BPInsights: October 17, 2026

Fed's Bowman Takes Stock of Post-SVB Supervision

In a speech on Wednesday, Federal Reserve Vice Chair for Supervision Michelle Bowman highlighted recent supervision restructuring efforts and takeaways from the independent review of Silicon Valley Bank's failure.

• Timely Action. Effective bank supervision depends on timely action, Bowman said - a key takeaway from the SVB review. When examiners identify vulnerabilities as they emerge, banks have more flexibility to address them, she said. "At the point when weakness emerges, a bank can often gradually reduce exposure, strengthen its liquidity position, improve contingency planning, or raise capital under normal market conditions," she said. "But where supervisors perpetually delay communication or action-to continually wait for additional evidence, more concurrence, or another committee meeting-supervision bogs down and loses effectiveness."
• Process and Procedure. The review found that "supervisory attention at SVB often centered on process, procedure, governance, and controls rather than on mitigating the underlying interest rate and liquidity exposures," Bowman noted. The lack of focus was reflected by SVB's 54 Matters Requiring Attention or Matters Requiring Immediate Attention, none of which required the bank to mitigate core risks, she said. "In other words, a supervisory organization can be extremely busy and still fail to focus sufficiently on the risks that matter most."
• Restructuring Supervision. Bowman described a restructuring of the central bank's supervision function that she had outlined last week. The Fed is considering ways to improve its supervisory decision-making framework, with the goals of allocating responsibility and authority clearly and directly between the Federal Reserve Board and Reserve Banks, clarifying decision rights for examiners and leadership and ensuring "direct escalation channels from examination teams to senior supervision leadership."
• Global Implications. International regulatory bodies like the Basel Committee on Banking Supervision and the Financial Stability Board should prioritize the most salient risks and remain "data driven," Bowman suggested. She warned against such organizations "simply accepting data and analysis without rigorous validation," which can build international standards on "flawed foundations."

Five Key Things

1. President Calls Fed's Cook to White House Hearing

President Donald Trump has summoned Federal Reserve Governor Lisa Cook to a White House hearing on Nov. 5, the latest development in a long-running attempt to remove Cook from the central bank's board. The Supreme Court held in a June opinion that Cook may remain in her job while her legal challenge to Trump's attempt to oust her advances. Trump initially tried to dismiss Cook in August 2025, accusing her of lying on mortgage applications; Cook filed a legal challenge in response and has denied the allegations. This week, Cook's attorney said the governor will be unable to attend the hearing due to official travel.

2. FDIC's Hill on Stablecoins, GENIUS

At the DC Fintech Week conference this week, FDIC Chairman Travis Hill previewed key stablecoin issues that the agency is considering as it prepares a final rule implementing the GENIUS Act. Commenters on the FDIC's proposal gave feedback on permissible activities for stablecoin issuers, reserve assets, resolution and tokenized deposits, among other issues, Hill said. "Those are a few examples of some of the types of questions that we got a lot of feedback on, that we're grappling with, as we move to the final rule," he said.

• Many Moving Pieces. GENIUS Act implementation involves "a lot of different rulemakings that are all sort of happening in parallel," Hill noted. The FDIC is coordinating closely with the OCC, which issued its proposal first, he said. The OCC's final rule implementing the GENIUS Act is expected "in the very near term," before the end of October, Comptroller Jonathan Gould said this week at a Milken Institute event.
• Deposits and AI Agents. The effect of agentic AI on bank deposits is "something we're certainly watching very closely," Hill said. "I think there's an open question about to what extent are people and businesses going to delegate the decision-making authority to these types of tools to be able to move their money around," he said. "That's something that may happen over time, but how quickly does that happen, and how pervasive is it? I mean, I think those are really the key questions, and it's worth also noting that there's a significant portion of deposits across the system that are business accounts, and those businesses have a lot of reasons for why they choose the banking relationships that they choose. And again, the question is: Are those treasurers of those corporations going to rely on these types of tools to be moving their money around and changing their banking relationships?"
• Third Party Risk Management. The third party risk management guidance issued in 2023 "has presented a number of challenges," Hill said, including a lack of clarity on how banks should apply that guidance across different types of partnerships. A recent proposal that would replace the guidance "is intended to kind of raise it up … to a bit of a higher level, and emphasize the fact that whatever frameworks are in place need to be tailored to the specific relationships."
• Resolution Timing. Hill discussed how the opening hours of payment rails affect bank resolutions, which ideally would happen over a weekend when markets are closed. "If money is moving 24 hours a day, and there is no decline in the volume of transaction, and so there's basically no end of the day on Friday, that would make things more challenging in terms of when you kind of shut the door on the institution," Hill said. "But again, the fact that payment rails are only open certain hours, I think, is only one factor in when activity slows down, because again, most of the world still operates on some sort of business hours where there is a slowdown at a certain time of the day."

3. What Is Confidential Supervisory Information?

The FDIC and the OCC have proposed updates to expand the circumstances in which banks may share their own confidential supervisory information without obtaining prior regulatory approval. Banks must be able to protect CSI while ensuring the right people have access to the information needed to manage risk, address supervisory concerns and run their organizations effectively. While BPI supports many aspects of these proposals, further adjustments would strengthen the overall framework.

