BPInsights: October 11, 2025

FDIC, OCC Proposals Advance Banking Agencies' Supervision Reform Efforts

The FDIC and OCC on Tuesday issued a joint proposal to clarify and narrow two important supervisory measures and terms, a significant step forward in the banking agencies' broader efforts to refocus bank supervision on core financial risks. The proposal would define the term "unsafe or unsound practice" and establish uniform standards for issuing Matters Requiring Attention to banks. It would define an "unsafe or unsound practice" to focus on practices that are likely to present a material risk to a bank's financial condition. This definition would set a common standard for how regulators issue enforcement actions under Section 8 of the Federal Deposit Insurance Act, and would provide a baseline for regulators' use of MRAs as described below.

The MRA proposal would similarly focus bank supervision on material risks by permitting examiners to issue an MRA to address activities that could reasonably present a risk of material harm to the institution or violations of banking and banking-related laws and regulations. An MRA is a supervisory communication demanding that a bank rectify a problem - a tool often used to dictate bank business practices based on subjective considerations not based in law, BPI has argued.

"[T]oday, too often, examiners focus on a litany of process-related items that are unrelated to a bank's current or future financial condition," Acting Chairman Travis Hill said in a statement Tuesday. "As a result, today's proposal would focus examiners' attention on supervisory issues that are material to a bank's safety and soundness."

• Reputational Risk. Also on Tuesday, the FDIC and OCC proposed a rule to eliminate reputation risk from bank examination. The proposed rule would prohibit the agencies from "criticizing or taking adverse action against an institution on the basis of reputation risk." Taking aim at the issue of "debanking" or account closures, the proposal would also ban the agencies from "requiring, instructing, or encouraging an institution to close an account, to refrain from providing an account, product, or service, or to modify or terminate any product or service on the basis of a person or entity's political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of politically disfavored but lawful business activities perceived to present reputation risk." The action codifies an already-announced change that has already modified examination manuals at several agencies, including the Federal Reserve, earlier this year.
• BPI Statement. BPI expressed support for the joint unsafe or unsound practices and MRA proposal in a statement on Tuesday, saying that the proposed rule "should help to refocus the examination process on material financial risks. Furthermore, it seeks public comment on how best to do that - in contrast with a previously opaque process. Thankfully, and to make them truly effective, these proposed reforms will be accompanied by reform of the LFI rating system for holding companies - already proposed by the Federal Reserve Board - and the anticipated revisions to the CAMELS rating system for banks."

Five Key Things

1. FinCEN Introduces Changes to Improve Banks' Ability to Combat Financial Crime

The Financial Crimes Enforcement Network, in collaboration with the Federal Reserve, FDIC, NCUA and OCC, on Thursday released four FAQs to clarify Bank Secrecy Act reporting requirements surrounding structuring Suspicious Activity Reports (SARs), Continuing Activity Reviews and documentation for non-SARs.

This development is the first major rationalization of the regime since it was created. The changes seek to modernize the process for filing SARs to help banks more effectively combat crime by focusing activities away from check-the-box compliance exercises and toward more effective measures that yield results for law enforcement and national security officials, like deploying AI.

Among the changes, structuring SARs are no longer tied solely to an arbitrary $10,000 transaction limit. Instead, financial institutions are encouraged to file a structuring SAR if they have additional knowledge, suspicion or reason to suspect that transactions are designed to evade reporting requirements. The changes also exempt banks from ineffective reporting requirements, such as the need to document the decision not to file a SAR, among others. BPI expressed support for the changes in a statement issued shortly after the announcement.

• On structuring, the FAQs note that FIs are only required to file if there is knowledge, suspicion, or reason to suspect that transactions are designed to evade reporting requirements. Without this knowledge, there is no requirement to file a SAR.

• On CARs, they note that the interpretation of the 2000 FinCEN administrative relief has been misinterpreted and seek to clarify that FIs are not required to conduct separate reviews (including manual) of a customer/account after filing a SAR to determine whether suspicious activity has continued.  There is a separate FAQ on CAR timelines.
• The fourth FAQ states there is no requirement to document the decision not to file a SAR, and that this requirement is nowhere under the BSA or implementing regs.  This was publicly stated in Under Secretary Hurley's past speech, so it's good to see now that it has come through in writing.

