Forvis Mazars has summarized this month’s activity in the U.S. banking regulatory landscape to help you keep up to speed on this quickly evolving regulatory environment.
The U.S. banking regulatory landscape was relatively quiet during the month, especially when compared to the economic and geopolitical landscapes. Nonetheless, many meaningful and noteworthy events took place that deserve careful attention. First, on Capitol Hill, legislation designed to move the financial industry into the digital future has taken shape, and the regulators have responded by lowering the hurdles to banks’ engagement in fintech and crypto-asset related activities. Second, both Congress and the regulators have taken the initial steps that lead to a reform of the supervisory and regulatory framework—reducing subjectivity in examinations, increasing transparency in supervision, and decreasing regulatory burden. Third, and finally, the banking agencies have reduced the barriers to bank merger and acquisition activity by reverting their bank merger statements of policies to former, simpler versions. Read about this—and more—in the following summary of activities in the U.S. banking regulatory world.
State of the Industry
The FDIC released its Quarterly Banking Profile for the first quarter of 2025, providing a comprehensive summary of the quarterly financial results of the 4,462 insured banks and savings associations. Overall, insured banks and savings associations are well positioned as liquidity remains strong and the level of capital is robust. During the quarter, deposits increased; however, loan growth was modest, and asset quality (while positive) began to show signs of emerging stress. While noting the strength in the industry, the FDIC also cautioned that the industry is faced with “challenges presented by economic uncertainty, elevated inflation and interest rates, tighter credit, and elevated unrealized losses.”
On Capitol Hill
The U.S. Senate advanced the GENIUS Act, a landmark stablecoin bill that would establish a regulatory framework for “payment stablecoins.” Under this act, a payment stablecoin is defined as a digital asset that is issued for payment or settlement purposes and has a predetermined fixed value per token, such as a fixed value of $1 per stablecoin. The act would, among other things, (a) establish reserve requirements, (b) require regulators to issue capital, liquidity, and risk management requirements, (c) establish disclosure, reporting, and audit requirements, and (d) apply the Bank Secrecy Act to issuers and require the Financial Crimes Enforcement Network (FinCEN) to develop tailored anti-money laundering rules.
In the U.S. House of Representatives, Rep. Scott Fitzgerald (R-WI) introduced the HUMPS Act of 2025, which would require, among other things, the federal financial institutions regulatory agencies to update the CAMELS rating system to establish clear and objective criteria for each component of the CAMELS rating and revise the weighting of each component to ensure that the composite rating reflects the financial condition and risk profile of the financial institution being rated. In addition, the act would require regulators to either eliminate the management (or “M”) component of the rating system or revise the component to limit examiner assessment of the component to objective measures of the bank’s governance and controls.
Banking Agencies Withdraw Previous Statements on Crypto Assets
On April 24, the Federal Reserve Board and the FDIC announced the withdrawal of two previous joint statements regarding crypto-asset related activities in banking organizations. The agencies stated that their action is “intended to provide clarity that banking organizations may engage in permissible crypto-asset activities and provide products and services to persons and firms engaged in crypto-asset related activities, consistent with safety and soundness and applicable laws and regulations.” The Office of the Comptroller of the Currency had previously withdrawn from the joint statements. The agencies stated that additional clarity with respect to crypto asset and related activities in banking organizations likely will be issued in the coming months.
Federal Reserve Board
The Federal Reserve Board Clarifies Rulemaking Plans on Stress Testing
On May 23, the Federal Reserve Board filed a joint motion with industry plaintiffs to stay proceedings on the industry lawsuit related to stress testing. In the filing, the Federal Reserve Board made a commitment that by September 30, 2025, it would fully disclose its stress-testing models and issue a notice of proposed rulemaking to “(1) seek comment on the stress-test models and scenarios proposed to be used in the 2026 stress tests; (2) propose that going forward the Board would seek comment on the annual scenarios as part of each year’s stress-test cycle, and that the Board would seek comment on any material proposed changes to the stress-test models prior to their use in any annual stress-test cycle; and (3) seek comment on a revised scenario design framework that would include objective standards for the development of the annual stress test scenarios, including the global market shock and largest counterparty default components.”1
Office of the Comptroller of the Currency (OCC)
From the Comptroller
In a speech at the Building Societies Annual Conference in Birmingham, England, Acting Comptroller Rodney E. Hood outlined the OCC’s priorities for 2025. These priorities include reducing regulatory burden, improving financial inclusion, supporting innovation in fintech, and enabling digital assets in the banking system.
