Bank Regulatory News and Trends

This regular publication from DLA Piper focuses on helping banking and financial services clients navigate the ever-changing regulatory landscape.

In this edition:

• Banking agencies issue guidance on lending to individuals not legally authorized to work in the United States
• Kevin Warsh sworn in as Fed Chair
• Brian Johnson nominated to head the CFPB
• Supreme Court distinguishes presidential authority to remove officials from the Fed from authority to remove officials from other agencies
• Fed proposes amendments to anti-money laundering rules
• FDIC issues final rule on resolution plans for larger banks
• FDIC proposes amendments to information disclosure regulations
• Banking regulators update inter-agency documents to remove reputation risk references
• New community bank leverage ratio rule goes into effect
• FDIC proposes reducing deposit insurance rates for banks, raising threshold for large institutions
• President Trump signs Executive Order to streamline fintechs’ access to financial services

Banking agencies issue guidance on lending to individuals not legally authorized to work in the United States. On July 13, 2026, the Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), and Office of the Comptroller of the Currency (OCC) issued inter-agency guidance intended to “address risks to the financial system posed by the extension of credit or financial services to the inadmissible and removable population,” consistent with Executive Order (EO) 14406, “Restoring Integrity to America’s Financial System.” The guidance focuses on credit risk exposures for lenders and encourages financial institutions to maintain safe and sound underwriting practices to identify, measure, monitor, and control increased uncertainty surrounding a borrower’s ability to generate income, maintain employment, and remain financially stable. The guidance also reminds financial institutions of their obligation to consider a consumer’s ability to repay under the Truth in Lending Act (implemented through Regulation Z) and the Equal Credit Opportunity Act (implemented through Regulation B), consistent with guidance published by the Consumer Financial Protection Bureau (CFPB) in June 2026. Regulated banks offering consumer credit products may expect examiner inquiries regarding their related underwriting practices and credit exposures.

Kevin Warsh sworn in as Fed Chair. On May 22, 2026, President Donald Trump led a swearing-in ceremony for Kevin Warsh as Chair of the Federal Reserve Board of Governors. Warsh succeeds Jerome Powell, who served eight years as Chair and has indicated that he intends to remain a Governor. The Federal Open Market Committee, the Fed’s monetary policymaking body responsible for setting interest rates, also unanimously selected Warsh as its Chair, the Fed announced. Warsh previously served on the Federal Reserve Board from 2006 to 2011. The Senate confirmed his nomination by a vote of 54–45.

• Warsh has historically favored less restrictive annual stress testing, lower regulatory capital and liquidity requirements, and faster approvals for large bank mergers and acquisitions (M&A). “I don’t believe the Fed is owed any particular deference in bank regulatory and supervisory policy,” he wrote in a Wall Street Journal op-ed in January 2026. “Fed claims of independence in bank matters undermine the case for independence in monetary policy. And when the Fed turns away from its creed and tradition, exercising powers that are the province of the Treasury Department, or taking positions on societal issues, it further jeopardizes its operational independence in what matters most.”
  
  
• Powell’s term as a Governor will expire in January 2028. However, he stated that he will remain on the Board “for a period of time to be determined” and will continue serving at least until the Department of Justice completes its investigation into his involvement in the renovation of the Federal Reserve’s headquarters in Washington, DC.

Brian Johnson nominated to head the CFPB. On June 10, 2026, President Trump nominated Brian Johnson to serve as Director of the CFPB. If confirmed by the Senate, Johnson would serve a five-year term. He would replace Russell Vought, Director of the Office of Management and Budget (OMB), who has also served as Acting Director of the CFPB since the beginning of President Trump’s second term. 

Johnson is President Trump’s third nominee to lead the CFPB. Last year, the President nominated Jonathan McKernan as Director but later selected him to serve as Under Secretary of the Treasury for Domestic Finance, a position for which the Senate confirmed him. President Trump then nominated Stuart Levenbach, but the Senate returned that nomination without action, allowing Vought to remain as Acting Director. Levenbach now serves as Chief Statistician of the United States within OMB.

