The Federal Reserve reforms with a "triple attack": Bowman loosens Wall Street regulations, Waller reformes regional Fed systems, and Walsh rewrites monetary policy framework.

President Trump of the United States nominated and formally confirmed by the Senate in 2025 the highest-ranking bank regulator at the Federal Reserve, Michelle Bowman, who warned the Financial Stability Board (FSB) not to enforce "strict regulatory rules" that are not suitable for diverse national groups and stated that such practices may significantly weaken the effectiveness of the regulatory framework of this internationally oriented regulatory agency. Michelle Bowman, Vice Chair of the Federal Reserve responsible for supervision, delivered a speech prepared for the Institute for Bank Policy in London on Monday local time, stating that the Financial Stability Board should encourage "flexibility" to ensure that regulatory measures are suitable for the specific circumstances of each jurisdiction. The Financial Stability Board (FSB) is an international organization responsible for monitoring global financial system risks, coordinating regulatory policies among countries, and making international financial regulatory recommendations. Its members include central banks, finance ministries, financial regulatory agencies of the G20 major economies, as well as international organizations such as the International Monetary Fund, and the World Bank. However, the FSB is not a "global financial regulatory agency" with supra-national enforcement powers. Its rules and recommendations generally do not have direct legal force and are implemented by member countries in combination with their own laws and financial structures. Bowman's latest call for "flexibility" essentially opposes mechanically applying uniform international standards to all countries. From unified regulation to tailored approaches, the Federal Reserve is pushing for a more flexible approach to global banking rules. Despite the Trump administration's withdrawal from many other multilateral organizations, the United States continues to participate in the Financial Stability Board and the Basel Committee on Banking Supervision. Bowman stated that this latest development reflects the U.S.'s emphasis on "baseline standards" as these standards can "ensure a level playing field." However, Bowman and her colleagues have been advocating for global financial regulatory organizations to focus on what they consider to be core financial risks rather than administrative matters; in her view, the latter does not have a significant positive impact on the safety and soundness of the global banking system. The U.S. government is pushing for this direction domestically, including reducing the size of capital buffers banks must hold to withstand potential losses, shrinking the scope of regulation targeting large banks, and implementing other reforms. The U.S. government refers to this initiative as "modernizing the global financial system." "Modernization is a long-term, sustainable approach to ensuring financial stabilitystarting with the banking sector. It means continually striving for improvement, learning, and adjusting our approaches as markets, technology, and risks evolve," Bowman said. As U.S. regulatory agencies reform related rules comprehensively, some European policymakers are also considering similar adjustments; however, they emphasize opposition to the capital requirement reductions that the U.S. is currently pursuing. Earlier this month, the Bank of England proposed relaxing certain capital rules, although Bank of England officials still expressed deep concerns about the growing threats posed by artificial intelligence and the increasingly risky geopolitical landscape. Bank of England Governor Andrew Bailey stated that the proposed reforms were a "carefully balanced judgment" and should not unduly harm the safety and soundness of financial institutions. In May, the Basel Committee on Banking Supervision, responsible for setting global bank capital rules, also agreed to conduct a limited review of a special provision in its capital rules, following complaints from U.S. officials that the provision provided European banks with unfair advantages. Bowman stated on Monday that international regulatory organizations can learn from the approaches she has taken, including implementing differentiated regulation and placing priority on transparency and accountability in the regulatory process. The Financial Stability Board is advancing regulatory modernization globally, Bowman said, and policymakers will submit a report in the autumn. She also emphasized that the work must be forward-looking to ensure that the process "incorporates emerging risks and promotes innovative, responsible financial regulatory frameworks." Trump administration's deepening influence on the Federal Reserve: Bowman easing regulation, Wall reshaping regional Fed operations, Wash launching institutional reforms Michelle Bowman was initially nominated by Trump to the Federal Reserve Board in 2018, confirmed for a second term in 2020; Trump nominated her in 2025 to be Vice Chair for Supervision, a position confirmed by the Senate in June of the same year. Wall was also nominated by Trump in 2020 and confirmed by the Senate; current Chair Kevin Wash was nominated by Trump in 2026 and took office in May after confirmation by the Senate. Therefore, in terms of personnel sources and policy authorization, the three may be an important part of Trump's reshaping of the leadership of the Federal Reserve. Trump's personnel influence on the Federal Reserve and institutional agenda is significantly deepening, with Bowman pushing for significant relaxation of regulatory policies for Wall Street banking giants, Wall pushing for the centralization of regional Fed operations, and Wash launching a comprehensive reform of institutions, to a large extent shifting the power and reform agenda of the Federal Reserve more towards the Washington Board and the current Chair; however, major monetary policy and institutional reforms still require consensus from the Board, the Federal Open Market Committee, and the various regional Fed systems of the Federal Reserve. However, if investors believe that reforms are starting to serve White House rate demands, the Fed's independence discount may higher long-term inflation expectations and U.S. Treasury term premiums, leading to a trading combination of "benefiting bank stocks, pressuring long bonds, and steepening yield curves." Bowman's alignment with the deregulatory agenda of the Trump administration is the highest: she advocates for lowering unnecessary capital and compliance burdens, reducing the weight of subjective and procedural reviews in supervision, and at the level of the Financial Stability Board, she requires global rules to allow flexibility in enforcement by various jurisdictions, which means the U.S. is trying to export its domestic "regulatory modernization" as international rule principles. Wash pushing for rate cuts and balance sheet reduction, restructuring market communication mechanisms and policy regulatory frameworks, also clearly reflects Trump's demand for the Federal Reserve to lower rates and return to its narrow statutory duties. However, Wall cannot simply be classified as a loyalist though responsible for advancing the centralization of back-office functions such as personnel, information technology, procurement, etc. of regional Fed banks to Washington, he explicitly stated that reforms should not undermine the principle of the Federal Open Market Committee's dominant monetary policy independence, and he opposes the dismissal of regional Fed bank presidents due to rate differences. However, the measures led by Wall to comprehensively reform the operational aspects of the 12 regional Fed branches of the Federal Reserve may ultimately shift power and decision-making from the regional Federal Reserve banks to Washington and subject the Federal Reserve to greater political pressure from the Trump administration.