Key points

  • The Federal Reserve is realigning supervision into five geographic regions, each led by an official accountable for all activity in that region.
  • Examiners will remain in existing Reserve Bank locations and continue overseeing their current institutions.
  • The change follows an independent Silicon Valley Bank review that identified a mismatch between decision-making authority and accountability.

The Federal Reserve is reorganizing its bank-supervision structure into five geographic regions, replacing a system built around the 12 regional Reserve Bank districts. Vice Chair for Supervision Michelle Bowman announced the realignment in an October 6 speech at the Community Banking Research Conference in St. Louis. Each region will have a leader accountable for all supervisory activity within it. The plan is intended to clarify who can make decisions and who is responsible for their results, while keeping examination staff in their existing locations.

Five regions will sit above local teams

Bowman said the new map will follow state boundaries and draw on a regional structure used by the Conference of State Bank Supervisors. Existing Reserve Bank offices will continue to support the work, and examiners will keep overseeing the banks currently assigned to them. The change therefore reorganizes leadership and accountability rather than moving every supervisory team or centralizing all examinations in Washington. Reuters reported that the Fed plans to begin interviewing candidates for the new regional leadership roles early next year.

Related reporting: Fed review says supervisory risk aversion delayed action before SVB failure

The current model splits authority

Federal Reserve officials in Washington set supervisory policy, but the 12 Reserve Banks conduct examinations. Bowman said that arrangement created a mismatch between responsibility for the system and authority over day-to-day supervisory decisions. She also criticized the extensive use of committees, arguing that layered deliberation could delay action and obscure who was responsible when risks emerged. The five-region model is designed to establish a clearer reporting structure while still drawing on local knowledge of banks, markets and state regulators.

Silicon Valley Bank review shaped the change

The restructuring follows preliminary findings from an independent review of the Federal Reserve’s supervision of Silicon Valley Bank, which failed in March 2023. Bowman said the review highlighted the long-standing divide between decision-making authority and accountability, compounded by numerous committees. The Fed’s response is not limited to organization charts. Supervisory operating principles introduced last year direct examiners to prioritize vulnerabilities that could cause material financial harm and to escalate concerns when existing tools are not sufficient.

Other regulatory changes are coming

Bowman also said the Board will consider updating fixed-dollar asset thresholds later this year. These thresholds help determine when institutions move into stricter supervisory categories. The proposal would adjust static amounts for inflation and economic growth and create a mechanism to revisit them every five years. The Fed is also considering broader changes to asset-size portfolios and its framework for tailoring rules to large banks. Those proposals will require separate Board action and should not be treated as completed policy.

What the reorganization could change

For banks, a clearer chain of command could make supervisory expectations more consistent across locations and reduce delays when examiners identify material risks. State regulators may also benefit from regions aligned to state boundaries. The practical effect will depend on how leaders are selected, how authority is delegated and whether the new structure produces faster, better-documented decisions without losing local expertise. Banks will also watch whether examination findings, escalation standards and appeals are applied more uniformly across the five regions once the new leaders take office. The announcement establishes the direction of travel; implementation details, transition timing and measurable outcomes will determine whether the overhaul improves oversight.

Sources

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