2. A Strategic Disadvantage: Cyber Defense and the Expiration of the Cybersecurity Information Sharing Act

Front-line defenders of U.S. cybersecurity are missing a crucial piece of their toolkit after the expiration last week of legislation that enabled banks and other companies to share cyber threat information and strengthen their resilience to attacks, BPI's Pat Warren wrote in an American Banker op-ed this week. The Cybersecurity Information Sharing Act, enacted in 2015, removed legal barriers to safe communication between companies about security threats, and provided vital protections and privacy guardrails preventing the use of data for other purposes. "The authorities codified by this law have become essential to the underlying fabric of public-private collaboration to combat emerging cyber and national security threats," Warren wrote in the op-ed. Without the sharing framework that this law enabled, the financial system is more isolated in facing threats and therefore more vulnerable to exploitation.

3. Coinbase Seeks OCC National Trust Charter

Crypto exchange Coinbase has applied for an OCC national trust charter, joining Circle, Ripple and other crypto firms that have sought federal banking charters. The crypto firm aims to expand its custody services, but a Coinbase statement suggested its ambitions stretch further than that business line: "If approved, the charter would continue to open up opportunities for Coinbase to launch new products beyond custody, including payments and related services, with the confidence of regulatory clarity, fostering broader institutional adoption," said Vice President of Institutional Product Greg Tusar.

• BPI View. BPI has long expressed concern about crypto and fintech firms obtaining access to banking system benefits without banks' full slate of regulatory protections and obligations.
• In Related News: Coinbase Tells Some Customers "No More Rewards." Coinbase reportedly notified customers by email this week that it will reduce "rewards" to 0% for customers who are not subscribed to its paid subscription service known as Coinbase One. The announcement sparked criticism online, with some accusing Coinbase of "bailing itself out by stealing its users' 'rewards.'"

4. McKernan Confirmed to Treasury Position

Former FDIC Director Jonathan McKernan was confirmed this week by the Senate as Treasury Under Secretary for Domestic Finance, a key oversight role for the Treasury market and fiscal policy. In addition to McKernan's confirmation, the Senate confirmed other senior Treasury officials: Brian Morrissey to be general counsel, and Francis Brooke to be assistant secretary for international trade and development. This week, Treasury Secretary Scott Bessent also announced Derek Theurer as acting deputy secretary.

5. Fed Appeals Corner Post Interchange Fee Ruling

The Federal Reserve Board this week filed a notice of appeal in the Corner Post case in North Dakota federal court, appealing the district court's ruling that the Fed acted outside its authority by issuing a regulation governing debit interchange fees. The district court judge ruled that the Fed's interchange fee rule, known as Regulation II, improperly established a one-size-fits-all fee cap and unlawfully considered certain cost categories in setting the cap.

• BPI View. BPI and The Clearing House, which had filed an amicus brief in the case, issued a statement upon the August district court ruling: "We are severely disappointed in the Court's interpretation of the Durbin Amendment. The payment system is secure, convenient and reliable because of significant investment by banks, and today's decision, if affirmed, would undermine that system. It would disincentivize innovation and perpetuate a misguided notion that banks should be forced to offer products and services without being able to recover the costs necessary to sustain those investments. We will evaluate the Court's decision and continue to pursue every avenue to ensure that banks can recover their costs and reasonable return, as the Durbin Amendment itself provides."
• Courts Split. Another federal judge in Kentucky in a separate recent case ruled in favor of the Fed's rule.

In Case You Missed It

Senate Overwhelmingly Rejects NDAA Amendment Prohibiting Interest on Reserve Balances

The U.S. Senate voted late Thursday night on an amendment to the National Defense Authorization Act - the annual measure that establishes the budget for national security funding - that would prohibit the Federal Reserve from paying interest on reserve balances. The amendment, introduced by Senator Rand Paul (R-KY), was overwhelmingly rejected by a vote of 83-14. BPI issued a statement following the vote:

"Prohibiting the Federal Reserve from deploying one of its key monetary policy tools would have drastic economic repercussions and ultimately cost American households and businesses by making credit less accessible and more costly. We appreciate the Senate for rejecting this harmful policy that would impose costs, not savings, on the American taxpayer. Major policy decisions that affect the banking sector's ability to support the economy and the Fed's ability to conduct monetary policy should be heavily scrutinized under regular order." - Erik Rust, Senior Vice President & Head of Government Affairs

For more on why prohibiting interest on reserve could severely harm the economy, please see here.

