WASHINGTON (Reuters) -U.S. President Donald Trump nominated Federal Reserve Governor Michelle Bowman to the central bank's top regulatory post as vice chair for supervision where she is expected to oversee an agenda of relaxed rule-writing and bank oversight.

A former community banker and frequent critic of overzealous bank regulation, Bowman would replace Michael Barr, who stepped down from the supervision post at the end of February to avert a potential legal dispute with the Trump administration.

"Our economy has been mismanaged for the past four years, and it is time for a change. Miki has the 'know-how' to get it done. I am confident we will achieve economic heights never before seen in our nation's history," Trump, who took office on January 20, wrote on social media.

In a statement, Bowman thanked Trump for the nomination and said she would pursue "a pragmatic approach to supervision and regulation with a transparent and tailored bank regulatory framework that encourages innovation."

If confirmed, Bowman would be responsible for the Fed's extensive bank regulatory portfolio, including supervising and writing rules for many of the nation's largest banks.

Her nomination was quickly met with praise from the banking industry and congressional Republicans, who touted her efforts to resist tougher industry rules.

"Since joining the Fed, Governor Bowman has been a thoughtful, principled voice for sensible regulatory and monetary policy and someone who understands the important role that banks of all sizes play in our financial system and our economy," Rob Nichols, head of the American Bankers Association, said in a statement.

Bowman was widely seen as a frontrunner to fill the role, in part due to the fact that the Fed's board is currently full, meaning a replacement must be named from existing governors.

Despite little experience with global banks, Bowman would be one of the top bank regulators in the U.S. government and globally, as the Fed oversees the nation's largest and most complex lenders.

COMMUNITY BANKING EXPERIENCE

A former Kansas banking regulator, Bowman has served on the Fed board since 2018 when Trump nominated her to fill a post specifically reserved for an official with community banking experience. She is expected to have a much lighter regulatory touch than Barr, whose rulemaking projects she has loudly criticized in multiple speeches over the past 18 months.

Bowman voted against Barr's proposal to implement the so-called "Basel III Endgame" rule that would overhaul how big banks gauge their risks, requiring them to hold significantly more capital. She has argued the capital burden should be reduced.

Partly spurred on by Bowman's criticism, big banks lobbied hard to water down that Basel rule, which has since failed to progress due to infighting among regulatory officials on the best path forward.

Bowman has also suggested the Fed should consider ways to make its annual big bank "stress tests" more transparent and predictable for lenders. The Fed recently announced it planned to make several significant changes to the stress tests going forward, and big banks have sued to challenge their legality.

Before joining the Fed, Bowman served as the state bank commissioner of Kansas for a year and a half, before which she spent several years as vice president of Farmers & Drovers Bank, a Kansas community bank.

Early in her career, she was a congressional staffer, and also held roles in the Federal Emergency Management Agency and the Department of Homeland Security.

(Reporting by Kanishka Singh, Pete Schroeder and Ismail Shakil; Editing by Chris Reese, Louise Heavens, Andrea Ricci and Muralikumar Anantharaman)