“Key Moments from Kevin Warsh’s Congressional Testimony”
During his confirmation hearing, Fed Chair nominee Kevin Warsh faced tough questions on independence—Sen. Elizabeth Warren, D-MA, accused him of being President Trump’s “sock puppet”— his policy positions, and his financial holdings. Warsh pushed back on concerns about political influence, arguing the Fed has “lost its way” and needs policy reforms, including a new inflation framework and a different approach to communication.
“Splitting the Monetary/Regulatory Baby”
While Warsh said monetary policy should stay independent, he stressed that Fed officials should coordinate more with the White House on supervision. That raises questions about where policy ends and supervision begins, especially in a crisis, and how much influence future administrations could have over bank oversight, according to this article.
I recently spoke with Politico reporter Sam Sutton on Banking with Interest about how issues such as the investigation into Fed Chair Jerome Powell, the conflict with Iran, and inflation risks are complicating Warsh’s nomination. Listen here.
“Small Banks Are Finally Gaining on Their Giant Rivals”
Midsize bank stocks are outperforming large bank stocks this year, aided by improving loan demand and expectations for lower rates. Big banks have narrowed the gap after a strong earnings season and still trade at higher valuations, though a continued pickup in business lending and a return of bank M&A could support smaller banks from here.
“The Unintentional AI Strategy”
Banks are adopting AI through vendors without a formal plan, as new capabilities are quietly being added to fraud, cybersecurity, and operations tools. Regulators still expect full oversight, so banks need to identify where AI is being used and ensure governance keeps pace.
Former acting Comptroller of the Currency Michael Hsu recently joined Banking with Interest to discuss why AI does not fit neatly into existing risk frameworks (including TPRM), how it is changing the cyber threat landscape, and why both banks and supervisors need to get more hands-on with the technology. Listen here.
“Why Community Banks Are Betting on Legacy Planning”
More than half of Americans lack estate plans, even with $124 trillion in wealth expected to change hands by 2048. Banks see an opportunity to help customers prepare and retain assets across generations. Some are already investing in tools and partnerships to do so.
“Most Banks Win the Account and Lose the Customer. Here’s the Playbook That Fixes That”
Many community banks lose customers soon after they open accounts, especially those acquired through rates or cash incentives. About one in five customers has moved money recently, indicating weak loyalty. This article includes suggestions for turning new accounts into primary relationships.
“Iran-Related Risks Manageable for Banks, But Duration Is Key”
Banks have limited direct exposure to Iran, and consumers are still spending—for now. But the longer the conflict lasts, the greater the potential disruption to global energy markets, which could affect the broader economy and bank balance sheets.
In Other News
Register here for Arm Your Bank Against the AI Threat to Deposits, our May 5 webinar with The CorePoint CEO Neil Stanley on how AI is helping customers identify higher-yielding alternatives—and what banks can do to defend against an estimated $3.5 trillion in at-risk deposits.
The federal government is moving marijuana to a less restrictive drug category, Republicans are concerned redistricting efforts may end up helping Democrats gain House seats, and actors are drawing attention for some of the bizarre things they do to prepare for roles.
Thanks for reading.