reserve regional bank supervisors have indicated that we should provide additional resources for - 11 agencies will eventually publish additional resources to assist community banks, i am concerned that the timing lag here posed an unnecessary cost on those expected to meet the new expectations, and that materials to facilitate compliance will not do enough to mitigate the additional burden imposed on those attempting to comply with these new expectations. closing thoughts i have spoken in the past about the implications of the over - calibration of bank capital requirements, the risks of regulators focusing on matters that are tangential to statutory mandates and critical areas of responsibility, and how regulators can work in a productive way to support responsible innovation in the banking system. 12 over - calibration of regulation and supervision as it applies to smaller and community banks can often be even more consequential, jeopardizing the ongoing viability of the community banking business model, at a significant cost to the communities, individuals, and businesses that rely on the that bank for important banking products and services. before i conclude my remarks, though, i would like to note that on february 6 of this year, the board announced that it is seeking comment on the interagency effort to reduce regulatory burden, a process that occurs every 10 years as mandated by the economic growth community banks upon implementation to provide appropriate expectations and ensure that small banks understand and can effectively use the guidance to inform their third - party risk management processes …. i am disappointed that the agencies failed to make the upfront investment to reduce unnecessary confusion and burden on community banks ” ), at https : / / www. federalreserve. gov / newsevents / pressreleases / bowman - statement - 20230606. htm. see michelle w. bowman, “ the path forward for bank capital reform ” ( speech at protect main street event, washington, d. c., january 17, 2024 ), https : / / www. federalreserve. gov / newsevents / speech / files / bowman20240. pdf ; michelle w. bowman, “ the future of banking ” ( speech at the 157th assembly for bank directors, southwestern graduate school of banking, maui, hawaii february 2, 2024 ), https : / / www. federalreserve. gov / newsevents / speech / files / bowman20240202a. pdf ; and michelle w. bowman, “ the innovation imperative : modernizing traditional banking ” ( speech

for release on delivery 9 : 20 a. m. est ( 8 : 20 a. m. cst ) february 12, 2024 defining a bank remarks by michelle w. bowman member board of governors of the federal reserve system at the american bankers association 2024 conference for community bankers san antonio, texas february 12, 2024 thank you for the invitation to join you in san antonio today for the aba ’ s conference for community bankers. 1 this conference provides an opportunity for bankers, state and federal regulators, and other policymakers to share perspectives on banking and other related financial topics. the ability to exchange ideas is critical to ensuring efficient and effective outcomes in the regulation and supervision of financial services activities. policymakers should seek to fully understand the direct and indirect consequences of regulation and supervision — and any changes that might be considered to existing expectations. one of the best, and most effective ways to gain this understanding is through direct engagement with bankers, bank customers, and other stakeholders about potential consequences. engaging with the public, being transparent about policy goals, and hearing from industry participants — enables us to craft more efficient and effective rules and enhance our ability to execute our supervisory responsibilities. this public engagement is particularly important now, when so many factors are in play that will likely reshape the contours of the banking industry. bank business models are adapting to technology changes, including new opportunities for third - party partnerships and new risks from increasingly sophisticated cyber criminals. we ’ ve seen some traditional banking activities continue to migrate into nonbank financial service providers, and regulators have implemented or proposed — or are considering proposing — significant changes to the bank regulatory framework, some of which could have broad impacts on the future of banking and on our current understanding of the community banking model. a broad range of policymakers continue to consider the root causes of the banking stress from last spring and whether changes are needed to achieve greater resilience and accountability, both among banks and among regulators. the views expressed in these remarks are my own and do not necessarily reflect those of my colleagues on the board of governors of the federal reserve system or the federal open market committee. - 2while many of the most significant changes have occurred in the larger bank space, community banks have been and will continue to be affected by these dynamics. increasingly, community banks must devote a greater proportion of their resources to compliance and risk management. even those changes that exclude community banks on their face present the prospect of regulatory “ trickle down, ” either through market forces and