Federal Reserve Vice Chair for Supervision Michelle Bowman stated that the shift of U.S. mortgage business from banks to non-bank lenders is a concerning trend. Speaking at a banking conference in Orlando, Bowman partly attributed this shift to restrictive capital requirements applied to Mortgage Servicing Rights (MSR). MSR is an asset on a bank's balance sheet, representing the net fees a bank expects to receive for servicing a mortgage loan over its lifetime. Bowman noted that banks holding MSR face high regulatory risk weights, which may hinder their ability to build profitable servicing operations. She acknowledged that these rules were created due to valid concerns but argued that adjustments should be considered. Bowman said potential adjustments would address legitimate worries about the structure of the mortgage market while maintaining appropriate prudential safeguards.