BPInsights: September 13, 2025

Supervision on FSOC's Radar This Week

The Financial Stability Oversight Council, an interagency body chaired by the Treasury secretary, discussed ongoing reforms to bank supervision at a meeting this week. The federal banking agencies have been working on various measures to improve supervision, such as the Fed's proposal to overhaul the Large Financial Institution ratings system. Here are other highlights from the meeting.

• Key focus: Treasury Secretary Scott Bessent, chair of the FSOC, previewed that "the Council will consider ways to enhance the member agencies' supervisory and regulatory frameworks as well as other efforts to position banks and other regulated entities to foster innovation and further support economic growth."
  • Effective and tailored: The post-crisis bank regulatory framework has "unduly weighed on banks' ability to serve as effective intermediaries for American households and businesses," Bessent said, calling for a system that is "efficient, effective and appropriately tailored." He expressed support for proposed recalibration of certain leverage capital requirements, ending reputational risk in examination, Bank Secrecy Act reforms and capital reforms.
• OCC: OCC chief Jonathan Gould said his agency is working to realign supervision in a way that supports economic growth and dynamism. "Following the 2008 crisis, we implemented a regulatory and supervisory framework that sought to micromanage bank balance sheets and activities and to reduce much of the examination process to a compliance exercise focused on procedural box-checking," he said. He expressed concern about supervision that prizes "risk elimination" over risk management. The OCC plans to issue rules to eliminate the use of reputation risk and define key supervisory concepts, like unsafe and unsound practices. "We will also be raising concerns of redundant supervision with the other federal banking agencies, whether around specific topics like cyber or where other agencies are not appropriately deferring to functional regulators as required by law," Gould said.
• Fed: Federal Reserve Vice Chair for Supervision Michelle Bowman provided an update on regulatory efforts, including supervision reform, leverage capital, stress testing, the LFI ratings proposal and payments fraud issues. "My priorities remain refocusing supervision on core and material financial risks, implementing a pragmatic and tailored approach to supervision and regulation, ensuring a path for innovation in the banking system and providing clear and transparent expectations and accountability for both supervision and regulation," Bowman said.
  • Core risks over process: Bowman said the Fed is shifting its supervision focus from process-oriented activities to "those that lead to bank failures" and affect material financial conditions. The Fed will tailor its supervision to specific business models and will not use horizontal exams to "grade on a curve," she said. "We will no longer hold every bank to the best practices of another bank." She said the Fed has begun work on the CAMELS rating framework in addition to the LFI framework.
  • Stress testing: Bowman noted that the Fed has already issued a proposal to address volatility in stress testing, and "in the coming weeks the Board will also issue proposals to improve stress test transparency, including by seeking public comment on the models and the scenarios used for the test."
• FDIC: Acting FDIC Chairman Travis Hill provided updates on his agency's efforts to overhaul regulation and supervision, including a similar shift in supervision to emphasize core risks over process, working on reforms to the CAMELS ratings system, revamping the FDIC's supervisory appeals process, raising asset thresholds for certain rules, improving the merger review process and modifying other aspects of its examination system. He also noted progress on the FDIC's review of account closures, as directed by the executive order on that topic.

Five Key Things

1. FinCEN Chief Previews AML Reporting Reform at Hearing

At a House subcommittee hearing this week, Treasury Financial Crimes Enforcement Network chief Andrea Gacki discussed forthcoming reforms to anti-money laundering requirements, including the Bank Secrecy Act and currency transaction reports. "One of the key objectives of this administration that we're focused on is is reforming the Bank Secrecy Act regime in the United States to ensure that it is risk-based and focused on the highest threats impacting our law enforcement and national security," Gacki said.

• Usability: Rep. Zachary Nunn (R-IA) emphasized the significant gap between the millions of employee hours spent filing currency transaction reports and suspicious activity reports, and the small number that prove useful to law enforcement investigations. Gacki said the reports do serve useful purposes, but acknowledged the potential for improvements. "We should be collecting information that is truly important to law enforcement and national security," Gacki said at the hearing. "To the extent that requires adjustments of the types of information that we ask for to simplify the forms and the thresholds, we are actively exploring that and hoping to bring it to conclusion as soon as possible." Some committee members pressed her on the actionable intelligence provided by the current reporting regime. Rep. Nunn asked: "How many arrests were made as a result of this reporting? Can you just give me a
  number?" Gacki responded: "Sir, I'm sorry, I don't have the number off the top of my head."
• Beneficial ownership rule: FinCEN is reviewing comments on a March interim rule that limited beneficial ownership reporting requirements to foreign companies and their foreign owners. FinCEN plans to finalize the interim rule later this calendar year, Gacki said. The beneficial ownership rule has garnered court challenges.

