Fed Chair Warsh to Ease Mortgage Capital Rules
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- Kevin Warsh was sworn in as Federal Reserve chairman on May 22, 2024, after being nominated by President Donald Trump.
- President Trump publicly pledged Warsh’s independence at the ceremony, while also noting that a booming economy is “a good thing.”
- Kevin Warsh has said he would “limit the Fed’s involvement in banking supervision,” preferring that political agencies handle bank regulation.
- Michelle Bowman, the Fed’s vice‑chair for supervision, has advocated easing mortgage‑loan capital rules, arguing they are “over‑calibrated” and have cut banks’ mortgage share from 60 % in 2008 to 35 % in 2023.
- Bowman’s plan would reduce the high capital buffers that large banks have built since the 2008 crisis, where banks have more than doubled their capital levels.
Why it matters: Banks could capture up to 25% more mortgage market share as capital buffers are cut, while the Fed’s supervisory role shrinks, raising systemic risk for borrowers and the broader economy.
