The Federal Reserve will make the banking system and economy less safe and less stable with cuts to staffing. Fewer Federal Reserve staff to supervise banks is a bad decision for all Americans. A shortage of trained and experienced bank supervisors was found to be a key cause of the 2023 bank failures. This decision will hurt the Federal Reserve and our banking system.

Michelle Bowman announced that the Fed’s supervision staff would be cut from the current level of 500 staff to about 350 by the end of next year. This cut is far larger than the 10% cut announced by Fed Chair Powell earlier this year.

In a quarterly investor report filed with the SEC, Meta said the CFPB informed it on September 25 that its investigation into the company’s advertising for financial products and services had been closed.

The CFPB completed its rollback of a rule introduced under the previous administration that sought to establish a centralized registry of enforcement actions against nonbank financial entities.

The OCC’s decision to weaken recovery plans will make the financial system, the economy and the American people more vulnerable to the costly consequences of bank failures. The larger and more complex a failing bank is, the more catastrophic its failure can be and the greater the likelihood of taxpayer bailouts. Planning for potential problems before they occur is essential to prevent a crisis from spiraling out of control and devastating Main Street, as happened in 2008, or causing contagion and costing Americans more than $40 billion, as happened in 2023.

Better Markets had applauded the OCC’s guidelines that increased the scope and rigor of recovery planning required at the largest banks. We are disappointed to see the OCC decide to rescind these guidelines.

Mike Selig, Chief Counsel on the SEC’s Crypto Task Force, was nominated to serve as the next chair of the Commodities Futures Trading Commission.

Selig’s appointment is expected to advance regulatory coordination between the CFTC and the SEC, particularly on deregulation of financial markets and light oversight over cryptocurrency.

The Fed Board voted 6 to 1 in favor of a proposal to further weaken the stress tests for large banks. Governor Barr voted against the proposal.

The Fed’s proposed changes will now enable the banks to game the tests to reduce their capital requirements even more. It will give the banks the answers to the test before they take it, rendering the tests essentially worthless.

Read Better Markets’ statement here.