The Fed rescinded its 2022 supervisory letter that set the expectation that state member banks provide advance notification of planned or current crypto-asset activities. Crypto activities are known to be risky and fraudulent. By removing the expectation that banks show that they can manage this risk before taking it on, the Fed has invited illegal and dangerous activity into the banking system.

The Fed joined the FDIC and OCC in withdrawing 2023 crypto guidance. Crypto activities are known to be risky and fraudulent. By removing the expectation that banks show that they can manage this risk before taking it on, the Fed has invited illegal and dangerous activity into the banking system.

The Department of Justice reportedly plans to eliminate its Consumer Protection Branch, the division responsible for bringing the DOJ’s cases against fraudsters, deceptive marketing, and unsafe health products.

FDIC continued to cut staffing; aiming to shed a total of 1200 positions from its starting point of 6200. Fewer FDIC staff to supervise banks (now and in the future), manage the deposit insurance fund, conduct resolution of failed banks, and protect consumers will directly lead to a banking system that is weaker and less safe. A shortage of trained and experienced examiners was found to be a key cause of the 2023 bank failures. This decision will hurt the agency and banking system now and for years to come because the examiner pipeline will be empty.

The Federal Reserve Board requests comment on a proposed rule that will weaken the stress tests for large banks.

The Fed Board voted 6 to 1 in favor of a proposal to weaken the stress tests for large banks. Governor Barr voted against the proposal. The proposal makes changes to average stress test results over two years, delay the implementation of the resulting capital requirements, and streamline data collection from the banks to conduct the test. This proposal will be followed by other changes “later this year” to further weaken the test framework.

The Trump Administration sent out Reduction-in-Force Notices (i.e., termination. Notices) to approximately 1500 of 1700 CFPB employees, indicating that it intends to immediately reduce the agency to approximately only 200 employees. Entire agency divisions have been virtually eliminated — though a federal court has temporarily placed these terminations on hold until a hearing later this month.