Tariffs, CFPB and FDIC: 8 big issues banks face today

8 of the biggest issues facing the banking industry today

April 8, 2025 9:00 AM

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President Donald Trump's proposed plan to establish a 10% tariff floor across the board, along with changes at the Federal Deposit Insurance Corp. and the Consumer Financial Protection Bureau, are some of the biggest issues pressing banking executives today.

The long-awaited initial public offering from the Swedish buy now/pay later lender Klarna has been put on hold following the tariff news. The IPO decision, which came in the middle of an already volatile market, garnered doubt from investment specialists and other experts who felt that recession fears and unstable footing made it the wrong time for such a move.

"In my view it's a terrible time to try an IPO," Adrian Mendoza, general partner and founder of Mendoza Ventures, an investment firm that specializes in fintech, told American Banker. "The back and forth on tariffs has created a volatility in the market, and I see more retail investors pull back on the fears of a recession."

Inflationary discussions in the wake of the tariffs haven't inspired panic in officials with the Federal Reserve. In speaking to an audience during the Society for Advancing Business Editing and Writing's annual conference in April, Fed Chair Jerome Powell remarked that "it's just too soon to say what the appropriate monetary policy response to these new policies will be."

"We will continue to carefully monitor the incoming data," he said. "We are well-positioned to wait for greater clarity."

Other banking leaders like JPMorgan Chase Chief Executive Jamie Dimon are eyeballing the short- and long-term effects of the tariffs. Specifically when it comes to inflation, "[the] impact on investments and capital flows [and] the effect on corporate profits," Dimon said in his annual letter to shareholders.

"While inflation has come down, most of what I see in the future is inflationary: continued high fiscal deficits, the remilitarization of the world and the need for infrastructure investment, including the green economy and the restructuring of trade and tariffs," Dimon said.

Read more: Tariffs

Regulatory news has also been rampant in recent weeks.

The on-again, off-again situation at the CFPB under the Trump administration has entered a new phase, as the agency restarted its enforcement activity to focus on violations involving service members and joint cases with state attorneys general, per American Banker reporting. The move follows a Department of Justice court filing on April 4 stating that a prior stop-work order does not include statutory work.

Since the departure of former CFPB Director Rohit Chopra in February, the agency has seen a spate of executives at the helm, which include Treasury Secretary Scott Bessent, Office of Management and Budget Director Russell Vought and former FDIC Director Jonathan McKernan, who is the current nominee to be the next CFPB director.

Lead officials have worked to effectively defang the CFPB through mass layoffs, regulatory rollbacks, work stoppages and more.

Read the full recap of these issues and more below.

FDIC upheaval offers crypto opportunity, bank uncertainty

The Federal Deposit Insurance Corp., like many government entities, is going through a rough period under the new president. Experts predict that staff cuts, a problematic work culture and regulatory changes are just the start of what's to come.

Last month, acting FDIC Chair Travis Hill sent a letter to House Financial Services Committee member Dan Meuser, R-Pa., explaining how the agency would work with the Treasury to walk back its use of reputational risk in supervisory activity — signaling a stark departure from the FDIC's stance under the Biden administration. The Office of the Comptroller of the Currency was first to do so, as per a March 20 announcement.

Hill joins other changemakers working to address the trend of "debanking," wherein financial institutions are shuttering consumer and business accounts for alleged political differences or under pressure from regulators.

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FDIC upheaval offers crypto opportunity, bank uncertainty

Powell: Fed will wait to see tariffs' effects before acting

The Trump administration's new policies on tariffs, immigration and government spending undeniably will have an effect on the U.S. economy this year, but until the consequences are understood fully, the Federal Reserve is taking a wait-and-see approach on interest rates, said Jerome Powell, the central bank's chair.

"It's just too soon to say what the appropriate monetary policy response to these new policies will be," Powell said. "Fast forward a year from now, the uncertainty will be much lower and the effects of the policies will be clear."

The Fed remains focused on its congressional dual mandate to maintain price stability and maximum employment, Powell said Friday in remarks to the Society for Advancing Business Editing and Writing, a business journalists' association, at its annual conference.

Read more:

Powell: Fed will wait to see tariffs' effects before acting

'Complete whiplash': Bank stocks fall after recent euphoria

Bank stocks have benefited from yearslong efforts to strengthen liquidity levels, build capital cushions and clean up credit. Trump's tariff policies have crushed those stock gains.