The OCC Reduces Burden & Uncertainty Associated With Bank Mergers
The OCC issued an interim final rule that rescinds the 2024 policy statement on bank mergers and restores the provisions in 12 CFR 5.33 related to expedited review and the use of the streamlined merger application. The effective date of the interim final rule is May 15, 2025, and comments on the interim final rule must be received by June 16, 2025.
The OCC Advances Fintech & Digital Assets in the Banking System
The OCC issued a request for information (RFI) on the key challenges and barriers that community banks face when adopting and implementing digital banking solutions. In its RFI, the OCC noted the importance of community banks being able to effectively implement new and emerging technologies to meet customer demands, increase revenue, improve efficiencies, and remain competitive. However, the agency reiterated the importance for banks implementing digital banking solutions to also implement a risk management system that can identify, measure, monitor, and control risk associated with the strategies and solutions undertaken. Comments on the RFI are due by June 26, 2025.
In a separate action, the OCC published Interpretive Letter 1184 to confirm that national banks may provide and outsource cryptocurrency custody and execution services on behalf of customers. As part of these services, national banks may buy and sell assets held in custody at the customer’s direction and are permitted to outsource to third parties bank-permissible crypto-asset activities, including custody and execution services, subject to appropriate third-party risk management practices.
A New Deputy Comptroller for Community & Industry Relations
The OCC announced that effective June 2, 2025, Andrew Moss will assume the role of deputy comptroller for community and industry relations. Moss will lead the agency’s strategies in support of financial inclusion initiatives, including the OCC’s Project REACh.
Federal Deposit Insurance Corporation
FDIC Rescinds Its 2024 Statement of Policy on Bank Merger Transactions
The FDIC rescinded its 2024 Statement of Policy on Bank Merger Transactions and reinstated the Statement of Policy on Bank Merger Transactions that was in effect prior to 2024. The Bank Merger Statement of Policy being reinstated is identical to the 2008 policy statement. In its Financial Institution Letter dated May 20, 2025, the agency stated that it plans to conduct a broader re-evaluation of its bank merger review process.
FDIC Semiannual Update of the Deposit Insurance Fund Restoration Plan
The FDIC released its latest semiannual update on the Restoration Plan for the agency’s Deposit Insurance Fund (DIF) on May 20, 2025. The FDIC stated that the reserve ratio remains on track to reach the statutory minimum of 1.35 percent ahead of the statutory deadline of September 30, 2028. According to the report, “the DIF reserve ratio increased by 6 basis points—from 1.22 percent as of June 30, 2024, to 1.28 percent as of December 31, 2024, due to growth in the DIF balance and slower-than-average insured deposit growth.” The Federal Deposit Insurance Act requires the FDIC Board to adopt a restoration plan when the DIF’s reserve ratio falls below 1.35 percent. The current restoration plan was established on September 15, 2020 after extraordinary deposit growth associated with COVID pandemic fiscal stimulus payments during the first half of 2020 caused the DIF reserve ratio to decline below the statutory minimum.
Notably, in his statement at the FDIC Board Meeting, Acting Chair Travis Hill stated: “Separate from, but related to, the Restoration Plan, I think we should consider whether insured deposits is the right metric to measure the DIF’s exposure to losses. The FDIC moved away from charging assessments on the basis of insured deposits years ago, creating a mismatch in how assessments are charged and how the health of the DIF is measured. One alternative permitted by the FDI Act is to use the assessment base rather than insured deposits as the denominator of the reserve ratio, and I have asked staff to analyze this option for future consideration.”
