Growing backlash to merging bank regulators

Politico

04-03-2025

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QUICK FIX
Community bankers and state banking supervisors are pushing back on the idea of consolidating or merging the federal agencies that regulate banks.
The Trump administration has already moved to dismantle the Consumer Financial Protection Bureau, which has long been a target of Republicans and the banking industry. And the White House has sought to exert greater control over all independent regulatory agencies. But it remains unclear how seriously the administration might entertain a more drastic overhaul of other regulators, such as the Federal Deposit Insurance Corp. or Office of the Comptroller of the Currency.
Still, some powerful critics of the approach are starting to publicly voice their concerns. Rebeca Romero Rainey, who leads the Independent Community Bankers of America, said the group opposed consolidating federal banking agencies.
'Federal banking regulators should be objective, nonpartisan, and protected from political influence, which is essential to promoting a safe and sound banking system, consumer confidence, and a strong national economy,' she said in a statement last week. 'Wall Street calls for consolidating the agencies undermine consumer confidence in the financial system.'
Brandon Milhorn, who leads the Conference of State Bank Supervisors, is also pushing back on the idea of a consolidated federal regulator that oversees 4,500 institutions ranging in size from a few million to $4 trillion. He said he's worried that a single agency would lead to greater politicization of federal regulation and lead to even more drastic swings in policy between administrations.
'One-size-fits-all federal regulation and 'supervisory creep' are problems under the existing system,' he said in a speech at the Atlanta Fed. 'Does anyone seriously believe that these problems would be better under one massive federal regulator?'
Wall Street CEOs are warmer to the idea of merging regulators. Bank of America's Brian Moynihan, said last week that he was 'all ears' to efforts to merge regulations, adding that his bank must answer to '100-plus regulators in our building every day.' And JPMorgan Chase CEO Jamie Dimon last month pitched Republican senators on a broad overhaul of the financial regulatory system, carrying into his meetings a chart that outlined the complexities of how the nation's largest bank is regulated.
Any major overhaul of the agencies — such as bringing the FDIC into the Treasury Department — would likely require Congress to act.
Rep. Andy Barr, a senior Republican on the House Financial Services Committee, told our Jasper Goodman on Monday that he's open to the idea of consolidating federal regulators. 'It's something that I've been interested in for a long time,' Barr said, adding that 'it's something DOGE needs to look at.'
Sen. Mike Rounds, a senior member of the Senate Banking Committee, said he prefers having multiple regulators but understands the appeal of consolidation, such as having a more consistent approach and said he's 'open for discussion.'
'We'll listen to all the sides on it first,' Rounds told Jasper. 'Right now, I like the idea of large banks having one supervisor and the medium and smaller banks having another. But we'll allow them to play that out.'
Asked if the administration could spearhead a consolidation effort on its own, Rounds said, 'this is something for Congress to be involved in.'
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Driving the day
The House Financial Services monetary policy task force holds its first hearing at 10 a.m. … The House Financial Services Housing and Insurance Subcommittee holds a hearing on housing supply at 2 p.m. … Rep. David Schweikert speaks at NABE at 4 p.m. …
Trump tariffs kick in: The sweeping 25-percent tariffs on imports from Mexico and Canada are a bitter blow to industry operating outside of the United States — which had hoped that weeks of mixed signals from senior officials and the president himself would mean new tariffs on U.S. allies would be delayed or removed entirely. The massive tariffs were a staple of Trump's reelection pitch last year. Still, the White House defied a flurry of last-minute pleas to change course from officials and industry groups in sectors from automotives to technology to agriculture.
That includes the U.S. Chamber of Commerce, which said new tariffs would result in price hikes or even force some small businesses to shut down entirely. 'We urge reconsideration of this policy and a swift end to these tariffs,' said Neil Bradley, U.S. Chamber's chief policy officer.
The retaliation: Canada is poised to hit the U.S. with 25 percent tariffs on C$30 billion of U.S. goods, and the threat of C$125 billion more after a 21-day consultation period. 'Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,' Canadian Prime Minister Justin Trudeau said in a statement.
Mexico President Claudia Sheinbaum said the next steps for her government 'depends on the United States' and Trump. 'Whatever his decision is, we will make our decisions. And there is a plan, there is unity in Mexico,' she said during a daily press conference Monday.
