BPInsights: September 6, 2025

Highlights from This Week's Fed Nomination Hearing

The Senate Banking Committee on Thursday held a hearing on the nomination of CEA Chair Stephen Miran to be a governor of the Federal Reserve Board. Miran testified alongside HUD nominees Ben Hobbs and Ronnie Kurtz and Treasury nominees Christopher Pilkerton and Jonathan Burke. Here are some key takeaways from the hearing.

• Basel: Banking Committee Chairman Tim Scott (R-SC) emphasized the need to strike a balance in bank capital requirements. "Every time I heard Jay Powell talk, he said that the amount of [capital] reserves we have was about right, but it kept going up every year," Scott said. Scott named the supplementary leverage ratio and Basel III Endgame as important items on the Fed's capital agenda. Miran said he shared some of Scott's concerns about Basel. "There needs to be a fulsome process at the Fed for thinking about not only the benefits of regulations, but the costs as well," Miran said.
• Independence: Much of the discussion focused on central bank independence, with both sides of the aisle raising particular concerns. Senate Democrats scrutinized Miran's choice to take an unpaid leave of absence from his role as the Council of Economic Advisers while serving on the Fed, while Senate Republicans criticized how the Fed in their view has strayed beyond their core mandate on issues like climate change, DEI and others.
• Supervision, account closures: Sen. Cynthia Lummis (R-WY) questioned where the boundary of central bank independence lies, suggesting bank supervision and payments do not enjoy the same independence as monetary policy. In response to Lummis' comment on that topic, Miran responded, "I do agree that they are different functions." Lummis also alluded to Operation Choke Point and the role of supervision in account closures. "I don't believe that Operation Choke Point was a non-political act," Miran said in response. "If confirmed to the Federal Reserve, I intend to fully respect independence with respect to monetary policy."

Five Key Things

1. Compliance Timing, New Rulemaking: Latest on the 1033 Data-Sharing Rule

Developments in BPI and co-plaintiffs' legal challenge to the CFPB's Section 1033 rule on financial data sharing have continued to advance. This week, the CFPB filed a new brief responding to the plaintiffs' motion to extend the existing compliance dates, asserting its intent to issue a proposal to extend the compliance dates.

• Recap: In late August, the CFPB issued an advanced notice of proposed rulemaking to seek comment on a variety of topics, including the following: the definitions of "consumer" and "representative", the cost of providing data access, the cost of accessing data, market developments since the last proposal, the Bureau's legal authority under the Dodd-Frank Act to write the rule, and data security and privacy considerations. The CFPB will use this information to determine whether to formally propose a new rule. BPI responded to this announcement with a statement.
• Compliance timeline: One important element of the court proceedings and the rulemaking is the timing of compliance with the current rule. BPI has asked the court to delay the current rule's compliance deadlines to prevent the need for banks to build costly systems to comply with the current rule when future rule changes could render those changes unnecessary. If granted, this request would not affect the ongoing rulemaking process. The Financial Technology Association, which has been defending the current rule, filed a brief this week opposing the banking industry's request to delay compliance.
• Key points: BPI has consistently emphasized that the rule violates the statute, and defense of the rule hinges on an overly broad interpretation of "consumer" in the provisions detailing how consumers can access their data. The CFPB does not have authority to require data sharing with commercial entities or ban data providers from charging fees for access. Any new rule on data-sharing should not extend beyond the authority granted to the Bureau by Congress.

2. Industry Groups Call on Congress to Renew Critical Cybersecurity Law Before September 30 Expiration

A coalition of 13 leading trade associations representing all sectors of the U.S. economy called on Congress to extend the Cybersecurity Information Sharing Act before its September 30 expiration date. The groups warned that failing to do so would impede public-private sector coordination during cyberattacks and weaken the nation's cyber defenses amid escalating global threats.

