Federal Reserve Plans to Cut Supervision and Regulation Division Headcount by 30%
The Federal Reserve is set to reduce the headcount of its supervision and regulation division by 30% by the end of 2026, according to a memo by Vice Chair for Supervision Michelle Bowman that was obtained by Banking Dive.
As per the memo, the aim is to achieve this reduction primarily through natural attrition, retirements, and by offering a voluntary separation incentive to all S&R division employees. This move would bring down the workforce of the division from 500 to about 350 employees.
Changes in Organizational Structure
Bowman highlighted her goal for the unit to operate with a flatter organizational structure and fewer management layers. The unit will focus on addressing issues that pose material risks to banks rather than process-related errors that do not impact a business’s safety and soundness.
Additionally, the operations unit within the division will be renamed as the “business enablement group” and will now include a new position focused on industry engagement.
Reactions and Criticisms
The announcement of the headcount reduction has drawn mixed reactions. Sen. Elizabeth Warren criticized the move, accusing the Fed of reverting to its pre-2008 financial crisis playbook. Warren expressed concerns about the potential impact on American financial stability.
Treasury Secretary Scott Bessent, on the other hand, has raised concerns about the size of the Fed’s purview, citing “mission creep” and “institutional bloat” at the central bank. Bessent highlighted the conflict of interest in the Fed regulating, lending to, and setting profitability for the banks it oversees.
Fed Chair Jerome Powell has directed Fed leadership to find incremental ways to streamline operations, aiming for a target headcount of 24,000 for the Fed.
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