• The Senate Banking Committee has not yet announced a date for Johnson’s nomination hearing. Pursuant to the Federal Vacancies Reform Act, Vought may continue serving in an acting capacity until August 1, 2026.
  

Supreme Court distinguishes presidential authority to remove officials from the Fed from authority to remove officials from other agencies. On June 29, 2026, the US Supreme Court ruled that the President may remove members of the Fed’s Board of Governors only for cause. The case, Trump v. Cook, stems from President Trump’s effort to dismiss Lisa D. Cook from the Board of Governors in August 2025. The 5–4 ruling allows Cook to remain in her position while the legal challenge to her dismissal proceeds in the lower courts. On the same day, the Court ruled in Trump v. Slaughter, a case involving the Federal Trade Commission (FTC), that the President has broader authority to remove officials from certain independent regulatory agencies, including the FTC. Chief Justice John G. Roberts, Jr., writing for the majority, stated that the Fed is different from other government agencies because it is a “uniquely structured” entity that “follows in the distinct historical tradition of the First and Second Banks of the United States.” Consistent with the ruling, a decision to continue pursuing Cook’s removal from the Fed Board of Governors would require procedures that provide her notice of the allegations and an opportunity to respond.

Fed proposes amendments to anti-money laundering rules. On July 7, 2026, the Fed issued a notice of proposed rulemaking on anti-money laundering (AML) and countering the financing of terrorism (CFT) programs. Among other changes, the proposal would require banks to allocate AML resources based on risk, with greater attention given to higher-risk customers and activities. The proposed amendments would also require banks to incorporate the Financial Crimes Enforcement Network (FinCEN)’s AML priorities into their risk assessment processes. Under the proposal, once a bank has established an AML program, the Fed would focus its supervision and enforcement activities on significant failures to implement the program. According to the Fed, the proposed amendments are intended to align with changes to AML program requirements separately proposed earlier this year by four other agencies: FinCEN, the OCC, the FDIC, and the NCUA.

• Comments on the proposal are due 60 days after publication in the Federal Register.
  

FDIC issues final rule on resolution plans for larger banks. On July 9, 2026, the FDIC published a final rule regarding resolution plan requirements for covered insured depository institutions with $100 billion or more in total assets. “The final amended rule strengthens the current resolution plan rule to support the FDIC’s resolution readiness in the event of material distress and failure of large [insured depository institutions],” the agency explained in a fact sheet on the new rule. Under the rule, institutions with $100 billion or more in average total assets (Group A) will submit resolution plans with a comprehensive strategy, while institutions with average total assets of at least $50 billion but less than $100 billion (Group B) will submit more limited informational filings. The FDIC stated that the resolution strategy identified for larger banks would likely follow a bridge bank approach, under which the agency, as receiver, would operate the failed institution, although the rule does not require that approach.

FDIC proposes amendments to information disclosure regulations. On June 25, 2026, the FDIC Board of Directors approved a notice of proposed rulemaking to amend the agency’s regulations governing the disclosure of confidential supervisory information (CSI) by the FDIC and other entities. The FDIC said its proposal would provide additional flexibility for insured depository institutions by expanding their ability to share confidential information without prior FDIC approval. It would also clarify the process for the FDIC to disclose CSI or approve disclosures by institutions and update rules governing disclosures under the Freedom of Information Act and in legal proceedings. In addition, it would allow disclosures of certain information to merger counterparties and other service providers, including financial technology (fintech) companies. Restrictions on sharing such information have historically presented regulatory diligence complexities in M&A transactions.

• Comments on the proposal are due 60 days after publication in the Federal Register.
  

