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Community bankers meet with Treasury’s Bessent

Several ICBA members participated in a roundtable discussion with Treasury Secretary Bessent.

The community bankers and Bessent discussed providing access to credit to small businesses and consumers in their communities. Bessent was also interested in hearing how policy changes could remove barriers to capital.

After the meeting, Bessent said on X: “Community banks have been the lifeblood of American entrepreneurship and economic growth since our nation’s founding, and they remain vitally critical to economic growth.” He added that under the administration of President Donald Trump, “it’s Main Street’s turn to shine.”

ICBA in March applauded Bessent for his remarks supporting community banks and committing to the continued independence of the nation’s prudential banking regulators and dual banking system. ICBA in January congratulated  Bessent for being named Treasury secretary.

Source: ICBA

Quick privatization of Freddie, Fannie unlikely

The privatization of Freddie Mac and  Fannie Mae is unlikely to occur quickly even as US President Donald Trump posted on social media that he is seriously considering bringing the government-sponsored enterprises public, said Brian Gardner, Stifel's chief Washington policy strategist.

"The post will, obviously, generate significant speculation about the administration's plan to privatize these government-sponsored enterprises (GSEs), but we do not believe action is imminent," Gardner wrote in a May 22 note.

The privatization is "a late 2025 or — more likely — a 2026 event, and possibly later than that," given that significant work still needs to be done before the US Treasury can start an initial public offering to recapitalize Fannie Mae and Freddie Mac, Gardner said.

"There are significant issues that the administration will need to address such as how to restructure Treasury's Senior Preferred shares, what to do with the junior preferred shares, how to settle any outstanding litigation, as well as collecting more intel on how investors, especially in the fixed income markets, might react to privatizing the two companies," Gardner wrote.

Ian Katz, managing director at Capital Alpha Partners, noted that Trump's social media post put Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Director of the Federal Housing Finance Agency William Pulte on the spot.

In the post, Trump said he will talk to Bessent, Lutnick and Pulte and will come up with a decision on the privatization "in the near future." Katz believes the administration will attempt to push forward without significantly involving Congress, since Congress will likely slow the process.



Source: S&P Global Market Intelligence

Fannie to employ AI

Fannie Mae announced a  partnership with AI software company Palantir to enhance its ability to detect mortgage fraud through a newly formed AI-powered Crime Detection Unit. “By integrating this leading AI technology, we will look across millions of datasets to detect patterns that were previously undetectable,” Fannie Mae President and CEO Priscilla Almodóvar said in a statement.

This foundation will power Fannie Mae’s Crime Detection Unit, a new platform that the company believes will help detect and prevent mortgage fraud with speed and precision never before seen in the U.S. housing market. Fannie Mae’s Crime Detection Unit’s capabilities will save the U.S. housing market millions in future fraud losses.

Source: Fannie Mae

CFPB revolving door

The Consumer Financial Protection Bureau told the agency's employees who have been locked out of their offices in the CFPB's Washington headquarters to come pack up their personal belongings in the office as mass firings loom at the agency, Bloomberg Law reported, citing an email obtained by the news outlet. According to the report, the employees were directed to a digital sign-up sheet and to get their belongings on June 3, 4, 5, or 11 between 8 a.m. and 4 p.m. The directive signifies the agency's confidence that a federal appeals court will allow the gutting of its workforce, the report noted.

Source: S&P Global Market Intelligence; Bloomberg Law

Brokered deposits decline for 5 consecutive quarters

Brokered deposits at US banks declined for the fifth quarter in a row as many banks reduce reliance  on expensive sources of funding amid the growth of low-cost deposits.

The sector finished the first quarter with $1.221 trillion in brokered deposits, down from $1.236 trillion at the end of 2024 and $1.341 trillion a year ago, according to S&P Global Market Intelligence data. As a percentage of total liabilities, brokered deposits dropped to 5.5%, from 5.7% in the previous quarter and 6.2% in the year-ago quarter.

Source: S&P Global Market Intelligence

Ag delinquencies spike in Q1 amid headwinds, trade anxiety

Agricultural and farm loan delinquencies spiked in the first quarter.

The industry's ratio of delinquent agricultural production loans — or those for funding agricultural production including crops and livestock — surged to 1.62% in the first quarter, its highest point since 1.97% in the first quarter of 2021. The delinquent farm loan ratio also jumped in the quarter to 1.51%, reaching a multiyear high from 1.60% in the third quarter of 2021. Farm loans are those secured for farmlands and improvements on them through mortgages and liens.

The credit quality deterioration comes as the farming industry has faced several headwinds in the first part of the year, such as threats from President Donald Trump's tariffs  and severe weather throughout the Midwest and Southeast in May. Those events continued what was already a tough year for farmers in 2024.

Source: S&P Global market Intelligence

An article from Travelers

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Source: Travelers

FDIC's 'problem bank list' posts net 3 decline

The number of banks on the Federal Deposit Insurance Corp.'s "problem bank list" fell quarter over quarter.

Sixty-three banks were on the agency's "problem bank list" in the first quarter, three fewer than the prior quarter. "Problem" banks made up 1.4% of all banks over the period, falling within the 1%-2% range that is considered normal for non-crisis periods, according to the agency.

"I believe there were a few that were taken off, a few that were added, which I think is typical for these types of periods," acting Chairman Travis Hill told reporters.

A bank is added to the list if its CAMELS rating drops to 4 or 5. The CAMELS scale measures a bank's capital adequacy, asset quality, management, earnings, liquidity and sensitivity on a scale of 1 to 5. The worst score is 5. These ratings are private supervisory information.

The FDIC no longer reports the total assets of the banks on the list, taking away a key data point showing the industry's health. This is the second quarter for which the bank has not reported the total assets.

Source: FDIC

Easing big bank rules proposal

The Trump administration is nearing completion of a proposal to relax rules on how much capital the biggest US banks must have to cushion potential losses and remain solvent in events of economic stress, Politico reported, citing unnamed sources. The Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. are jointly developing the plan, which could be released in the coming months, according to the report.

Source: S&P Global Market Intelligence

ISO 20022 transition scheduled for July

ICBA is reminding community bankers of the Fedwire Funds Service’s upcoming conversion to the ISO 20022 message format.          

ISO 20022 is the format used for FedNow transactions. The Fed’s delay of the transition until July 14 is designed to give financial institutions and vendors more time to prepare.    

A recent Independent Banker magazine article spotlights what community banks should know about the transition, while a previous ICBA blog post features key resources and considerations.

Source: ICBA; Federal Reserve

Paper check reduction

The US Treasury Department is seeking public comment to its plan to eliminate most paper checks as part of a government-wide shift to electronic payments by Sept. 30. The shift will include Social Security benefits, tax refunds and vendor payments. The department said paper checks are increasingly becoming fronts for fraud.

Source: U.S. Treasury Department

CSBS conducting community bank survey

The Conference for State Bank Supervisors is conducting its Annual Survey of Community Banks and encouraging community banks with less than $10 billion in assets to participate. The survey takes approximately 30 minutes to complete and is open through June 30.

Participating banks will need to provide their FDIC certificate number, but all information collected is for research purposes only and will not be linked to any institution. A PDF version of the 2025 Annual Survey questions is available here for reference.

The survey results will be released on Oct. 7 at the annual Community Banking Research Conference, which is sponsored by CSBS, the FDIC, and the Federal Reserve. Participate in the survey.

Source: Conference of State Bank Supervisors