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Treasury expands bank regulatory role - tailor community bank rules

The US Treasury plans to take a larger role in US bank regulation than it has before, according to Secretary Scott Bessent. At the request of President Donald Trump, the Treasury will shape the future of US bank regulation by directing the federal bank regulators.

"The Treasury Department intends to play a greater role in bank regulation. I'm just the conductor, and I got a great orchestra, and we're going to make great music" Bessent said at a banking conference, referring to the heads of the various federal banking agencies.

His priorities include tailored rules for community banks, increased focus on financial risk versus management and governance, modernized capital requirements and reassessed capital buffers for large banks.

Bessent highlighted the need for tailored regulations that alleviate compliance burdens on community banks, which he believes have been disproportionately affected by existing rules. He indicated that the Treasury may exempt these banks from certain regulations, such as those from the Consumer Financial Protection Bureau, to allow them to better serve their communities.

"For too long, financial policy has served large institutions at the expense of smaller ones," he stated.

Source: S&P Global Market Intelligence

French Hill charts a more pragmatic path on tariffs

U.S. Rep. French Hill, chair of the House Financial Services Committee, expressed reservations about President Trump's across-the-board tariffs policy in an interview with Bloomberg.

• Hill said such tariffs often lack measurable goals and questioned the short-term economic benefits of sweeping tariff policies
• He said targeted efforts in specific industries are more likely to yield results
• Hill also emphasized the need for an intermediate-term plan to assess the success of tariffs

The Arkansas congressman advocated for reopening US-Mexico-Canada Agreement (USMCA) negotiations to stop Chinese components from entering the supply chain through Mexico and Canada.

Hill said extending Trump's 2017 tax cuts restoring expensing and R&D credits would stimulate growth, even without lowering marginal rates.

Hill also discussed progress on stablecoin legislation, calling for a U.S. dollar-backed digital token regulated under federal law with bipartisan support in both chambers. 

Source: Arkansas Business; Bloomberg

Tariffs projected to push US inflation near 2022 highs

The Trump administration's sweeping new tariffs may push the US annual inflation rate near the heights reached in 2022, economists said, potentially upending the Federal Reserve's efforts to rein in the highest levels of inflation in decades.

Even if the tariffs do not cause an immediate increase in inflation, the tariffs against nearly all US global trading partners and the retaliatory actions likely to follow could push the economy into a significant slowdown, boosting the likelihood of a long-feared recession, economists said.

"There's enormous uncertainty in both directions," said James Egelhof, chief US economist with BNP Paribas, in an interview.

If ultimately imposed as President Donald Trump has proposed, the new tariffs would cause the core consumer price index to run at a 6% annual pace on average over the next two years, Egelhof said. The core consumer price index, which excludes volatile food and energy costs, rose 3.1% from February 2024 to February 2025 and is expected to increase 3% from March 2024 to March 2025, according to estimates compiled by Econoday.

Fed officials want core personal consumption expenditures (PCE) — their preferred inflation metric — to run at 2% annual growth, a target that has proven elusive even amid one of the most aggressive rate hike cycles in the central bank's history.

Source: S&P Global Market Intelligence

An article from PCA Technology Solutions

AI In Action: How Data Turns into Powerful Business Moves

"In today’s fast-paced world, businesses are drowning in data. From customer interactions to market trends, the sheer volume of information can be overwhelming. But what if you could sift through all that noise and uncover hidden gems? What if you could predict the future and make decisions with confidence?"

In this article by Sean Tappe, Executive VP of Operations, PCA Technology Solutions, an ACB Associate Member, he explores how AI is: "No longer a futuristic fantasy, AI is now a powerful tool transforming how businesses operate. Imagine a world where computers can mimic human intelligence, analyze data at lightning speed, predict future outcomes, and even generate creative solutions. Sounds like something out of a sci-fi movie, right? Well, it’s happening right now."

Click here to learn more.

Source: PCA Technology Solutions

Groups oppose efforts to increase income tax rates

ICBA and other groups said recent proposals to raise the top individual income tax rate to 40% would disproportionately harm hundreds of thousands of pass-through businesses organized as S corporations, partnerships, and sole proprietorships.