Banking regulators update inter-agency documents to remove reputation risk references. Three key bank regulatory agencies – the Fed, the FDIC, and the OCC – have jointly updated inter-agency documents to remove references to reputation risk. A joint announcement published on June 2, 2026 indicates that this step complements earlier actions to end the use of reputation risk in supervision, citing concerns that it could be misused “to restrict individuals’ and legal businesses’ access to financial services due to their constitutionally protected political or religious beliefs, speech, or conduct or lawful business activities.”

• In April 2026, the FDIC and the OCC issued a final rule codifying the elimination of reputation risk from their supervisory programs. The rule defines reputation risk to include “an express reference to the operational conditions of an institution.” The rule also prohibits the agencies from requesting or directing a bank to close customer accounts based on a person’s political, social, or religious beliefs or other lawful activities, consistent with EO 14331, “Guaranteeing Fair Banking for All Americans.”
  
  
• The removal of reputation risk from bank supervisory programs aligns with the Trump Administration’s broader focus on banking access issues. That focus is reflected in EO 14331, which addresses concerns regarding the denial of banking or financial services (i.e., debanking) based on political or religious beliefs, as well as perceived risks associated with otherwise lawful business activities. Read more about this development in our DLA Piper client alert.

New community bank leverage ratio rule goes into effect. On July 1, 2026, a new inter-agency rule lowering the community bank leverage ratio from nine percent to eight percent went into effect. According to statements from the FDIC, the Fed, and the OCC, the change allows community banks to use a simplified method of capital adequacy and is intended to reduce regulatory burden. The agencies jointly published the final rule on April 29, 2026. The rule also extends the grace period for temporarily non-compliant community banks from two months to four months. Community banks that utilize the grace period must maintain a leverage ratio of more than seven percent and must not spend more than eight quarters in the grace period during any five-year period.

FDIC proposes reducing deposit insurance rates for banks, raising threshold for large institutions. On June 25, 2026, the FDIC issued a notice of proposed rulemaking that would lower the assessments banks pay into the agency’s Deposit Insurance Fund (DIF). The proposed rule also would increase the threshold at which banks are considered “small” from $10 billion to $30 billion in assets, which would result in more banks being assessed at lower rates. The FDIC’s proposal would reduce the initial base deposit insurance assessment rate for both large and small banks by 0.01 percent and 0.02 percent, respectively. Large banks could receive additional assessment reductions if they provide the agency with additional data or temporary access to internal systems. The DIF, which is funded through risk-based assessments paid by insured depository institutions and interest on US Treasury securities, aims to protect depositors and support the resolution of failed banks. The fund provides deposit insurance coverage of up to $250,000 per depositor.

• FDIC staff have prepared assessment rate calculators to allow financial institutions to estimate their assessment rates under the proposed rule.

• Comments on the proposal must be received by August 31, 2026.
  

President Trump signs Executive Order to streamline fintechs’ access to financial services. On May 19, 2026, President Trump signed EO 14405, “Integrating Financial Technology Innovation into Regulatory Frameworks,” aimed at streamlining regulatory processes, reducing unnecessary barriers to entry, and encouraging collaboration between fintech firms, federally regulated financial institutions, and federal financial regulators. Under the EO, the Fed is directed to “evaluate the legal, regulatory, and policy frameworks governing access to Reserve Bank payment accounts and payment services by uninsured depository institutions and non-bank financial companies,” according to a White House fact sheet issued with the Order. The EO also directs the Fed to assess its legal authority to provide uninsured depository institutions and non-bank financial companies with access to Reserve Bank payment accounts and services. In addition, the Fed must report on potential avenues for expanding such access, legal constraints that could limit direct access, and the policies and authorities governing access at both the Reserve Bank and Board of Governors levels. Federal financial regulators are required to review and identify existing regulations that may be updated to facilitate innovation and take steps to encourage innovation.

Fintech companies and non-bank payment firms that fall within the Fed’s Tier 2 or Tier 3 categories under the 2022 account access guidelines are encouraged to monitor these developments closely. Direct access to payment services for fintechs has been a longstanding topic of discussion among fintech companies. Read more about this topic in our DLA Piper client alert.