What BPI is recommending:

• Define CSI clearly and precisely so institution-generated materials do not become CSI merely because they are reviewed by the FDIC or OCC.
• Update confidentiality rules by replacing prescriptive requirements with a principles-based framework.
• Revise the framework for disclosure to affiliates, service providers, prospective senior officers and participants in M&A transactions.
• Expand third-party categories that may receive CSI without prior agency approval.
• Provide procedural protections, including notice and an opportunity to object before an agency makes a discretionary disclosure of an institution's CSI.
• Align regulations across the federal banking agencies by working together with the Federal Reserve.

4. Foster, Casten Reportedly Eyeing Top HFSC Democratic Slot

Reps. Bill Foster (D-IL) and Sean Casten (D-IL) are vying for the top Democratic position on the House Financial Services Committee, challenging Rep. Maxine Waters (D-CA), according to media reports this week. Foster is the ranking member of the Subcommittee on Financial Institutions.

5. The Ledger

Here's the latest in digital assets.

• Tethered. A Wall Street Journal investigative piece this week alleged that a company co-owned by Bo Hines, a White House crypto adviser, received millions of dollars from stablecoin issuer Tether while he was shepherding the GENIUS Act through enactment. "While Hines was leading the White House's push to pass the Genius Act, Tether-the company with the most at stake in the legislation-was steering millions of dollars to a business he co-owned, according to messages, internal documents and payment records reviewed by The Wall Street Journal," the article said. Tether subsequently hired Hines to run its U.S. operations.
• Patrick Witt Departing. White House crypto adviser Patrick Witt, is departing his position, according to media reports this week. Witt was reportedly going to leave the White House in July to report for National Guard training, but he said at the time that the training had been deferred.
• Crypto Hardware Firm Reviews Policies After Spyware Hack. Crypto hardware provider Ledger SAS is reviewing its policies and procedures after spyware implanted in wallets drained $90 million in stolen crypto, according to Bloomberg this week.

In Case You Missed It

BPI Responds to OCC Banking Access Report

BPI issued the following statement regarding an OCC report that was released on Wednesday on access to banking services.

"The banking industry supports fair access to banking services and has been working to ensure that government regulations and policies enable banks to serve law-abiding customers.

We support efforts to establish clear and consistent standards that promote access while maintaining sound risk management, including the administration's recent efforts to prioritize supervisory attention on material financial risk and rather than reputational risk.

We look forward to continued engagement with the administration and Congress as they consider additional proposals that ensure that political or religious beliefs do not unfairly affect customers' access to banking services."

Traversing the Pond

Here's the latest in international banking policy.

• FSB Releases Liquidity Report. The Financial Stability Board recently published a report concluding that the absence of credible liquidity backstops remains a significant unresolved gap in the global bank resolution framework. About half of covered jurisdictions had material gaps in liquidity backstops compared to the FSB's standard, according to the report. The report strongly supports U.S. and U.K. approaches to liquidity in resolution, on the grounds that they combine operational readiness, taxpayer protection and scalability. In contrast, the report found the European Banking Union insufficient; the single resolution fund is too small and not scalable enough for a GSIB resolution. Large internationally active banks face two key challenges, according to the report: obtaining foreign currency liquidity in resolution, and moving liquidity across borders inside banking groups. To read more, see the report here.
• FCA to Harness AI for Oversight Activities. The UK Financial Conduct Authority plans to become an "agentic regulator," harnessing AI to automate supervision and enforcement activities, according to the Financial Times this week, citing a forthcoming speech by senior official Jessica Rusu that will unveil the regulator's response to the latest frontier AI models.
• BoE Working with Banks on Cyber Defenses. The Bank of England is working with banks to ensure their cybersecurity safeguards are prepared in the event of AI-enabled cyberattacks, according to Deputy Governor Sarah Breeden this week. The BoE is also surveying banks' readiness for quantum computing risks to encryption, and plans to use the results of this survey to inform a system-wide response for the banking sector.
• EBA Chair Previews 'Pragmatic Solutions.' European Banking Authority Chairman François-Louis Michaud previewed upcoming reforms in the EU as part of the bloc's effort to simplify bank regulations. "I'm confident that there will be pragmatic solutions found that can start being implemented already in 2027," Michaud said in an interview this week. The comments came as the European Commission prepares to release a legislative package in 2027 that includes bank regulatory changes to capital and other matters. While some changes require legislative action, others can be made by "drawing on the structures and mandates that exist," Michaud said.
• FSB Seeks Comment on 'Modernization.' The Financial Stability Board recently published a consultation seeking input on eight high-level principles for "regulatory and supervisory modernisation." Themes addressed in the paper include the need to strengthen cost-benefit analysis; to reduce fragmentation and gold-plating; and to address overlapping prudential, macroprudential, supervisory and resolution requirements.
• AI Report. The FSB also published a report titled Sound Practices for Responsible Adoption of Artificial Intelligence (AI) on Thursday. The 12 practices named in the report emphasize the importance of organization-wide AI governance and highlight considerations for managing risks throughout the AI lifecycle. "The sound practices aim to promote coordination, cooperation and information-sharing among financial institutions, supervisors and other stakeholders, within and across jurisdictions, as AI adoption increases," according to the FSB.

Member News

Dimon Warns of Agentic AI Risks

JPMorgan Chase CEO Jamie Dimon cautioned against the risks associated with agentic AI. "If people are using [AI agents], they should understand the risk," Dimon said on an earnings call this week. "There's a liability transfer; they should understand there's a liability transfer. If that is being misused, they should understand it's being misused. So we have to make sure we protect our customer in the right kind of way." He added that "in the meantime, we're not going to allow just any outside agent to come in inside the company because that's just too risky for clients and for JPMorgan."

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