Fed eyes 30% cut in supervision, regulation unit

Core Points - The Federal Reserve plans to reduce its supervision and regulation division's headcount by 30% by the end of 2026, aiming to decrease from 500 to approximately 350 employees [1][3] - The reduction will primarily occur through natural attrition, retirements, and voluntary separation incentives for employees [2] - This initiative is part of a broader strategy to cut the Fed's overall workforce by 10% by 2027 [3] Organizational Changes - The supervision and regulation division will adopt a flatter organizational structure with fewer management layers [3] - The operations unit will be renamed the "business enablement group," which will include a new position focused on industry engagement [7] Focus Shift - The division will concentrate on material risks to banks rather than minor process-related errors that do not impact safety and soundness [5] - This approach aligns with a recent proposal from the Federal Deposit Insurance Corp. to limit penalties to issues that materially affect a bank's risk of failure [6] Criticism - The headcount reduction has faced criticism from Senator Elizabeth Warren, who expressed concerns about the potential undermining of financial stability [7]