After sliding on April 3, bank share prices continued to fall the following day as Wall Street factored in the increasing likelihood of higher inflation and a recession due to the proposed tariff regime. The so-called Trump bump that drove bank stocks to their highest levels in years on hopes of deregulation and business-friendly policies was wiped away. Some of those companies' shares saw their steepest drops since the banking crisis in 2023.

And this might not be the nadir for bank stocks. Even though they don't face direct hits from tariffs, there are revenue risks that come with the policies, D.A. Davidson analyst Peter Winter told American Banker. The sector's punishment in the market is an indicator of broader concern about the economy.

Read more:

'Complete whiplash': Bank stocks fall after recent euphoria

CFPB will rewrite small-business lending rule

The Consumer Financial Protection Bureau said it would reissue a Dodd-Frank-mandated rule originally released under the Biden administration requiring lenders to collect and report data on small-business loans, citing ongoing legal challenges to the regulation.

The CFPB said in an April 3 legal filing in Revenue Based Finance Coalition v. CFPB — an industry challenge to the small-business data collection rule required under Section 1071 of Dodd-Frank — that it plans to reevaluate the regulation and initiate a new rulemaking process, which could render the lawsuit moot.

"CFPB's new leadership has directed staff to initiate a new Section 1071 rulemaking," the filing noted. "The CFPB anticipates issuing a Notice of Proposed Rulemaking as expeditiously as reasonably possible. Because the anticipated rulemaking process may be moot or otherwise resolve this litigation, holding this matter in abeyance would conserve the Court's resources."

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CFPB will rewrite small-business lending rule

80% of Wall Street firms are splurging on AI

Financial services firms are going all-in on AI and data management investments this year as many feel tech is outpacing their adoption, a new survey from Broadridge Financial Solutions finds.

The fifth-annual Digital Transformation & Next-Gen Technology Study found 80% of the more than 500 firms surveyed are making moderate-to-large investments in artificial intelligence this year, up from 74% in 2024. Half of executives surveyed said they foresee capital-markets firms engaged in significant adoption of digital assets and ledger technology in the next few years.

Much of this is driven by a shifting sentiment among respondents as to the quantifiable value artificial intelligence has, Germán Soto Sanchez, chief product and strategy officer at Broadridge, told American Banker.

Read more:

80% of Wall Street firms are splurging on AI: Broadridge

Republicans spell out regulatory demands

Leading Republicans on the House Financial Services Committee released a flurry of letters to key bank regulators asking for them to rescind or alter rulemaking from the Biden administration.

Lawmakers, led by Rep. French Hill, the chairman of the House Financial Services Committee, wrote to the heads of several financial regulators — including the Treasury Department, the FDIC, the Federal Reserve, the OCC and the CFPB — with a laundry list of bank regulations they would like to see rolled back or done away with under the Trump administration.

For all the prudential regulators, the lawmakers asked that they roll back the revamped Community Reinvestment Act, a 1977 anti-redlining law that bank regulators updated the implementation rules for in October 2023. The Fed, the FDIC and the OCC already said that they plan to rescind the CRA rule and revert to previous standards.

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Republicans spell out demands for bank regulators

OCC ends consideration of climate-related financial risks

The Office of the Comptroller of the Currency is ending its participation in a framework for mitigating climate-related financial risks at large banks.

The agency said on March 31 that the principles hampered institutions and their regulators, and that this framework was duplicative of other regulatory requirements.

"The OCC's existing guidance for banks to maintain a sound risk management framework applies to all activities conducted by supervised institutions and includes potential exposures to severe weather events or natural disasters," acting Comptroller of the Currency Rodney Hood said. "I will continue to look for appropriate opportunities to calibrate regulatory requirements to be effective, not excessive, while ensuring the safety, soundness and fairness of the federal banking system."

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OCC ends consideration of climate-related financial risks

Treasury's halt of paper checks likely to reduce fraud

The banking industry's effort to fight check fraud is likely to benefit from President Donald Trump's order to the Treasury Department to stop issuing paper checks for federal disbursements and to transition to digital payments.

The executive order, signed last week, cited concerns of "unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies" with using paper checks for federal payments. It gives the Treasury about six months to switch to digital.

Suspicious Activity Reports, or SARs, related to check fraud nearly doubled from 2021 to 2023, according to the FBI's Internet Crime Complaint Center. Just over a third (about 521,000) of the 1.5 million fraud-related SARs filed by depository institutions in 2024 were related to check fraud, according to recent Fincen data. The overall financial losses from fraud and scams increased in 2024 as well.

Read more:

Treasury's halt of paper checks likely to reduce fraud