2. Senate Panel Advances Miran Nomination

The Senate Banking Committee on Wednesday voted 13-11 on party lines to approve the nomination of Stephen Miran to the Federal Reserve Board of Governors. Miran's nomination now awaits a floor vote by the full Senate. Miran currently serves as chair of the White House Council of Economic Advisors. Miran has been nominated to replace Adriana Kugler, who departed short of her full term.

3. House Lawmakers Eye FDIC Resolution Framework

During a House Financial Services Committee's Financial Institutions Subcommittee hearing this week on bank funding and resolution issues, lawmakers discussed reforms to the FDIC's resolution process for bank failures. Lawmakers examined the consequences of the agency's response to the 2023 bank failures and considered potential reforms to the FDIC's bidding process for failed banks.

• 'Clear guidance' needed: Rep. Andy Barr (R-KY), the subcommittee's chairman, said the FDIC's response to the 2023 bank failures created "unnecessary uncertainty at a time when clear guidance was especially necessary." Barr called for a bidding process that enables banks of all sizes, including community banks, to participate fairly.
• 'Handcuffs' on funding: Lawmakers also discussed the benefits of access to diverse funding sources, including brokered, reciprocal and custodial deposits. A "current misalignment in the regulatory treatment" of such deposits has "placed handcuffs on small well-managed financial institutions' ability to sustainably fund themselves, and reform is necessary," Barr said.
• Bidding process: Rep. Bill Huizenga (R-MI) expressed concern about the resolutions of SVB and Signature Bank in 2023, which he said reflected a lack of preparedness on regulators' part. "[It] became abundantly clear, I think, to all of us that regulators were unprepared at that time," he said. "We found, in our investigations, that the FDIC, ultimately, picked winners and losers when it came to resolving these bank failures, sometimes very last minute.
• Bigger picture: Barr highlighted the need for tailored regulation, including the capital framework.

4. Gould: OCC Will 'Chart a Path' to Ensure Banks Can Work Safely with Crypto

At a CoinDesk conference this week, Comptroller Jonathan Gould emphasized that the OCC will enable banks to engage with digital assets in a way that preserves safety and soundness, overhauling the agency's previous, reflexively restrictive approach. "I view a lot of what crypto represents, as well as using the technology and processes underlying it, as being inherent to financial intermediation services," Gould said. "We're going to take a step back to see if we're going to work much more closely with those who are interested in doing these activities, and we're going to chart a path to ensure you can do it in a safe and sound manner. That is our obligation as supervisors and regulators when you're engaged in legally permissible activities.

5. OCC's Gould Reiterates Account Access Review

At the CoinDesk conference, OCC Comptroller Jonathan Gould reiterated an announcement the OCC made on Monday that it is reviewing "politicized or unlawful debanking." The agency issued a bulletin clarifying that it will consider such activity in licensing filings and Community Reinvestment Act assessments, while also indicating that additional details would be provided in the normal course of updating manuals.

Bank supervision is broken. There are 5 steps to fix it.

These steps include addressing regulatory overreach and repealing illegal guidance. Policymakers should ensure banks are only subject to rules issued through the transparent, legal process.

Learn more at BetterBankSupervision.com.

BPI Adds 3 New Hires to Support Government Affairs, Regulatory Policy Efforts

BPI on Friday announced the hiring of three new staff members on BPI's Government Affairs and Regulatory and Policy Affairs teams. The new hires are Kristin Royster, Senior Vice President of Technology, Security and Resilience Strategy (starting Sept. 17); Devina Khanna, Vice President of Government Affairs (starting Sept. 22); and Jeffrey Luther, Vice President of Regulatory Affairs (starting Oct. 6).

"These new hires help support BPI's depth and range of expertise at a critical moment for banking policy. Their experience and knowledge across the public and private sectors will equip them to advance BPI priorities through Capitol Hill engagement, regulatory advocacy and strategic policy development. We are excited to welcome Kristin, Devina and Jeffrey to the team," said BPI President and CEO Greg Baer.

Kristin Royster joins BPI following 13 years at Bank of America. Kristin will focus on critical infrastructure policy, including cross-sector engagement, public-private partnerships and operational resilience and third-party risk management. She most recently served as a Senior Vice President and Information Security Executive at the bank, where she managed its partnerships with government stakeholders, trade associations and other external partners on cybersecurity, advised the Chief Information Security Officer on policy and communications and engaged with federal policymakers on cybersecurity issues. Prior to her work in the industry, she spent several years in the U.S. Department of Homeland Security, most recently as Director of External Affairs for the department's Office of Cybersecurity and Communications.

