Jennifer Schonberger · Senior Reporter Fri, February 27, 2026 at 2:28 AM GMT+8 2 min read The Federal Reserve’s top banking cop told the US Senate on Thursday that she’s looking to unveil retooled bank regulations before the end of March, with a focus on boosting mortgage lending.
Fed Vice Chair of Supervision Michelle Bowman, testifying before the Senate Banking Committee, said the central bank has arrived at a consensus with other regulators on Basel III, a regulatory framework for banks developed in response to the financial crisis. Bowman said it will include a retooling of capital requirements to encourage traditional banks to get back into mortgage lending.
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Bowman invoked her personal experience running a community bank in Kansas and stories she heard as Kansas state bank commissioner. The theme: how post-financial crisis Dodd-Frank regulations and regulations from the Consumer Financial Protection Bureau inhibited mortgage lending. Bowman said many community banks have exited the mortgage-lending business, hurting consumers.
“We're very focused, as we were thinking about the Basel approach, in ways that we could right-size and recalibrate the approach for residential mortgage lending so that we could encourage the banks to get back into the mortgage business,” Bowman told lawmakers.
Following the 2007-2009 financial crisis, much of mortgage lending has shifted away from traditional banks. Bowman said the Fed, along with the OCC and the FDIC, will propose that one part of the bank capital requirements will aim to ensure that regulators provide appropriate risk weightings while limiting the excesses that existed during the financial crisis.
Bowman added that other issues need to be addressed as well, including regulations from the CFPB that she says put onerous requirements and large fines on banks for making mistakes on mortgage applications.
“I think it's important that we think about this in a broader manner and holistically as we approach thinking about banks getting back into the mortgage space,” she said.
Bowman first introduced the idea of retooling capital requirements to rejuvenate mortgage lending in a speech a few weeks ago, noting that making changes to allow community banks back into mortgage lending would not threaten the safety and soundness of the banking system.
Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.
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