GS, JPM, BAC: Trump Names New Federal Reserve Supervisor

U.S. President Donald Trump has named current Federal Reserve Governor Michelle Bowman to take over the central bank’s top supervisory role.

Governor Bowman got the nod from Trump after previous Federal Reserve Vice Chair for Supervision Michael Barr resigned from the role, although he remains a governor of the central bank. Bowman’s ascension to the supervisory role is viewed as good news for U.S. banks such as JPMorgan Chase (JPM), Bank of America (BAC), and Goldman Sachs (GS).

Bowman, who is herself a former bank executive and state regulator from Kansas, is seen as friendly and supportive of the U.S. banking industry. She joined the central bank during Trump’s first term in office. On social media, Trump said of Bowman that she “has been serving honorably on the Fed’s Board of Governors since 2018, and has great expertise dealing with Inflation, Regulation, and Banking.”

The duties of the vice chair for supervision include developing policy recommendations regarding supervision and regulation for the Federal Reserve’s Board.

Internal Conflict

While the banks might be cheering Bowman’s appointment, Federal Reserve Chair Jerome Powell is not overly enthusiastic of the supervisory role at the central bank. During Congressional testimony in February, Powell said that he thought the vice chair for supervision had created “volatility” for the Fed. The position was created as part of regulatory reforms following the 2008 financial crisis.

As a Fed governor, Bowman is also part of the Federal Open Market Committee that sets the benchmark interest rate for the central bank. The committee is set to meet this week and announce its next move on interest rates on March 19. Markets expect the central bank to hold interest rates at current levels.

Is GS Stock a Buy?

Let’s look at the stock of Goldman Sachs, one of the largest investment banks on Wall Street. GS stock has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on 11 Buy and four Hold recommendations assigned in the last three months. The average GS price target of $665.54 implies 20.71% upside from current levels.

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