"The current cyber threat landscape highlights the need for consistent public-private collaboration-of which information sharing is a central component," the coalition wrote. "Without the protections codified by this statute, businesses may be less willing to share cyber threat information for fear of legal exposure. Any chilling effect on this information exchange directly benefits the nation-state attackers and cybercriminals seeking to degrade U.S. economic and national security interests."

The Cybersecurity Information Sharing Act was enacted over a decade ago in response to a breach at the Office of Personnel Management. Attacks on both the public and private sector continue, with several recent examples such as SolarWinds, BeyondTrust and the Office of the Comptroller of the Currency email compromise serving as a stark reminder of why renewing this law is so vital to America's cybersecurity readiness.

The law creates a voluntary framework for the private sector and government agencies to share cyber threat information while ensuring data-sharing is secure and complies with strict privacy safeguards. The law also enacts important antitrust and liability protections for companies to share actionable threat indicators.

Legislation to renew the law, led by Chairman Andrew Garbarino (R-NY), passed out of the House Committee on Homeland Security on Wednesday by a unanimous vote of 25-0.

3. eSLR Proposal is Important Step to Rationalize Capital Framework

The banking agencies' proposal to recalibrate the enhanced supplementary leverage ratio is a prudent move to restore the eSLR to its intended purpose and support Treasury market vitality, BPI said in a comment letter last week. Reforms to the eSLR are one piece of a more comprehensive capital overhaul that is necessary, the letter said.

"This proposal marks progress toward a more data-driven approach to capital requirements, which will benefit economic growth. The eSLR should be a backstop, not a binding constraint, and this proposal would help restore that crucial balance. But the eSLR is only one part of the bigger picture, which includes necessary reforms to stress testing, the Basel III Endgame proposal, the GSIB surcharge and the tier 1 leverage ratio. We are encouraged by Vice Chair Bowman's stated goals of considering the cumulative effects of regulatory requirements and questioning if regulations are fulfilling their purpose." - Sarah Flowers, BPI Head of Capital Advocacy

To access the letter, click here.

4. Cyber Agency Delays Incident-Reporting Rule to 2026

The Cybersecurity and Infrastructure Security Agency is delaying implementation of the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA), a law requiring firms in critical infrastructure sectors to report cyber incidents to the government, by six months to 2026. BPI supported the passage of the legislation, but has expressed significant concerns with the proposed rule and has emphasized the necessity of harmonizing duplicative requirements and ensuring the final rule adheres to Congressional intent.

5. Fed Releases Updated Bank Capital Requirements

The Federal Reserve late last week released the updated capital requirements for large banks in the U.S. The requirements will go into effect on Oct. 1, 2025. The individual requirements can be found here.

• Averaging: In an effort to reduce year-over-year volatility, the Fed proposed a rule to average stress test results over two consecutive years when calculating banks' capital requirements. If the Fed finalizes the rule as proposed in April, this year's results will be averaged with those from 2024 and updated requirements will be published separately, the Fed stated in a release. Under the proposal, new requirements would become effective Jan. 1.

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 the latest in crypto.

• Spot crypto trading: The SEC and CFTC issued a joint staff statement this week clarifying that "current law does not prohibit SEC- or CFTC-registered exchanges from facilitating trading" of certain spot crypto asset products.
• Crypto execs sentenced: Two former top executives at bankrupt crypto lender Cred Inc. were sentenced recently to prison time after pleading guilty to conspiracy to commit wire fraud. Former Cred CEO Daniel Schatt was sentenced to four years in prison, while former CFO Joseph Podulka was sentenced to three years.
• Stablecoins in China: China has taken a hard approach to crypto trading, banning the practice in 2021 - but amid the country's ongoing push to reduce dependence on the U.S. dollar, newly enacted Hong Kong stablecoin legislation could provide a path for more stablecoin uptake, the Economist reported.

Traversing the Pond

Here's the latest in international banking policy.

