Page 4 - January 16, 2025 Bulletin

BANKING
ARTICLES

FDIC’s Hill Outlines Policy for banks to close accounts rather than risk massive fines for
Priorities in Next Administration inadequate BSA compliance,” he said.
Hill also called for an end to the FDIC’s “misguided focus” on
In a recent speech, FDIC Vice Chairman Travis Hill outlined his climate change and for the agencies to craft a Basel III endgame
policy priorities for the agency in coming months, calling for a response that is roughly capital neutral. Hill opposed the proposal
return to fundamentals for bank supervision, a “more open-minded put forward by the Federal Reserve last year, which is currently on
approach” to technology and bank-fintech partnerships, and a re- hold as regulators debate proposing the rule with significant changes.
evaluation of how regulators implement the Bank Secrecy Act.
Hill noted the looming departure of FDIC Chairman Martin CFPB Adjusts Exemption
Gruenberg on Jan. 19, which is the day before President-elect Trump Thresholds for Reg C, Reg Z
takes office. The change in FDIC leadership will result in a change in
policy direction, with Hill touching on several changes he would like The Consumer Financial Protection Bureau has announced the
to see in coming weeks and months, starting with supervision. He annual threshold adjustments for asset-size exemptions from
called for bank supervision to focus less on process and more on core Regulation C, which implements the Home Mortgage Disclosure
financial risks. Act, and Regulation Z, which implements the Truth in Lending Act.
“[Supervisor] criticisms often have little bearing on a bank’s actual For Reg C, the exemption threshold will increase to $58 million
health or solvency, are a major distraction for examiners and banks, from $56 million. The adjustment is based on the 2.9% increase
and are contributing to crushing compliance costs, particularly for in the average of the CPI-W for the 12-month period ending in
community and regional banks,” Hill said. November 2024, according to the CFPB.

Hill wants FDIC supervisors to be more receptive when banks For more info on Reg C: https://www.consumerfinance.gov/
approach them about adopting new technologies or innovation, rules-policy/final-rules/home-mortgage-disclosure-regulation-c-
saying bank experimentation “should not require time-consuming adjustment-asset-size-exemption-threshold/
engagements with examiners or extensive approval processes.” For Reg Z, the exemption threshold will increase to $2.717 billion
He also wants the agency to rethink its oversight of bank-fintech from $2.640 billion for certain first-lien higher-priced mortgage
partnerships, calling for fewer enforcement actions and more loans. The asset limit will also apply during a grace period, in certain
openness about the agency’s expectations for such ventures.
circumstances, with respect to transactions with applications received
Hill addressed the issue of “debanking,” pointing to complaints from before April 1, 2026. For certain insured depository institutions
individuals in the cryptocurrency industry who claimed they had and insured credit unions meeting certain conditions, including an
lost access to bank accounts as well as those who claimed they lost asset-size exemption threshold, the exemption threshold will increase
access for political or religious reasons. The first step to address such to $12.179 billion from $11.835 billion. The adjustments are based
complaints is to re-evaluate how regulators implement the BSA, he on the 2.9% increase in the average of the CPI-W for the 12-month
said. period ending in November 2024.
“While we all share the goal of ensuring criminals and terrorists are For more info on Reg Z: https://www.consumerfinance.gov/rules-
not using the banking system to fund drug trafficking, terrorism, policy/final-rules/truth-lending-act-regulation-z-adjustment-asset-
and other serious crimes, the current BSA regime creates an incentive size-exemption-threshold/

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