Devina Khanna joins BPI from the office of Rep. Stephen Lynch (D-MA), where she served as Economic Policy Advisor to the Congressman, who serves on the House Financial Services Committee and is ranking member of the Digital Assets and Fintech Subcommittee. Devina will support BPI's engagement with the Hill on issues of importance to the industry. She previously worked for the Financial Health Network, the Consumer Financial Protection Bureau and BlackRock.

Jeffrey Luther most recently served as an associate in Covington & Burling's Financial Services and Corporate practice groups, covering M&A, capital markets transactions, corporate governance and regulatory advocacy, among other matters. Previously he served as a clerk for Vice Chancellor Nathan Cook on the Delaware Court of Chancery, an associate in Sullivan & Cromwell's Financial Institutions Group, and an examiner at the Federal Deposit Insurance Corporation. Jeffrey will focus on a range of prudential and regulatory policy issues. He is a graduate of the University of Pennsylvania Law School and the University of Missouri.

The announcement on Friday builds upon the three new additions to BPI's research team, which BPI announced in late July. These new hires enable BPI to further support its mission of using data and research to shape sound policy.

In Case You Missed It

Fed to Host Payments Innovation Conference

The Federal Reserve will host a conference on payments innovation on Oct. 21, the central bank announced this week. The conference will feature panel discussions on topics such as "the convergence of traditional and decentralized finance; emerging stablecoin use cases and business models; the intersection of artificial intelligence and payments; and the tokenization of financial products and services."

The Crypto Ledger

Here's what's new in crypto.

• Market structure: Late last week, Senate Republicans finalized a full draft of updated crypto market structure legislation, according to POLITICO. The bill would divide crypto oversight between the SEC and CFTC. A key difference in this draft bill from a House-passed version of market structure legislation is the plan to create a new category of digital assets called "ancillary assets" that are not securities.
• Democrats on market structure: A group of Senate Democrats this week outlined what they hope to see in a crypto market structure bill. The memo from Sens. Ruben Gallego (D-AZ), Mark Warner (D-VA), Kirsten Gillibrand (D-NY) and others outlines consumer protection and illicit finance provisions, such as AML/CFT requirements. The senators' framework requests that legislation should: "Preserve the intent of the GENIUS Act prohibition on interest or yield paid by stablecoin issuers, including indirectly or through affiliates."

Traversing the Pond

Here's the latest in international banking policy.

• Capital: German proposals to simplify banks' capital stacks are sowing disagreement in the EU amid the European Central Bank's efforts to streamline bank regulation, according to Bloomberg. One idea sparking concerns is the proposal to compress a buffer set by the ECB and a buffer set by the national authority into one. "For some officials at the ECB, that stokes fears of an outcome where national authorities are in the driving seat and capital requirements will become less harmonious across the euro zone," Bloomberg reported. "Some national authorities fear the opposite outcome could leave them with less capacity to introduce capital requirements tailored to their countries' circumstances."
• Donnery on simplification: ECB supervisory official Sharon Donnery outlined the central bank's efforts to simplify banking oversight in a blog post this week. Efforts include reforming annual assessments, refining the methodology for determining Pillar 2 requirements and reforms to stress testing. Donnery emphasized that simplification does not entail lighter-touch oversight.
• Draghi reiterates call to action: Former ECB President Mario Draghi repeated his call to promote European competitiveness in the global economy. A year after Draghi issued his policy recommendations, only a handful of them have been introduced, according to POLITICO.
• ESMA market risk report: The European Securities and Markets Authority issued its second risk monitoring report of 2025 this week. The report flags geopolitical risks in particular as a source of volatility.
• EC strategic foresight report: The European Commission released a "strategic foresight" report this week, outlining eight priority areas to strengthen the EU's resilience, including economic autonomy, technological leadership, sustainability and safeguarding democracy.

PNC Acquires FirstBank, Expanding Presence in Colorado, Arizona

PNC this week announced an agreement to acquire FirstBank Holding Company, including its subsidiary FirstBank, which is headquartered in Lakewood, Colorado. The acquisition will grow PNC's footprint in Colorado and Arizona. "The addition of FirstBank's strong presence in these fast-growing markets will reinforce PNC as a leading national bank in the United States," PNC said in a press release.