Fed's Bowman addresses de-banking over reputational risk, digital assets in banks - report

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"One of the first things that I did in assuming this role was to rescind all of our guidance and to change our supervisory materials that referenced reputation risks, so that we could ensure that the Federal Reserve is no longer including that in our examinations or in our supervisory activities," Michelle Bowman, Fed vice chair for supervision, said on Tuesday.

That means that "banks can have as customers anyone that they choose to that's engaged in legal activity, and they can't discriminate against them based on their business model, their political views, or otherwise," she explained in an interview broadcast on Bloomberg Television.

When asked how pervasive the practice is of turning away customers due to "reputational risk," Bowman said it's difficult to answer as it falls "under the cloak of confidential supervisory information. But as long as our examination teams and our policymakers are focusing on ensuring that reputational risk and de-banking is not a part of the banking system going forward, I think that's the way we'll work to achieve that."

She also said she spends a lot of time speaking with bankers and with people in the economy, so, if it is happening, she expects people would let her know, then the Fed can address it.

In speaking about how the Fed is changing its guidance to banks in terms of digital assets, Bowman highlighted that the central bank has disbanded its novel supervision group that focused on innovation and the integration of digital assets into the banking system. Instead, the Fed is taking what the group learned and integrating those lessons into its Reserve Bank examination teams, "so they understand that as Congress overwhelmingly supported the passage of the GENIUS Act, these are very acceptable activities, and they're, of course, legal," Bowman said. [https://www.bloomberg.com/news/articles/2025-08-19/bowman-focuses-on-her-current-fed-role-including-rules-overhaul]

With the passage of that legislation, "we're working on developing frameworks that will allow for digital assets to exist both inside and outside the banking system in a way that is unquestionably allowable activity," she added.

Having taken the role heading bank supervision at the Fed in June, Bowman has a broad range of tasks on her plate, including reworking the regulator's proposal for big banks' capital requirements. In June, the Fed proposed a rule to ease the enhanced supplementary ratio [https://seekingalpha.com/news/4462412-fed-proposes-easing-slr-capital-rule-to-bolster-treasury-market-stability---report]for the largest U.S. banks, in an effort to bolster Treasury market stability.

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