BPInsights: September 19, 2026

Bowman Previews Stress Test Changes

Federal Reserve Vice Chair for Supervision Michelle Bowman previewed forthcoming changes to U.S. stress tests in a Mansion House speech in London on Friday. The outlined changes mark a culmination of multiple years of work to enhance the transparency and reduce the volatility of the stress testing framework, in line with a BPI legal challenge in 2024 that called for subjecting the tests' scenarios and models to public comment. "In finalizing these reforms, we will finally close the book on an opaque and unnecessarily unpredictable framework," Bowman said. "We can soon begin anew with a framework that complies with U.S. administrative procedure laws, that better promotes the stability of our financial system, and that better ensures the safety and soundness of our largest banks."

• Two Final Rules. Bowman previewed two forthcoming final rules - one that would subject the stress test models and scenarios to public comment, and one that would aim to reduce volatility in capital requirements by averaging the results of a bank's two most recent stress tests. She noted two significant recommendations received on these rules - to establish a specific date to freeze bank balance sheets prior to the release of proposed scenarios shortly thereafter; and to incorporate two Global Market Shock scenarios on the same as-of date, calculating the stress capital buffer with the larger loss.
• Models. Bowman plans to recommend considering a third proposal to revise the 2027 stress test models, seeking comment on a revised model for noninterest income. "This model would better capture business diversity across firms and would replace the existing noninterest income model for the 2027 stress test," she said.
• 'Expanded Approach.' Bowman described an "expanded approach for stress testing" that would make it "a more effective tool for identifying firm-specific vulnerabilities under various economic and financial scenarios." These exercises would not be used for setting capital requirements, but would aim to identify risks and vulnerabilities as they build up in the early stages. Tactics could include scenario analyses informed by additional scenarios to test banks' balance sheets and an "open dialogue" between supervisors and banks. "I believe there is tremendous value in comparing notes," she said. Bowman cited Silicon Valley Bank's failure as an example where such an approach would have been effective. The Fed may also consider "reverse stress testing," in which banks design a stress scenario, which would then provide regulators insights into risk management and liquidity.
• Liquidity Proposal. During a Q&A session on Friday, Bowman indicated that a liquidity proposal will be issued in the fall.
• Bottom Line. Bowman emphasized the purpose of these reforms: strengthening transparency and risk-sensitivity.

Five Key Things

1. Clarity Act Cloture Vote Fails to Proceed

A procedural vote to advance the Clarity Act crypto bill for Senate consideration failed to garner sufficient support this week. The Senate voted 49-50 not to open debate on the bill, with three Republicans and all Democrats opposing. 60 votes were needed to move forward. BPI issued a joint statement alongside other trade associations, reiterating concerns about the bill's provisions on stablecoin yield payment. The failure of the cloture vote largely hinged on Democrats' view that the bill contained inadequate ethics language to prevent government officials from profiting from crypto.

2. Initial Findings from Fed's Independent Review of Silicon Valley Bank

Vice Chair for Supervision Michelle Bowman previewed the initial findings of the Federal Reserve's independent review of the failure of Silicon Valley Bank. The review was conducted by Starling Advisory Group and examined whether the Fed's examiners identified the bank's vulnerabilities well in advance; if so, why they failed to take prompt action to require SVB to remedy those deficiencies; and whether supervisory actions or inactions contributed to SVB's failure. Here are some highlights of the report.

• Causes of Failure. SVB failed "as the result of a confluence of vulnerabilities," including unrealized losses on its securities portfolio that exceeded its capital; a highly concentrated, largely uninsured deposit base; and a lack of readiness to borrow from the discount window. The supervisory staff "knew, or should have known, about these vulnerabilities as early as March 2022," according to the Fed's release. One factor in supervisory inaction was a longstanding culture of risk aversion and uncertainty on "decision rights" among supervisory staff that compounded that bias toward inaction.
• Failure to Act. Supervisory staff did not take prompt and decisive action to encourage or require SVB to reduce interest-rate risk or concentration of vulnerabilities, according to the report. Delays in action were not caused by tailoring rules "or by any directive or suggestion from the former Vice Chair for Supervision to reduce the intensity of supervision," the report stated.
• Role of Social Media. Contrary to some postmortem analyses, social media did not fuel the run at SVB, according to the report.
• 'Promptly and Decisively.' "The American people deserve a banking system that is safe, sound, and resilient," Vice Chair Bowman said in a speech Friday outlining the initial findings. "They deserve supervisors who constantly assess the banking system to identify vulnerabilities and have the will to act promptly and decisively when material vulnerabilities are identified. And they deserve leaders who are unafraid to examine their own shortcomings with the same rigor we apply to the institutions we supervise."

3. Fed Bank-Monitoring Database Suffered Outage Last Month

A Federal Reserve database for monitoring banks suffered a temporary outage last month, prompting concern from Sen. Elizabeth Warren (D-MA), the Banking Committee's ranking member. The system, known as the National Information Center, was affected on both the internal side and the public website, according to the Wall Street Journal. The Journal also reported that Fed's discount window was affected by the outage.

