On Thursday, Federal Reserve Vice Chair for Supervision Michelle Bowman announced plans to restructure the agency's supervision and examination department and reduce its staff by approximately 30%.

According to Bloomberg, Bowman stated during an internal meeting with staff on Thursday that the reduction is expected to be achieved primarily through natural attrition, retirements, and incentives for voluntary departures.

It was reported that, based on a memo sent to staff, Bowman anticipates the overall size of the Supervision and Regulation (S&R) department will be reduced to about 350 employees, a cut of roughly 30% from the previously approved headcount of nearly 500. This target is to be achieved by the end of 2026.

The department's restructuring comes as Bowman and other US regulators are working to relax a series of bank capital rules and refocus bank supervision. This also aligns with the Fed's goal of reducing its system-wide staff by about 10% over the next few years and corresponds with the Trump administration's broader direction of downsizing staff at major US financial regulatory agencies.

Bowman emphasized on Thursday that the department's staff should focus on "material risks" at banks and not be distracted by procedural matters that do not materially impact bank safety and soundness. Bowman also raised other requirements, including relying on the examination work of a bank's primary federal regulator and avoiding unnecessary duplicate supervision.