Senate Revisits Effort to Increase FDIC Insurance Limit

Senators Bill Hagerty (R-TN) and Angela Alsobrooks (D-MD) renewed efforts on Friday to increase the FDIC insurance limit for noninterest-bearing transaction accounts. The latest draft legislation aims to increase the insured limit for each depositor from $250,000 per depositor, per bank to $10 million. The proposal would be phased in over 10 years, exclude U.S. GSIBs and U.S. branches of foreign banks from additional insurance coverage and exempt financial institutions under $10 billion in assets from higher or special assessments to cover costs associated with this added benefit.

A previous version of this proposal from Senators Hagerty and Alsobrooks, offered as an amendment to the NDAA, would have increased the insured limit to $20 million rather than $10 million, and would've applied to banks with less than $250 billion in assets.

The Crypto Ledger

Here's what's new in crypto.

• Stablecoin Tied to Russia Sanctions Evasion. The Kremlin-backed stablecoin A7A5 has moved at least $6 billion since August, when entities connected to it were blacklisted, demonstrating the role of crypto in Russian sanctions skirting, according to the Financial Times.
• BoE Exemptions. The Bank of England plans to grant certain exemptions to proposed limits on businesses' stablecoin holdings, according to Bloomberg. The BoE may grant waivers to crypto exchanges that need to hold large amounts of stablecoins and allow firms to use stablecoins in settlements for its Digital Securities Sandbox.
• SEC Innovation Exemption. The SEC "innovation exemption," a framework designed to allow digital asset firms to experiment with blockchain-based services within the U.S., is a "top priority" for the agency that could be finalized this year, according to Chair Paul Atkins.

Traversing the Pond

Here's the latest in international banking policy.

• Bailey Flags 4 Challenges Facing Regulators. In recent remarks, Bank of England Governor Andrew Bailey laid out four key challenges facing financial policymakers today: The danger of complacency (the "Minsky moment" of memories of crises fading and history repeating itself); how to address an overly complex regulatory system amid calls for simplification; unpacking regulation's effects on competitiveness; and regulation's impact on economic growth.
• Lagarde Recommends Strengthening Nonbank Oversight. ECB President Christine Lagarde urged policymakers to strengthen regulation and supervision of nonbanks. "[B]etter supervision of non-banks would make potential financial stability risks that have lain dormant in darker corners of the economy more visible, allowing policymakers to pre-empt them," Lagarde said in a recent speech in Amsterdam. She suggested this heightened nonbank oversight as an alternative to "lowering standards for banks," recommending instead "levelling them up for non-banks that are involved in bank-like activities, or with significant links to the banking sector."
• EU Capital Proposals. French regulators are proposing to streamline capital requirements for the largest eurozone banks to level the playing field with U.S. competitors, according to Reuters. The proposal, which will feed into the ECB's simplification efforts, would merge the total loss-absorbing capacity requirement with Europe's Minimum Requirement for own Funds and Eligible Liabilities (MREL) to create a single risk-based requirement. The plan comes on the heels of a similar simplification proposal from Germany and a Bloomberg report that the U.S. is seeking to end the capital treatment of the EU as a single domestic market in banks' cross-border exposure assessments.
• EBA Outlines Goals and Priorities for Next Year. The European Banking Authority last week released its Work Programme for 2026, outlining its priorities for the coming year, which include "developing a rulebook which contributes to an efficient, resilient and sustainable single market; ii) performing risk assessments with tools, data and methodologies which support effective analysis, supervision and oversight; [and] iii) tackling innovation to enhance the technological capacity of all stakeholders."
• ECB Eyes Leadership Shakeup. The ECB will replace two-thirds of its top leadership as several of its Executive Board members' terms end over the next two years. Potential candidates to replace No. 2 official Luis de Guindos, whose term ends in May 2026, will create the next vacancy, include the Bank of Finland's Olli Rehn, Portugal's Clara Raposo and Greece's Christina Papaconstantinou, according to Bloomberg.

'Innovation Never Sleeps': Synchrony CEO Brian Doubles on How Restlessness Drives Success

In a recent interview with Fast Company's Stephanie Mehta, Synchrony CEO Brian Doubles described how he is driving innovation while staying true to the bank's core values. Read the Modern CEO feature here.

Fifth Third to Acquire Comerica

Fifth Third Bancorp and Comerica Inc. have reached an agreement under which Fifth Third will acquire Comerica in a $10.9 billion all-stock transaction. The combination will create the 9th largest U.S. bank with approximately $288 billion in assets.