4. Bessent Previews Changes to AML Reporting Thresholds

At a House Financial Services Committee hearing this week, Treasury Secretary Scott Bessent previewed forthcoming revisions to reporting thresholds for key anti-money laundering forms. Banks must file currency transaction reports for cash transactions over $10,000 or for suspected illicit activity that exceeds other thresholds of $5,000 for banks or $2,000 for money service businesses, depending on the circumstances. Bessent suggested the revisions could involve raising the thresholds, which have not been updated in decades, and providing flexibility based on the duration of client relationships. "We are in the midst of this, and as always, we will be looking after our smaller financial institutions, small banks and community banks, to obviate any excess expense … while maintaining the safety and soundness of our financial system," Bessent said. He characterized the issue as a priority.

5. BPI Raises Concerns with Zerohash Trust Charter Application

BPI flagged concerns to the OCC in a letter this week about fintech firm Zerohash's reapplication for a national trust bank charter, which appears to reflect minimal changes after the application was returned to the firm because of major deficiencies. Zerohash's initial application was returned for unknown problems, and the firm subsequently filed a revised application, which was apparently near identical, except the addition of the word "fiduciary." The new application does not explain how the settlement, clearing and escrow services that the trust bank would provide would be fiduciary in nature or how they differ from those described in the application that was sent back. The letter urges the OCC to ensure that Zerohash's activities would be legally permissible for a national trust bank.

In Case You Missed It

FDIC Proposes Merger Changes

The FDIC on Thursday proposed several significant changes to its merger review framework. The proposal would streamline M&A application processing timelines for simpler deals and require the FDIC to identify an incomplete filing in writing within 21 days of receipt (to avoid applications languishing in limbo). It would also include changes to competition analysis, including counting credit union deposits in the competition screening. It would also add a new "fair banking" element to the convenience and needs factor that applies only to larger banks.

The Ledger

Here's what's new in digital assets.

• SEC Moves Forward with Innovation Exception. The SEC cleared the way this week for trading venues to offer tokenized stocks in the U.S. The move follows the failure this week of the Clarity Act to advance through procedural steps in the Senate. Certain investors are already able to access tokenized money market funds and commodities in the U.S., but the tokenized stocks measure broadens the technology to the equity market.
• CoinEx Shuts Down After Iran Activity. Crypto exchange CoinEx, a hub for Iranian crypto transactions, announced it was going out of business this week. The firm cited a "prolonged downturn in the cryptocurrency market and rising compliance costs," according to the Wall Street Journal.
• Bitcoin, Crypto Stocks Dive After Clarity Stalls. Following the failed cloture vote on the Clarity Act, Bitcoin and Ether sank significantly, according to Bloomberg. The stocks of Coinbase and Circle also sank as much as 8 percent.
• CFTC Unveils Crypto Proposal. Similarly, the Commodity Futures Trading Commission sent a proposal to the White House's Office of Management and Budget for review, signaling a new rulemaking in the wake of the stalled Clarity Act. The CFTC proposal lays out a framework to regulate crypto transactions and markets.

Traversing the Pond

Here's the latest in international banking policy.

• EU Competitiveness Communication Follow-Up. This week, BPI filed a follow-up response to the European Commission's recent Communication on banking competitiveness. "The Communication rightly highlights several challenges affecting the competitiveness of the banking sector and sets out several constructive avenues for work," BPI said in a statement. "The diagnosis is correct, but the prescription should account for the cumulative effect of overlapping supervisory and regulatory measures on banks' ability to support investment and growth."
• Albuquerque Calls for Single Bank Reg Package. EU financial services commissioner Maria Luis Albuquerque this week rejected banks' call to split a European bank regulatory reform package into two parts. Banks had urged the EU to act first on capital and other "simplification" reforms and later address deposit insurance overhauls, rather than tackling all the changes simultaneously. "If we really want to do something meaningful we need to look at this as a package because everything is connected," Albuquerque said.
• Knot Wins French Support to Succeed Lagarde. Dutch central banker Klaas Knot has gained support from France to succeed Christine Lagarde as head of the European Central Bank, according to Reuters. However, Knot's nomination may face resistance from Germany, the article said.
• UK Crypto Crackdown. The UK's Financial Conduct Authority took action against illegal peer-to-peer crypto trading in London, targeting three firms suspected of running unregistered crypto businesses, which can be used for money laundering and other illicit finance purposes.

Member News

U.S. Bank Launches Stablecoin

U.S. Bank last week announced a successful pilot transaction using USBDC, its proprietary U.S. dollar-backed stablecoin. The transaction involved a cross-border payment between U.S. Bank entities in North America and Europe.

Upcoming Events

• 9/23/2026: Georgetown Psaros Center Financial Markets Quality Conference
• 9/24/2026-9/25/2026: Philadelphia Fed 10^th Annual Fintech Conference, Featuring BPI CEO Greg Baer
• 10/13/2026-10/16/2026: DC Fintech Week