Vice Chair for Supervision Michelle W. Bowman used a London speech on September 18, 2026, to frame upcoming Federal Reserve actions as the final chapter in a multiyear effort to modernize bank regulatory stress testing. Speaking at the Luncheon of the Lord Mayor City of London at Mansion House, Bowman said the Board will consider final revisions to its stress testing framework in the coming weeks. The significance lies in the stated goal: replacing what she described as an opaque and unnecessarily unpredictable framework with one that complies with U.S. administrative procedure laws, promotes financial stability, and better ensures the safety and soundness of the largest banks.
The mechanics center on the stress capital buffer, or SCB, which incorporates forward-looking supervisory stress testing into large bank capital requirements. Bowman said the coming changes will improve transparency and public accountability, strengthen the reliability and accuracy of the models, and reduce the volatility of capital requirements flowing from annual stress test results. She also said that before the end of this year she expects the Board to finalize reforms to risk-based capital requirements for large and small banks, as well as improvements to the global systemically important bank surcharge. The speech describes these reforms as creating a durable and lasting framework for capital requirements that are rational, robust, aligned with risk, and transparent.
The evidence is a single primary source: the full text of Bowman's speech published by Federal Reserve Speeches. The document is dated September 18, 2026, and the dossier identifies it as a tier-one primary source read in full. Bowman acknowledged that the Federal Reserve has incorporated lessons learned from the outset of the stress testing program, including what she called difficult lessons for an institution like the Federal Reserve Board. She specifically cited the imperative of process and model transparency, public accountability, supportable and repeatable outcomes, and proactive regulatory action. The speech also previews an expanded approach for future stress testing: forward-looking exercises that would leverage underlying data from capital-based stress tests but would not affect capital requirements. Instead, those exercises would deepen understanding of exposures to material financial and nonfinancial risks and their resiliency.
For banks and markets, the immediate implication is a regulatory calendar event rather than a completed rule. Bowman said the Board will consider final revisions in the coming weeks, and she expects finalization of risk-based capital reforms and the GISB surcharge before the end of this year. Because the speech frames the stress testing changes as reducing volatility in capital requirements, the direction of travel is toward a more predictable capital regime for large U.S. banks. However, the dossier does not contain the text of the final rules, the specific model changes, or the quantitative impact on any individual firm. The speech also does not provide a vote count or confirm final Board approval.
The main limitation is that this is a single speech, not a final rule or a multi-source record. The dossier contains no corroborating documents, no market data, and no independent analysis of how the changes would affect capital levels or bank behavior. What to watch is whether the Board adopts the revisions as described, whether the final stress testing framework matches Bowman's transparency and volatility claims, and how the separate risk-based capital and GISB surcharge reforms interact with the SCB changes. Until those final actions are published, the speech should be read as a senior official's preview of intended regulatory direction rather than a completed policy outcome.