"Trump's Search for Powell's Replacement at the Fed Is Getting Louder"
National Economic Council Director Kevin Hassett has emerged as a contender to replace Fed Chair Jerome Powell, alongside Treasury Secretary Scott Bessent and former Fed Governor Kevin Warsh. All three have been publicly criticizing the Fed in an apparent bid to bolster their standing with President Trump. Bessent could even serve as Treasury Secretary and Fed Chair simultaneously, according to some reports, a rare but not unprecedented arrangement.
Meanwhile, the latest Fed meeting minutes showed that most officials believe rate cuts are coming, though opinions vary on how aggressively to ease policy.
"Deposit Momentum is Back. But Sustained Growth Will Require Careful Nurturing"
Deposits are growing again, mainly due to savvy pricing and portfolio strategies, but banks are also benefiting from older customers who prefer to stay put. Meanwhile, fintechs remain fierce competitors for younger customers, a sign that future growth will hinge on innovative digital offerings.
"Community Banks View Embedded Finance as Key to Longevity"
Ninety-nine percent of leaders at community-based financial institutions who responded to a recent survey said embedded finance is “important” to their long-term survival, with 60% calling it “extremely important.” They cited its potential to boost revenue, attract low-cost deposits, and enhance customer experience through fintech partnerships. Read the full report.
"Banks Should Not Chase Their Loan Growth Right Now"
Banks should hold off on aggressive loan growth, according to S&P’s director of financial institutions research. Instead, he says they should tighten standards, increase debt-service coverage ratios, and avoid their least creditworthy borrowers, claiming that while this may dent earnings in the near term, it could help minimize credit losses later on.
The country’s oldest bank is taking over custody of Ripple’s stablecoin reserves, the latest sign cryptocurrency is becoming integrated with traditional finance. BNY also custodies Circle’s USDC and SocGen’s USD CoinVertible.
"Banks Don’t Know Their Customers. AI Can Fix That (If They Let It)"
By building unified platforms and using artificial intelligence to tailor customer experiences and engage with customers, banks can position themselves to compete in an increasingly digital landscape.
To learn more about how AI can create value for banks, check out this recent episode of Banking with Interest with Kiah Haslett, banking and fintech editor for Bank Director and FinXTech.
"Challenger to FICO Credit Scores Gets Green Light for Use in Mortgages"
The FHFA announced that Fannie Mae and Freddie Mac will now accept the VantageScore 4.0 credit model in a bid to increase competition, lower costs, and help more Americans—especially renters and rural residents—qualify for mortgages.
In Other News
The Supreme Court cleared the way for mass firings of federal workers, Linda Yaccarino stepped down as X’s CEO after a tumultuous two-year tenure, and if you ever wondered what it was like to live like Michael Jordan, his former Chicago mansion is now on Airbnb—for six figures per week and a $25,000 security deposit.
Thanks for reading.