Vendor * Spotlight

Click logo to hear more or

visit their website

Fed independence at play

The Federal Reserve's independence and nonpartisanship are key factors in President Donald Trump's pick for chair.

Trump is gearing up to announce his nominee for Fed chair, nearly one year ahead of the May 2026 expiration of Jerome Powell's term. Trump has indicated with recent remarks that he might want a more loyal Fed chair, threatening to fire  Powell, who has "done a superb job remaining nonpartisan," wrote Derek Tang, economist, CEO and co-founder of Monetary Policy Analytics.

While Trump eventually backed off those threats, he could still seek a more loyal Fed chair, which could upend the nonpartisanship nature of the regulatory agency.

There is growing support among advisers, both within and outside the Trump administration, for Treasury Secretary Scott Bessent to become the next chair of the Federal Reserve, American Banker reported, citing people familiar with the matter. But, appointing him would leave a vacancy in the top seat at the Treasury, Tang wrote.

Former Fed Governor Kevin Warsh "might appeal to Trump culturally," given his past commentary that the Fed should not be the source of economic policy and that the agency is not above accountability, Tang wrote.

Fed Governor Christopher Waller could be a more independent pick based on his past commentary lamenting that quantitative easing politicized the central bank unnecessarily.

Still, "despite sympathy for easing forward guidance now, Waller could well pivot to independence defense and inflation credibility as Chair so the market should not presume a lower rate path," Tang wrote.

Another possibility for Fed chair is National Economic Council Director Kevin Hassett, a current Trump adviser, Tang added.

Depending on the trajectory of the economy, any pick could face a tough confirmation process. "If the economy does not hold up in coming months, the Senate may no longer give Trump the benefit of the doubt on nominees, which might push Trump to make more confirmable choices," Tang wrote.

If Powell steps down from the board after he is no longer chair, Trump could also have a board seat pick. In addition, an empty governor seat will open up in February 2026 because Adriana Kugler’s term will expire. Trump could tap Bessent for one of those seats, but that may be "a bridge too far for market angst over Fed independence."



Source: S&P Global Market Intelligence

Regulatory agency independence

President Donald Trump's moves to curtail agency independence in bank regulation could have negative consequences, former regulators said at a Brookings Institution conference.

The executive branch has aimed to play a larger role in bank industry regulation since Trump took office in January, firing or threatening to fire agency leaders, among other actions. The Supreme Court ruled in May that the president can dismiss top officials at independent agencies, with the exception of the Federal Reserve.

Former Federal Deposit Insurance Corp. Chair Sheila Bair, who served from 2006 to 2011, said at the event that she hopes the court will reconsider its decision, adding that agencies have nonpartisan boards with fixed terms and explicit statutory language around what constitutes legitimate cause for removal.

"It's really hard to have agency independence if you don't have job independence and the president can fire you at will," Bair said. "That's going to have a chilling effect on your decision-making."

While the Supreme Court's ruling exempted the Fed because it is a uniquely structured, quasi-private entity, Bair said the exemption does not have a legal basis. Further, the FDIC is arguably also quasi-private because it is funded by the bank industry through deposit insurance premiums, and perhaps should also be exempted, she said.

Source: ICBA

Key bills passed out of House committee

The House Financial Services Committee approved several key bills, including a market structure measure that provides favorable oversight for cryptocurrency.

The market structure bill, or the CLARITY Act, passed with a 32-19 vote and is designed to establish clear regulatory frameworks, granting the Commodity Futures Trading Commission (CFTC) new powers and dividing registration responsibilities for cryptocurrency platforms between the CFTC and the SEC.

Democratic lawmakers criticized the move. "This bill includes loopholes and exemptions from regulation that expose everyday investors to fraud, pave the way for FTX-style fraud and collapses, and endanger our national security," said Rep. Maxine Waters (D-Calif.) in a press release.

Another bill, the Small Bank Holding Company Relief Act, would require the Federal Reserve to raise the consolidated asset threshold to $25 billion for small bank holding companies and savings and loan holding companies. It passed in a 30-20 vote.

The committee also approved the Systemic Risk Authority Transparency Act, which mandates reports from the Government Accountability Office and bank regulators following the invocation of the systemic risk exception by the FDIC. The bill passed unanimously.

