credit and services, an increase in the number of unbanked or underbanked communities, and economic harm. building a framework to better support community banks after acknowledging the importance of community banks and effectively defining these firms, the next step is identifying principles for how these firms should be regulated and supervised. the guiding principles are relatively straightforward : the approach must be tailored to risk, transparent, and consistent across similar institutions. together, these elements can create an opportunity to construct an enduring community bank regulatory and supervisory framework for the future. this conference provides an ideal venue to facilitate conversations that can help spur the development of blue - sky ideas to preserve community banking well into the future. while it would be impossible to lay out a comprehensive blueprint for a community banking reform agenda in this speech, i see several opportunities that are promising and essential. the value of experience building this framework for the future starts with personnel, the people making decisions over the long term. how do we approach our responsibilities? we should highlight examples that have been successful but also reflect on the significant work that remains to be done. congress reserved one seat on the federal reserve board for someone with demonstrated primary experience working in or supervising community banks. 13 while congress did not enumerate any specific additional responsibilities for this particular seat on the board, the 12 u. s. c. § 241. - 12 creation of this role itself is an implicit acknowledgement of the value that this experience can bring across the board ’ s functions, especially regarding bank regulation and supervision. this experience, of having worked as a banker or as a state regulator, is uncommon within the federal regulatory agencies. for example, of the current members of the federal reserve board, i am the only member with experience as a banker or state regulator. in my view, we should ask how someone with this experience in the community banking system can best serve on the board. this experience and perspective is critical. as a former community banker at a statechartered bank and as the state bank commissioner of kansas, i have seen and directly experienced the practical effect of supervision and regulation from “ both sides ” of the banker ’ s desk. with this background, one understands and appreciates the importance of a respectful and healthy partnership between state and federal regulators and the need for setting high standards and applying strong oversight to banks of all sizes, including community banks. this background also provides perspective on how overregulation can impose disproportionate burden on a community bank, over

product offerings or increased prices for consumers. regulators must anticipate, assess, and balance these costs in the rulemaking process and accept that, at times, the right policy is not to impose additional regulations but rather to take actions to reduce the burden of existing regulatory requirements. one of the key challenges to pursuing this balancing is how to effectively complete the analysis. the incremental burden of any single regulatory reform may be challenging to measure — its costs may seem minor when weighed against the benefits. but this approach ignores the additional cost of cumulative burdens, a concern that is particularly acute among community banks faced with an onslaught of changes. if we ignore cumulative burdens, we risk more rapid and pronounced swings in the regulatory pendulum. these swings in approach risk not only our ability to effectively supervise banks, but banks ’ ability to effectively manage their business. 15 when faced with regulatory change, how does bank management review and provide meaningful comment on voluminous michelle w. bowman, “ bank mergers and acquisition, and de novo bank formation : implications for the future of the banking system, ” ( speech at a workshop on the future of banking hosted by the federal reserve bank of kansas city, kansas city, missouri, april 2, 2024 ), https : / / www. federalreserve. gov / newsevents / speech / files / bowman20240402a. pdf. - 19 concurrent regulatory proposals that may build upon proposed, but not finalized regulations? when new rules are adopted, how can a bank ensure it has appropriate staffing and resources to ensure compliance? the cumulative burden of regulation is rarely acknowledged in the rulemaking process. while we assess burden with respect to discrete rule changes, there is no obligation to “ refresh ” that analysis due to changes in underlying conditions or new information about impact absent a further rule change. and the analysis of a rule focuses on the incremental impact of the specific regulation, ignoring the likely aggregate effect of requirements. while the minimum legal process required under the administrative procedure act should be the “ floor ” for rulemaking, in my view it is insufficient. likewise, while policymakers have even greater discretion in pursuing changes to supervision, we need not do so in a vacuum without opportunities for — and a receptiveness to — feedback. we can and should expand the lens through which we consider proposals, in a way that considers the cumulative effects of regulation and supervision on banks and their ultimate customers, in a way that identifies redunda