• BoE proposes repo reform: The Bank of England this week released a discussion paper exploring potential bond-market reforms to enhance resilience of the gilt repo market. The paper highlights measures such as expanded central clearing of gilt repo, and minimum haircuts on non-centrally cleared gilt repo transactions.
• Stablecoin risks on ECB radar: ECB President Christine Lagarde emphasized the need to apply "timeless principles to new issues" in financial regulation, citing stablecoins as an example. "At first sight, these entities and activities may seem novel. But we do not need to wait for them to mature to realise that they are reintroducing old risks through the back door," she said in a speech this week. "The categories of risk they create are not new. They are risks long familiar to supervisors and regulators." Liquidity risk is a key risk introduced by stablecoins, she said, calling for the EU's Markets in Crypto-Assets Regulation to close "gaps" in oversight, such as when an EU entity and a non-EU entity jointly issue stablecoins.
• ECB eyes default risk safeguards: The European Central Bank is examining how banks are insuring their loan portfolios against credit default risk and other risks, as well as the effects of those risks on the financial system overall, according to Bloomberg. The ECB held a workshop this week with banks and officials from the European Insurance and Occupational Pensions Authority. The workshop covered topics such as risk estimates, insurance gaps, coverage at the time of origination and for existing portfolios and data availability.
• EU banking competitiveness: To boost competitiveness in the banking sector, the EU should scale up a fragmented banking system and introduce an EU-wide deposit insurance mechanism and resolution authority, a Bloomberg editorial this week urged. The editorial also called for limiting each country's exposure to its own sovereign debt to avoid a "doom loop" that intertwines banks' and governments' finances and called for "faithfully implementing globally agreed capital rules."
• In case you missed: EU authorities published several regulatory measures this summer: The EBA reiterated that its no-action letter will remain valid during the EU's postponement of the Fundamental Review of the Trading Book market risk capital requirement. The European Commission opened a call for evidence on a European climate resilience and risk management initiative. The EC is introducing a "climate factor" into its collateral framework to mitigate financial risks associated with climate change. In addition, Jürgen Schaaf, Advisor to the Senior Management of Market Infrastructure and Payments at the ECB, published a blog post on the risks and strategic implications of stablecoins for Europe's monetary sovereignty and financial stability.

BPI's Heather Hogsett Named Vice Chair of Critical Infrastructure Security Group FSSCC

Heather Hogsett, Bank Policy Institute Executive Vice President and Head of BITS, has been selected as the new Vice Chair for the Financial Services Sector Coordinating Council, a financial industry organization focused on critical infrastructure security. Heather, who was promoted to lead BITS earlier this year, has served as a thought leader and an expert witness on Capitol Hill on cybersecurity and critical infrastructure issues in the banking sector during her years at BPI. Read more about the appointment here.

BPI Hires Marco Macchiavelli as Senior Fellow

BPI recently announced the hiring of economist Marco Macchiavelli as a Senior Fellow on its Research team. Marco is an Assistant Professor of Finance at the Isenberg School of Management at UMass Amherst and a former economist at the Federal Reserve Board. He started the position at BPI on Aug. 25.

"Marco's depth of expertise across a range of critical BPI issues will enrich the Research team's capabilities," said Chief Economist Bill Nelson. "Marco is a gifted researcher, well versed in core prudential topics, such as liquidity and funding markets, as well as novel areas like stablecoins and cybersecurity. We're delighted to welcome him to the team."

Before joining UMass, Marco served as an economist at the Federal Reserve Board for seven years, where he worked on monetary policy implementation and short-term funding markets. He has previously also worked for the American Financial Exchange on credit-sensitive rates and LIBOR replacement. He has published in leading finance journals including the Journal of Financial Economics, the Review of Financial Studies and Management Science.

Fifth Third Named Top Veteran-Friendly Employer by U.S. Veterans Magazine

Fifth Third has again been recognized by U.S. Veterans Magazine as a Top Veteran-Friendly Employer for 2025 for its excellence in supporting employees who have experience as a military veteran, service member, family member or advocate. The magazine's annual list recognizes companies that are leading the way in promoting and creating a veteran-friendly workforce and are committed to recruiting and retaining veterans. Read more here.