- Key insight: Bank regulators plan to continue with tailoring exercises and other deregulation.
- Forward look: The regulators should be back in the Senate Banking Committee in the new year per oversight requirements, but oversight hearings have been scarce in this Congress.
- What’s at stake: Banks are watching as key rules like Basel III endgame and risks like debanking enforcement proceed in the administration.
WASHINGTON — Top regulators at the prudential banking agencies underlined plans for a pared down regulatory system for financial companies, defending the work they’ve done so far under President Donald Trump’s administration.
The hearing is the only time the banking world has heard from these regulators as a group in 2025. While all of them have gone through the Senate confirmation process and appeared for those confirmation hearings, there’s been no opportunity for lawmakers to ask questions and perform oversight of the work they’ve actually done at the agencies, despite some of them being confirmed in the early half of 2025. Russell Vought, acting head of the Consumer Financial Protection Bureau, has also not had an oversight hearing in that capacity (he also leads the Office of Management and Budget) despite a requirement that the head of the CFPB testify in the banking committees annually.
The regulators told lawmakers that they plan to continue the general trend of loosening certain rules and beefing up enforcement in other areas, such as debanking.
Fed Vice Chairman for Supervision Michelle Bowman said that the central bank is looking at tailoring the process for mergers and acquisitions, as well as the de novo chartering application process, for community banks.
“We are exploring streamlining these processes and updating the Federal Reserve Board’s merger analysis to accurately consider competition among small banks,” Bowman said. “Now is the time to build a framework for community banks that recognizes their unique strengths and supports their critical role in providing financial services to businesses and families throughout the United States.”
Bowman also said that the Fed is looking at changing capital requirements, specifically around home lending.
“In particular, the capital treatment of mortgages and mortgage servicing assets under the U.S. standardized approach has resulted in banks reducing their participation in this important lending activity, potentially curtailing access to mortgage credit,” she said. “We are considering approaches to more granularly differentiate the riskiness of mortgages with benefits extending to financial institutions of all sizes, not just the largest banks.”
In her testimony though, Bowman stopped short of promising that upcoming capital requirements will be capital neutral, a longtime wishlist item for banks.
Rep. Andy Barr, R-Ky., asked whether the agencies are “planning to issue a proposal that predetermines a, quote, ‘capital neutral’ outcome, even if some risks continue to be over capitalized.”
“We’re not,” Bowman replied. “We don’t have a preconceived notion about where we’ll land with our capital requirements. Based on this review, this whole list, this comprehensive review of capital that we’re undertaking now, we’re looking at it from a risk-based approach by each factor and category.”
Jonathan Gould, the head of the OCC, was pressed on a handful of occasions to elucidate the agency’s approach to addressing debanking, an issue in which President Trump has taken a
“We are currently implementing the President’s Executive Order on Guaranteeing Fair Banking for All Americans by, among other things, reviewing the activities of the largest national banks and investigating complaints of alleged debanking,” Gould said in his testimony to the House Financial Services Committee. “We will be considering options for evaluating whether and to what extent non-financial factors may have influenced or impacted core banking functions such as credit underwriting practices.”
Acting FDIC Chairman Travis Hill, whose final
Congress is considering raising
“Let’s say we raise the deposit insurance coverage amount 100 times to what it is now making, meaning the denominator goes way up,” House Financial Services Chairman French Hill asked Travis Hill. “Normally for the FDIC to meet its statutory minimum, wouldn’t it need to raise assessments as well?”
“If no other changes are made and the denominator goes up, then that’s correct. In order to achieve the same reserve ratio, revenue coming into the DIF would have to increase,” Travis Hill said.
Ebrima Santos Sanneh, Maria Volkova and John Heltman contributed to this report.