Source: House Financial Services Committee

Agencies request information on targeting payments fraud

Federal banking agencies announced a request for comment on potential actions to help consumers, businesses, and financial institutions mitigate risk of payments fraud, with a particular focus on check fraud.

The agencies are seeking public comments on discrete actions, collectively or independently, to mitigate check fraud and other payments fraud within their respective bank regulation and payments authorities.

The agencies requested input on five potential areas for improvement and collaboration:

• External collaboration among the agencies, Federal Reserve Banks, and industry stakeholders.
• Consumer, business, and industry education.
• Regulation and supervision to mitigate payments fraud.
• Data collection and information sharing.
• Federal Reserve Bank operator tools and services.

FDIC Vice Chair for Supervision Michelle Bowman said the request is a “welcome first step” in agency efforts to combat the increasing occurrence of fraud, citing the harm of check fraud on community banks, consumers, and businesses. Bowman called for a comprehensive strategy to develop and implement an effective, coordinated approach.

Comments must be received within 90 days after date of publication in the Federal Register. The agencies said they will also continue looking for additional opportunities to effectively collaborate across other state and federal agencies given the importance of interagency coordination to help mitigate payments fraud.

Source: ICBA

Proposals to stop Fed interest on reserves and curb CFPB funding

Senate Banking Committee Chairman Tim Scott (R-SC) expressed his opposition to a quick move on a proposal that would prevent the Fed from paying interest on reserves to banks, Bloomberg News reported.

The proposal, championed by Texas Sen. Ted Cruz (R), aims to save roughly $1.1 trillion over a decade by eliminating interest payments, which Cruz argues disproportionately benefit foreign banks, the report said.

Cruz said interest payments on reserves began in 2008 during the financial crisis and have since surged from $1 billion to $186 billion in 2024 as interest rates increased, according to a separate Bloomberg News report. He criticized the notion that the payments are necessary for controlling short-term interest rates, noting that the Fed managed without them from its inception in 1913.

The Committee also introduced significant provisions in the proposed budget bill that would slash funding for the CFPB and eliminate the Office of Financial Research, among other changes.

The legislation aims to alter the CFPB's funding structure by removing its ability to self-fund through the Fed, instead subjecting it to regular congressional appropriations.

Source: S&P Global Market Intelligence

SBA loan guarantees near ceiling

The Small Business Administration's (SBA) 7(a) loan guarantee program is experiencing increased activity, with loan volumes expected to approach the $35 billion annual ceiling on or before the Sept. 30, American Banker reported, citing Tony Wilkinson, president and CEO of the National Association of Government Guaranteed Lenders (NAGGL), a trade group representing SBA lenders. Despite this growth, the Trump administration plans to maintain the existing limit for at least another year, according to the report. Currently, the approved loans total $26.3 billion.



Source: S&P Global Market Intelligence

An article from ICBA

Let's come together to address fraud

“Some of the most effective approaches to fraud prevention emerge through conversations about what has worked within your banks”.

This article by ICBA President & CEO, Rebeca Romero Rainey, points out the strength of community bankers working together and how this spirit can help fight fraud losses, "according to the Federal Trade Commission, upwards of $12.5 billion in 2024—a 25% increase year over year".

Click here to learn more..

Source: ICBA; Arkansas Community Banker

Check fraud prevention flyers available

Community bankers can now order physical copies of a check fraud prevention flyer to distribute to customers.

Developed by ICBA and the U.S. Postal Inspection Service, the educational materials offer step-by-step instructions to help consumers safeguard their financial assets and respond if they experience check fraud.

ICBA member banks can use an online form to order copies of the flyer from ICBA.

ICBA in February announced the partnership with the U.S. Postal Inspection Service to combat the threat of check fraud. The partnership also includes a customizable news release available on ICBA’s Marketing Resource Center.

Source: ICBA

Precedence over conflicting state laws

The Office of the Comptroller of the Currency (OCC) reaffirmed its commitment to its 2011 state preemption rules, which assert that federal law takes precedence over conflicting state laws, rejecting requests from the Conference of State Bank Supervisors (CSBS) to revise these regulations. In a letter to CSBS President Brandon Milhorn, acting Comptroller Rodney Hood stated  that the current preemption rules align with applicable law and that the OCC will continue to vigorously defend federal preemption.

Source: OCC; CSBS