Consumer Financial Protection Bureau (CFPB)
CFPB Orders Immediate Withdrawal of Interpretive Rules, Policy Statements, & Advisory Opinions
In a Federal Register notice announced on May 12, 2025, the CFPB ordered the immediate withdrawal of 67 interpretive rules, policy statements, and advisory opinions. In the notice, the CFPB highlighted three reasons for its withdrawal:
- The CFPB intends to issue guidance only when necessary to reduce compliance burdens. By withdrawing the documents, CFPB staff will have an opportunity to review and consider whether the guidance was statutorily prescribed, consistent with the relevant statute or regulation, and burden reducing.
- The CFPB is reducing its enforcement activities in light of presidential directives to deregulate and streamline bureaucracy. To reduce the burden associated with the overlap of CFPB enforcement with the enforcement responsibilities of other federal and state regulators, the CFPB is reducing its own enforcement to only those areas statutorily required. Withdrawing guidance associated with CFPB enforcement efforts should not have an adverse effect on regulated entities.
- The CFPB believes that regulated entities understand guidance generally is non-binding and does not create substantive rights. To the extent guidance goes beyond the relevant statute or regulation, it is unlawful and undermines any reliance on that guidance. Where guidance is not per se unlawful, the CFPB has determined that such guidance should be withdrawn and reissued only if the guidance is necessary and reduces compliance burdens.
For more details on this issue, please see our FORsights™ article, “CFPB Withdraws 67 Interpretive Rules, Policy Statements, & Advisory Opinions.”
CFPB Deprioritizes Enforcement of Buy Now, Pay Later Loans
In a May 6, 2025 press release, the CFPB announced it will not prioritize enforcement actions taken on the basis of the Truth in Lending (Regulation Z); Use of Digital User Accounts to Access Buy Now, Pay Later Loans regulation issued on May 31, 2024. Further, the CFPB stated it is contemplating action to rescind its Buy Now, Pay Later regulations.
CFPB Modifies Its Regulations Related to State Enforcement of Consumer Financial Laws
The CFPB rescinded its May 2022 interpretive rule regarding the scope of state enforcement under Section 1042 of the Consumer Financial Protection Act of 2010 (CFPA) and related provisions. The May 2022 rule interpreted §1042 to allow states to bring an action whenever “a covered person or service provider violates any of the Federal consumer financial laws,” not just the CFPA. In its release, the CFPB emphasized that in rescinding the 2022 interpretive rule it is not altering, limiting, or affecting the authority of states to take any action authorized by any separate provision of state or federal law.
The CFPB also rescinded its procedures under which a state official must notify the CFPB when the official takes an action to enforce the CFPA. Section 1042(b) of the CFPA requires states to notify the bureau and the prudential regulators before initiating action in a court or other administrative or regulatory proceeding to enforce any provision of the CFPA. On June 29, 2012, the bureau issued regulations regarding states’ obligations to notify the bureau and prudential regulators of actions covered by §1042. The CFPB determined that the rescinded regulations merely restated the notification requirements codified in §1042 and, as such, are unnecessary and should be eliminated.
Financial Accounting Standards Board (FASB)
FASB Clarifies Guidance for Identifying the Account Acquirer in a Business Combination
FASB published an Accounting Standards Update (ASU) on May 12, 2025 that clarifies the requirements for identifying the accounting acquirer in FASB Accounting Standards Codification (ASC) Topic 805, Business Combinations. The determination of the accounting acquirer in a business combination can significantly affect the carrying amounts of the combined entity’s assets and liabilities. This revises current guidance for determining the accounting acquirer for transactions in which a variable interest entity is acquired. The ASU requires an entity to consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions.