In a joint letter to House Ways and Means Committee Chairman Jason Smith (R-Mo.) and Senate Finance Committee Chairman Mike Crapo (R-Iowa), they encouraged the committee chairs to stand strong against any effort to increase income tax rates. The groups noted:

• Pass-throughs comprise over 95% of all businesses and employ 62% of the nation’s workforce.
• Most pass-through business income is taxed at the top rates, so raising these rates would harm Main Street businesses engaged in nearly every aspect of the economy.
• They are responsible for employing millions of Americans, driving investment, and supporting local economies nationwide.
• The so-called “millionaire tax” in question–which actually kicks in at income around $620,000–would saddle them with a tax hike that offsets about half the tax benefit of extending the Section 199A deduction.



Source: ICBA

Call for regulatory parity from the CFPB

Responding to the Consumer Financial Protection Bureau’s request for information on the collection, use, and monetization of consumer payment and other personal financial data, ICBA said community banks remain steadfast in their commitment to safeguard and prioritize the protection of consumer information.

In a comment letter, ICBA said the CFPB should focus its regulatory oversight resources on establishing parity between traditional financial institutions and under-regulated technology service providers that provide bank-like services.

Source: ICBA

FS-ISAC shares details of ATM hard drive incidents

The Financial Services Information Sharing and Analysis Center’s latest weekly risk summary shared details of incidents in which threat actors install AnyDesk remote access software on ATM drives.

FS-ISAC said:

• Threat actors access the ATM cabinet with keys, remove the hard drive, modify it at another location, then return and reconnect the device.
• The modified drive contains AnyDesk software, which attempts outbound connection to AnyDesk infrastructure URLs/addresses.
• In some cases, the attackers returned several times, presumably to troubleshoot failed outbound connections.
•  

The FS-ISAC publication and other resources are available on ICBA's Cyber and Data Security resource center.

Source: ICBA; FS-ISAC

Community banker optimism still up but confidence slipping

Community bankers reported an overall positive economic outlook for a third consecutive quarter, but their confidence in future business conditions is fading, according to the Conference of State Bank Supervisors’ first-quarter Community Bank Sentiment Index.

The CBSI climbed two points to 129, the highest mark since it began in 2019, driven by expectations of a lighter regulatory environment, higher expected profitability, and higher franchise values. CSBS noted that the gains were offset by a deterioration in business condition expectations and a pullback in optimism about future monetary policy decisions.

Source: CSBS

ILC bank applications surge to 4-year high as FDIC encourages de novos

Industrial loan company applications have reached their highest point in four years amid hope the new administration will welcome them with open arms.

Just three months into the year, three industrial loan company (ILC) charter applications have been filed with the Federal Deposit Insurance Corp., after no such applications in 2023 and 2024. This year is already rivaling 2021 when four companies filed applications, according to S&P Global Market Intelligence data.

The path to obtaining an ILC charter has been rocky since the Great Financial Crisis, with most companies withdrawing their applications at least once and the FDIC only approving three such applications since 2006. But that path could soon get smoother under this administration, as the FDIC plans to issue a request for information regarding issues related to the ILC application process, acting Chairman Travis Hill said during an April 8 speech. The agency wants to encourage increased de novo bank formation, he said.

"Overall, deposit insurance remains a special government privilege, and we will maintain rigorous standards for approval in line with our statutory requirements," Hill said. "But we will do so with an eye toward reestablishing a meaningful pipeline of new entrants into the banking sector."

Source: S&P global Market Intelligence

Crypto enforcement team disbanded

The US Justice Department is dismantling its National Cryptocurrency Enforcement Team and directing prosecutors to limit their cryptocurrency investigations to focus primarily on drug cartels and terrorist organizations, Reuters reported, citing a memo seen by the news outlet.

In the memo, Deputy Attorney General Todd Blanche reportedly said future investigations will prioritize cases involving individuals who exploit digital asset investors or use cryptocurrencies for criminal activities such as terrorism, drug trafficking and organized crime, and instructed that any ongoing investigations that do not align with this new focus should be closed.

Source: S&P Global Market Intelligence