Michelle W Bowman: When regulation reshapes markets – the migration of corporate lending Speech by Ms Michelle W Bowman, Vice Chair for Supervision of the Board of Governors of the Federal Reserve System, at the Hoover Institution Annual Monetary Policy Conference, Stanford,…
lifornia, 8 May 2026. Good afternoon and thank you for the invitation to join you at the Hoover Institution’s annual Monetary Policy Conference.1 As the Federal Reserve’s Vice Chair for Supervision, I oversee the safety and soundness of banking institutions, responsibilities that are closely linked to another of the Fed’s important duties, which is to safeguard financial stability
Instead of talking about monetary policy, my remarks will focus on this topic. Today, I will address a challenge that emerges at the intersection of these two responsibilities. That is, when regulatory requirements become disproportionately burdensome relative to risk and banks simply curtail the targeted activities.
This leaves a deficit between demand for banking services and banks that are willing to provide them. When banks are no longer willing to provide specific services, nonbanks step in to meet those needs, and the activity is essentially pushed out of the regulated banking system. This includes the migration of corporate lending from banks to nonbanks.