Political fallout? Trump's new tariffs could hit hard in some GOP states and congressional districts, Doug Palmer reports, underscoring the political peril that tariffs represent for Republicans who have nonetheless maintained broad support for the president's trade agenda.
— Ari Hawkins
At the regulators
New FDIC makes moves: The FDIC on Monday moved to rescind a Biden-era policy that imposed greater scrutiny on proposed bank mergers, the first major regulatory rollback under the agency's new Republican control.
The FDIC said it would temporarily reinstate its prior bank merger guidelines while it embarks on a broader effort to 'comprehensively' overhaul its approach to bank mergers.
Making it official: The FDIC also formally withdrew pending Biden-era regulatory proposals on brokered deposits, corporate governance and asset managers' ownership of banks.
The changes were expected, since the Biden policies have drawn sharp criticism from Republicans and industry groups. Acting FDIC Chair Travis Hill earlier this year said he would prioritize a reversal of the bank merger guidance, among a slew of other policies from the previous administration.
DOGE WATCH
CFPB legal saga continues: A federal judge on Monday said she'll keep in place for now her order blocking the Trump administration from moving ahead with mass firings at the Consumer Financial Protection Bureau, Katy O'Donnell reports.
Judge Amy Berman Jackson scheduled a new evidentiary hearing for next Monday morning. It's the second time a judge has ordered agency officials to sit for sworn testimony in the blizzard of emergency litigation over the Trump administration's efforts to slash the federal bureaucracy.
Jackson called on CFPB Chief Operating Officer Adam Martinez to testify. Martinez in a filing on Sunday conceded that the claims of two employees — that he had referred to the 'closure of the agency' and said it was in 'wind down mode' — 'are not inaccurate,' but said the administration was now seeking to 'right-size' the agency rather than close it.
DOGE eyes IRS procurement system: The Trump administration said in a court filing Monday night that the Treasury Department's DOGE team is seeking access to an IRS system that tracks and approves and funds vendor contracts.
A Justice Department attorney asked a federal judge to confirm that DOGE's access to the IRS data would not violate her existing order that generally blocks the Musk-affiliated operation from tapping into Treasury payment systems.
The government said Treasury's DOGE team needed access to the IRS procurement data 'to analyze vendor contracts and assess them for utility and wastefulness.' The Democratic attorneys general who brought the lawsuit opposed the request, according to the letter.
On The Hill
Shutdown watch: 'Top Republican appropriators both said Monday they are pursuing a 'two-track strategy' for avoiding a shutdown in less than two weeks — a sign that the lead negotiators in government funding talks aren't ready to give up on getting a yearlong deal even as President Donald Trump has called for a stopgap measure,' POLITICO's Ben Leonard, Jennifer Scholtes, Mia McCarthy and Nicholas Wu report.
'The announcements from Rep. Tom Cole and Sen. Susan Collins — the chairs of the House and Senate Appropriations Committee, respectively — come as GOP leaders have already said they plan to move a short-term funding bill in the coming days after rejecting Democrats' demands for new language to stop Trump and Elon Musk from withholding congressionally approved spending.'
Congress eyes regulatory rollbacks: The Senate is expected to vote this week on a pair of Republican resolutions repealing Biden-era rules on cryptocurrency tax reporting and the CFPB's oversight of digital payment companies,Jasper Goodman reports.
The Senate is expected to vote today on legislation by Sen. Ted Cruz (R-Texas) that would overturn IRS regulations affecting crypto brokers. And on Wednesday, the chamber will take up a resolution by Sen. Pete Ricketts (R-Neb.) that would scrap the CFPB's expanded oversight of Big Tech firms that offer digital wallet services.
GOP pushes Trump to pick a new Fed bank cop: Jasper also reports that the Republican chairs of Congress' banking committees—Rep. French Hill and Sen. Tim Scott—want the Trump administration to move quickly to name a new top regulatory official at the Federal Reserve, saying the position needs to be filled to roll back Biden-era regulations.
In a letter to Treasury Secretary Scott Bessent signed by more than two dozen members of the House Financial Services and Senate Banking panels, the lawmakers called on the administration to name 'a strong leader as soon as possible' to become the Fed's next vice chair for supervision. The role was previously held by Michael Barr, who resigned his role as the top regulatory official last month.
Dems press HUD on cuts: Rep. Maxine Waters (D-Calif.) on Monday planned to hand-deliver a letter to Housing and Urban Development Secretary Scott Turner, grilling him on recent cuts at the agency, Katy reports.
Waters, the top Democrat on the House Financial Services Committee, said in the letter that actions by HUD and the Elon Musk-led Department of Government Efficiency have given her 'deep concern about the future of fair and affordable housing.' The letter, shared with POLITICO, was signed by more than 100 of Waters' Democratic colleagues.