FASB Provides Additional Guidance on Share-Based Consideration Payable to a Customer
On May 15, 2025, FASB published an ASU providing guidance for share-based consideration payable to a customer in conjunction with selling goods or services. The ASU addresses the intersection of the requirements of FASB ASC Topic 606, Revenue from Contracts with Customers, and Topic 718, Compensation—Stock Compensation. According to FASB, the changes affect the timing of revenue recognition for entities that offer to pay share-based consideration (for example, equity instruments) to a customer to incentivize the customer to purchase its goods and services. Specifically, the ASU clarifies the requirements for share-based consideration payable to a customer that vests upon the customer purchasing a specified volume or monetary amount of goods and services from the entity.
On the International Front
The Basel Committee on Banking Supervision met in Stockholm on May 21 to 22.2 The Basel Committee reported an agreement among members—including the U.S. banking agencies—to prioritize the implementation of Basel III in a manner that is complete and consistent with international standards. In addition, the committee agreed to strengthen supervisory effectiveness following lessons learned from the 2023 banking turmoil and finalize principles for the sound management of third-party risk in the banking sector by year end.
Earlier in the month, the Governors and Heads of Supervision (GHOS), the governing body of the Basel Committee, met and reaffirmed their commitment to the implementation of Basel III.3 The GHOS also directed the Basel Committee to publish a voluntary disclosure framework on climate-related financial risks and to prioritize analysis on the financial risk implications of extreme weather events.
On the Lighter Side of the News
Habemus Papam. On May 8, 2025, Cardinal Robert Prevost of Chicago was elected pope, becoming the first American pope in history. Upon his election, Prevost selected the papal name of Leo XIV. In his address to the College of Cardinals, Prevost explained the rationale behind this name selection. Pope Leo XIII had led the Catholic church during the industrial revolution and consistently addressed the social issues associated with industrialization. In his own words, the name Leo XIV was chosen because “[i]n our own day, the Church offers to everyone the treasury of her social teaching in response to another industrial revolution and to developments in the field of artificial intelligence that pose new challenges for the defense of human dignity, justice and labor.”4 The issue of artificial intelligence is becoming truly widespread across all aspects of modern society.
A Penny [Not] Saved. After 230 years, the U.S. Treasury has directed the U.S. Mint to cease production of the penny as soon as it runs out of blank templates on hand. According to the Wall Street Journal, each penny costs on average four cents to produce, so the U.S. Mint will save around $56 million per year in the cost of materials alone.5 While the penny is ubiquitous in American culture, its use over the years has waned. Approximately 60% of all pennies in circulation (around $14 billion) currently reside in coin jars or piggy banks. However, even though the penny will no longer be produced, according to CNN, there will be approximately 114 billion pennies remaining in circulation. To visualize the quantity of pennies outstanding, if all the pennies were to be placed in a square box, that box would be 13 stories tall!6
How Forvis Mazars Can Help
In the heavily regulated banking industry, leaders face more challenges than ever, from managing shareholder and regulatory expectations to pursuing digital innovation. Our Financial Services team at Forvis Mazars can help your financial institution tackle issues inherent to the industry, including market growth, internal control threats, industry consolidation, and compliance. We have the experience in financial services that you can trust. Combine our focus on Unmatched Client Experience® with the resources of a global firm and you will find that Forvis Mazars is the trusted advisor your institution needs. Serving you is our passion and privilege.
If you have any questions or need assistance, please reach out to one of our professionals.
- 1Bank Policy Institute, et al., v. Board of Governors of the Federal Reserve System, No. 2:24-cv-4300 (S.D. Ohio May 23, 2025).
- 2https://www.bis.org/press/p250521.htm.
- 3https://www.bis.org/press/p250512.htm.
- 4Pope Leo XIV, “Address of His Holiness Pope Leo XIV to the College of Cardinals,” vatican.va, May 10, 2025.
- 5“Treasury Sounds Death Knell for Penny Production,” wsj.com, May 22, 2025.
- 6“So what happens to America’s 114 billion pennies once the US stops making them?” cnn.com, May 25, 2025.