"Trump's Big Fiscal Dominance Play"
President Trump is pressuring Fed Chair Jerome Powell to lower interest rates to reduce the government's rising debt costs, raising concerns over Fed independence. Experts warn that calls for using monetary policy to address fiscal needs, an approach known as “fiscal dominance,” have triggered inflation crises in other countries.
For a deeper dive into Trump’s efforts to influence rate policy and his tensions with Powell, check out this week’s episode of Banking with Interest, featuring Politico’s Victoria Guida. Also, be sure to read Guida’s recent article on Powell’s “new normal.”
"The Stablecoin Bill Is Now Law. What's Next for Banks?"
With the GENIUS Act now law, banks are lobbying regulators over rules that could protect or weaken their traditional role in the financial system. Key questions remain about Fed master accounts, regulation of yield-like products, and the structure of stablecoin operations. While some banks see opportunity, others see a threat. However, much will depend on how federal and state banking regulators interpret the law.
"Bank Trade Groups Push Back on Crypto Firms’ Bank Charter Pursuit"
Speaking of digital assets, the ABA and four other trade groups urged the OCC to delay decisions on applications for trust bank charters filed by crypto firms, citing insufficient transparency for public scrutiny and unclear business plans. The trade groups’ letter caught bank charter experts off guard, who doubt it will lead to greater public disclosure.
In still other news, PNC and Coinbase have partnered up on crypto-as-a-service.
"Banks Ready Fresh Push Against Tighter US Capital Rules"
Wall Street banks and lobbyists urged the Fed to avoid stricter capital requirements at a banking conference led by Vice Chair for Supervision Michelle Bowman, who’s long called for industry-friendly reforms to Basel III, stress tests, capital surcharges, and other rules. However, critics argue that these efforts, often framed as a pursuit of increased transparency and efficiency, are really a veiled attempt at deregulation that could weaken financial safeguards.
Additionally, OpenAI CEO Sam Altman warned during the conference that AI-driven voice cloning poses a major fraud risk and has made voice-based authentication nearly obsolete.
"How to Build an AI Policy at Your Community Bank"
Community banks are racing to develop policies for AI as the rapidly evolving technology becomes embedded in vendor tools and employee workflows. To craft an effective policy, experts advise banks to identify where AI is already being used, set clear guidelines for staff, protect customer data, and regularly update policies to keep pace with new risks and capabilities.
"Banks Hate ‘Buy Now, Pay Later’—and May Penalize Its Users"
FICO’s new credit model will begin factoring in BNPL activity, but lenders remain cautious, treating frequent use as a red flag. In any event, banks should be mindful that the short-term loans now pose an even bigger threat to traditional lending revenue, and that assessing credit risk will require deeper analysis beyond standard reports.
"Will Fintechs Overtake Banks? Five Lessons from Fintech-Bank Merger"
Successful bank-fintech mergers and partnerships depend on collaboration, adaptability, and shared compliance priorities, according to one former banker and regulator.
In Other News
President Trump announced a plan to make the U.S. an “AI export powerhouse,” even as he appears to be losing influence over GOP lawmakers amid the Epstein scandal. Also, heavy metal icon Ozzy Osbourne died.
Thanks for reading.