Michelle Bowman, the Fed governor in charge of community bank issues, and a Trump appointee, has been speaking lately against the prospect of tougher regulations on banks.

Vice-Chair for Supervision Michael Barr will propose the Fed’s regulatory changes: the Basel endgame, liquidity, stress testing and long-term bank debt.

The Fed politics:  The Fed Board of Governors, which votes on regulatory matters and now has six members, is historically a consensus-seeking group. A minority of one or two governors can sometimes win some concessions from the majority on a proposal if they vote in favor of it. It’s a way a proposal’s opponents can get it softened.

Bowman: recently speaking to a European Central Bank (ECB) conference in Frankfurt said that the “unique nature and business models of the banks that recently failed, in my view, do not justify imposing new, overly complex regulatory and supervisory expectations on a broad range of banks. If we allow this to occur, we will end up with a system of significantly fewer banks serving significantly fewer customers.”

Barr:  responding at a recent House hearing on whether he agreed with Bowman’s assessment. He said he doesn’t. “I think that capital in general is facilitating strong lending to all communities. And having strong capital in the system is critical for doing that. Of course, any changes that we propose, we are talking about the largest institutions in the country, institutions over $100 billion in assets, the kinds of capital requirements that we’re talking about are requirements that would help those firms better account in their capital for their actual risk such as making changes in the way unrealized losses and gains from securities are treated for capital purposes.”

Result leans towards tougher bank regs:  in the tone of Bowman’s comments, its apparent she will vote against whatever proposals Barr makes. Her public comments may score points with the banking industry, but it won’t win concessions from Barr.    If Barr thinks, there’s no chance she’ll vote in favor of his proposals he has zero incentive to negotiate or soften his proposals.