Fed to Cut Bank-Supervision Staff by 30% as Bowman Reshapes Oversight

Federal Reserve officials plan to shrink the regulatory body’s bank-supervision workforce by roughly 30% by the end of next year, leaving roughly 350 employees in the Supervision & Regulation (S&R) division, according to an internal memo reviewed by The Wall Street Journal.

Vice Chair Michelle Bowman, the Fed’s new top regulatory official, announced the move at a staff meeting, the memo said. The cuts, which pare down from the division’s authorized head count of 500, track with Chair Jerome Powell’s institution-wide push in May to reduce staff by about 10%, the Journal reported.

The memo offers a clearer look at Bowman’s plans to “drastically rein in the Fed’s oversight of the banking sector,” according to the newspaper.

The S&R division, which is responsible for oversight of thousands of bank holding companies and state-chartered banks, will operate with fewer management layers, Bowman told employees, according to the report. The division’s operations unit will be renamed the “business enablement group,” and a new position focused on industry engagement will be created.

To reach the new staffing level, the Fed plans to rely on attrition and retirements and will offer a voluntary separation incentive to all S&R employees, with details forthcoming, the memo stated.

“The goal is to accomplish this reduction as much as possible through natural attrition, retirements, and by offering a voluntary separation incentive to all S&R division employees,” the memo said.

Bowman is selecting new leadership after longtime S&R director Michael Gibson announced his retirement earlier this year. Two deputies, Arthur Lindo and Jennifer Burns, have also stepped down, according to the report.

The downsizing also arrives amid pointed criticism from senior administration officials. U.S. Treasury Secretary Scott Bessent has argued that the Fed’s “mission creep” and “institutional bloat” have expanded its role in economic policy and risked its monetary-policy independence, according to his public statements cited by the Journal.