Agency Agenda and Appointments Tracker

February 19, 2025

For Immediate Release

Several key regulatory issues are likely to dominate the financial services agenda in the coming period. We are closely monitoring the following five areas:

The Future of the CFPB

The agency’s next leader appears to be Jonathan McKernan, who was nominated by President Trump on February 11th. Until his confirmation, Russell Vought remains the acting director, and he has already taken a series of aggressive steps to curtail the CFPB’s operations. Under his tenure, all CFPB rulemaking and supervisory activities were frozen, a stop-work order was issued, and an upcoming funding draw was refused.

McKernan has signaled his alignment with many of the administration’s priorities, including easing the regulatory burden on banks and criticizing climate risk guidance. However, some CFPB proponents are cautiously optimistic that McKernan, who has a track record as a regulator, will be less draconian than Vought in managing the agency. Still, for those seeking to preserve the CFPB’s independence, legal challenges may be the most viable path forward.

Regulatory Reform

Regulatory reform is unfolding as expected, with a strong focus on fostering a more accommodating environment for non-bank financial service providers, particularly crypto firms. This shift began with the recent rescission of the SEC’s Staff Accounting Bulletin 121, which, practically speaking, restricted banks from offering crypto custody services.

Since then, there has been a concerted push for reform across the Legislative and Executive branches. In the Senate, the GENIUS Act was introduced to establish a regulatory framework for stablecoins, including placing the largest issuers under prudential supervision. A day later, a similar act calling for the regulation of stablecoins was introduced in the House. Meanwhile, an executive order from President Trump created a working group to determine the future of digital asset regulations.

Recent hearings in both the House Financial Services Committee and the Senate Banking Committee reinforced these priorities, with lawmakers criticizing regulators for encouraging institutions to debank certain sectors, including crypto firms.

Basel III "Endgame"

With the proposed Basel III "Endgame" rules (led by the Federal Reserve, with Governors Bowman and Waller dissenting) under review, Federal Reserve Chair Jerome Powell recently promised a capital-neutral starting point. Acting FDIC Chair Travis Hill has noted the FDIC's preference for the same. Hill also emphasized the crucial role of the Federal Reserve’s upcoming stress-testing revisions, which are anticipated in December, noting that the interplay between these initiatives will determine the final impact on bank capital and risk management. Considering these changes and the administration’s broader priorities, proposals for capital increases are unlikely to advance far, and new efforts to relax current capital requirements may even emerge.

Deposit Insurance Reform

Potential reforms to the deposit insurance system are anticipated. With legislative proposals from both Democratic and Republican lawmakers, combined with the FDIC's ongoing review and Acting FDIC Chair Travis Hill’s public prioritization of this issue, some form of reform is likely. This is a particularly important issue for mid-sized banks, who have been vocal about their concerns. Moreover, if the Trump administration’s proposal to curtail the FDIC’s supervisory authority goes through, the agency’s sole responsibility may be confined to the insurance fund.

Potential for Agency Consolidation

The administration’s drive to reduce government spending and bureaucratic overlap has put agency consolidation on the table. The existence of three federal banking agencies provides a clear target for demonstrating progress on this goal. This drive for efficiency is underscored by the recent government-wide hiring freeze, which has led to the FDIC rescinding over 200 job offers for examiners with similar cuts reportedly made at the OCC — raising questions about the agencies’ long-term staffing budgets. While the exact form of any consolidation remains unclear, discussions range from streamlining regulatory oversight to the more radical idea of transferring the FDIC’s supervisory work role to the OCC. Though these proposals align with the administration’s focus on government efficiency, several proposed changes to the current system would require legislative approval.

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