant concerns about Trump’s pick to be the next vice chair for supervision at the Fed.
In response to the news, the Sierra Club and Public Citizen issued the following statements:
"Major U.S. banks are exacerbating threats to financial stability and long-term economic growth through their continued financing of dirty energy and insufficient investment in clean energy. Regardless of changing political winds, the Federal Reserve has a duty to supervise and regulate these and other risky banking practices. The Fed was designed to operate independently of political influence, yet this nomination is another troubling sign of its willingness to prioritize short-term political expedience over the long-term stability of the U.S. economy. At a time when climate-related financial risks are only growing, the Fed should be stepping up to protect the economy—not retreating under political pressure from climate deniers and Wall Street." - Ben Cushing, director of the Sierra Club’s Sustainable Finance campaign.
“Bowman’s nomination for vice-chair for supervision is a gift to the banking industry. Under her leadership we can expect loosening capital requirements, lax bank supervision, and neglect of emerging risks to the financial system, including from climate change. At a moment when insurance markets are driving instability across the country, the potential for a financial crisis driven by climate change has never been higher. The Federal Reserve needs a vice chair for supervision who is attuned to the risks climate change poses to financial stability and is willing to exercise their authority to mitigate these risks both for the financial institutions under the Federal Reserve’s supervision as well as the broader financial system and economy. During her tenure at the Federal Reserve, Bowman has been unwilling to take the steps needed to stem these risks.” - Elyse Schupak, policy advocate with Public Citizen’s Climate Program.
BACKGROUND
During her tenure as a Fed governor, Bowman has repeatedly voted against measures designed to strengthen capital buffers that help protect against economic shocks and downturns. The potential rollback of regulations established after the 2008 financial crisis could lead to increased risk-taking behavior among major financial institutions.
Federal Reserve Chair Jay Powell’s recent climate change admission that mortgages in regions of the country will be unattainable and reports finding homes may be overvalued by trillions of dollars due to climate risks.
The full Senate will need to confirm Bowman before she officially assumes the role.
About the Sierra Club
The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.