The Secret Service is suffering from a failure to communicate, Puff Daddy and Sam Bankman-Fried are now roommates in prison, and New York City Mayor Eric Adams was indicted for fraud and bribery.
Don't miss our exclusive webinar on Wednesday, Oct 9th at 2:00 PM ET, where Cam Fine, the former president and CEO of ICBA, and Ed Yingling, the former president and CEO of ABA, will explore the impact of the 2024 election on financial institutions. Register here.
Here's what else you might want to read this week:
"Small Banks Will Need More Deposits Before Lending Can Take Off"
Bank execs believe loan demand will pick up in the coming months, but community banks will need more deposits to support it. In the meantime, with a significant amount of cash tied up in money market funds and bond funds, they may have to learn to live with slower loan growth, says First Bank CEO Patrick Ryan.
"When Will Money-Market Funds Lose Their Allure?"
So when can we expect cash to flow out of money market funds? Not until yields slide to around 3%, some analysts believe. Even then, it's unclear where that cash will go and how much of it will end up in banks. Money market funds held a record $6.76 trillion in assets as of Tuesday after an inflow of $126 billion following the Fed's 50-bps rate cut last week.
"Lawmakers Fret Over Capital Requirements Uncertainty"
During a House subcommittee hearing, GOP lawmakers ripped regulators for rushing out a series of proposals in recent months on brokered deposits, mergers, and long-term debt requirements, among others. The main focus of the hearing was the Basel III endgame proposal, the future of which remains uncertain following significant industry pushback, lengthy delays, and most recently, a lack of support among the FDIC board for a re-proposal.
These developments, coupled with regulators' "clumsy" and "politicized" procedures, have resulted in "lingering uncertainty about the future rules of the road" for banks, said Andy Barr, R-KY, chair of the financial institutions and monetary policy subcommittee.
"Fed Risks Policy Missteps as Long-Run Rate Projections Edge Higher"
After the Fed approved a 50-bps rate cut last week, officials' median projections for the fed funds rate rose to 2.9%, the highest level in years. (At the end of 2023, it was 2.5%.) As the expected neutral rate climbs, uncertainty over its ultimate path is raising concerns that the Fed may be adjusting rates improperly. The WSJ's James Mackintosh accused the central bank of "flying blind."
"Fed Governor: Regulators Just 'Don't Understand' Implications of New Rules"
A lack of banking experience among federal regulators has led to unintended consequences from policies for mergers, fintech partnerships, and liquidity proposals, among others, Fed Governor Michelle Bowman told the Kentucky Bankers Association on Tuesday.
"'We are Running Out of Time': U.S. House Democrat Urges Stablecoin Bill Compromise"
During an SEC oversight hearing, ranking member of the House Financial Services Committee Maxine Waters, D-CA, urged Chair Patrick McHenry, R-NC, to finish a bipartisan stablecoin bill before the next Congress. Waters said she wants a "grand bargain," but there is little time to make one-and even less time for that bargain to win Senate approval. Check out this episode of Banking with Interest with law professor Hilary Allen to learn why a stablecoin bill could be bad for banks. (In case you were curious, GOP lawmakers also spent most of this hearing ripping SEC Chair Gary Gensler for his record on crypto oversight and his regulation-by-enforcement approach.)
"How U.S. Bank's 'Bank Smartly' Line is Targeting the Young Affluent While Growing Deposits"
U.S. Bank's "multiservice" strategy is leading to deposit growth and positioning the institution for the future. "We're being more intentional with the notion of 'interconnectedness'," said Head of Consumer and Business Banking Products Arijit Roy during the bank's investor day.
"JPMorgan in Talks With Apple to Take Over Credit Card From Goldman"
Discussions started recently, but a deal to tie together America's biggest bank and the tech behemoth isn't a sure thing. Key details still need to be negotiated, such as a transaction price for existing card balances and the terms and conditions of the rewards program.
"FDIC Recordkeeping Plan Poses Problems for Banks, Fintechs"
Requiring banks to maintain records of the beneficial owners of custodial deposit accounts could help protect customers' funds, but it would also significantly complicate bank-fintech partnerships, experts warn. Which may be the idea the FDIC was going for.
"How 'Voice Cloning' Will Disrupt Customer Verification"
Fraudsters can now clone a person's voice with just three seconds of audio, this article says. While voice generation and other AI-powered risks may seem intimidating, tools exist to mitigate them, and they're not as costly as you may believe. For a deep dive into voice clones (including my own) and other AI threats, check out this Banking with Interest episode with NYT reporter Emily Flitter.
"5 Ways to Make a Good Digital Impression on Your Bank Website"
Your website will be the first impression of your bank most prospective customers get. Make it a good one by paying attention to language and not being generic, among other tips.
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Rob Blackwell
Chief Content Officer and Head of External Affairs
IntraFi
Arlington, VA
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