“Treasury’s McKernan Sees Sea Change in Deposit Behavior”
The era of cheap, sticky deposits is winding down as fintechs and other nonbanks gain market share, Treasury Under Secretary Jonathan McKernan warned at an event this week. Technology is shortening liability duration and raising funding costs, he explained, putting core deposits under the same stresses as the asset side of bank balance sheets. McKernan added that the Treasury Department aims to create a “level playing field” between banks and nonbanks.
“Deposit Insurance Reform Momentum Slows in House”
The Hagerty-Alsobrooks bill to raise FDIC coverage on noninterest-bearing business accounts to $10 million met sharp resistance during a House Financial Services Committee hearing, where Republicans and witnesses questioned its cost and moral-hazard risks. HFSC Chair French Hill, R-AK, noted deposit insurance reform has “no easy answers and choices always come with tradeoffs.”
“Easing Regulations Could Lead to Smaller Fed Balance Sheet, Miran Says”
Fed Governor Stephen Miran challenged a core pillar of the post-2008 regulatory framework at a Bank Policy Institute event, arguing that liquidity and capital rules are compelling banks to hold more reserves at the Fed than they need. That dynamic, he said, keeps the central bank’s balance sheet artificially large, an unusually direct critique from a sitting Fed governor. He added that easing those requirements could reduce banks’ reserve demand and allow the Fed to shrink its balance sheet, a move that could have wide-ranging implications for credit, liquidity, and financial stability.
“How the Marriage of Open Banking and Payments Will Change Everything”
Open banking is enabling “pay-by-bank” options that move transactions off card networks and onto direct account-to-account rails. As regulators finalize standards, banks and fintechs will need to rethink pricing, risk management, and data-sharing practices while adapting to new challenges related to fraud and disputes, this article says.
“Why Every Company Suddenly Wants to Become a Bank”
The OCC has received 12 national trust charter applications this year, the most in a decade, as fintech and crypto firms seek entry into payments and custody without becoming full-service banks. Traditional banks worry that trust charters, which allow firms to offer custody and some payment services while avoiding full prudential oversight, could create an uneven playing field and increase risks if lightly supervised firms expand into core banking activities.
“AI Will Reduce Banks’ Headcount. Get Over It”
Wells CEO Charlie Scharf says artificial intelligence will reduce banking headcounts and leaders should acknowledge as much. He argues that banks must redesign processes, stop hiring for roles likely to be automated, and invest in retraining employees for higher-value work.
“Fed’s Kugler Violated Trading Ethics, Disclosure Shows”
Former Fed Governor Adriana Kugler engaged in stock transactions during blackout periods around FOMC meetings, new disclosure documents show. The developments, which violate the central bank’s ethics rules, help explain Kugler’s abrupt August resignation.
In Other News
President Trump signed a bill to release the Epstein files, Russian and Chinese spies are setting “honey traps” to steal Silicon Valley’s secrets, and these 10 signs indicate you may be ready for retirement.
Thanks for reading.