Federal Reserve Overhauls Its Approach To Supervision

In Short

The Situation: Federal Reserve ("Fed") Vice Chair for Supervision Michelle Bowman has expressed a desire to sharpen the focus of the Fed's supervision of financial institutions.

The Result: The Fed's new Statement of Supervisory Operating Principles ("Statement") released November 18, 2025, significantly streamlines the focus of examination priorities for Fed examiners, both for bank holding companies and Fed-supervised banks.

Looking Ahead: Fed-supervised institutions should expect a recentering of examination and supervision on material financial risks and a reduction in "check-the-box" compliance requirements in the supervisory process.

The Statement refocuses examiner priorities, both for banks and bank holding companies, on material financial risks to the institution. It requires clear, specific supervisory criticisms written in a way that would allow "a person of ordinary intelligence" to understand the deficiency and how a