/>iThe FDIC will shift its focus and priorities under the leadership of its new Acting Chairman, Travis Hill. In a statement released on January 20, 2025, Chairman Hill signaled a potential departure from some of the initiatives of the prior FDIC leadership. In the statement, he explained his key priorities for the agency moving forward, which include:
- Rethinking the agency’s regulatory approach. Hill expressed concerns that existing regulations, guidance, and manuals may be overly burdensome to innovators. He plans to conduct a comprehensive review of these materials to ensure agency guidance promotes a vibrant and growing economy. This review may lead to the withdrawal of certain proposals, such as those related to brokered deposits and corporate guidance, which were a focus of the previous administration.
- Streamlining supervisory efforts. Hill emphasized the need to focus supervisory efforts on core financial risks rather than ensuring compliance with overly burdensome processes. He also aims to streamline the supervisory process to reduce the regulatory burden on banks.
- Modernizing resolution practices. Hill highlighted the need to learn from the costly bank failures of 2023 and improve the FDIC’s readiness to resolve large financial institutions that are in financial distress. This will involve the agency being more proactive and nimble and improving the bidding process for the acquisition of failed banks, ensuring the FDIC is better equipped to handle future challenges.
- Balancing growth and safety. Hill acknowledged the need to balance driving economic growth with ensuring safe financial practices. He indicated that the FDIC would consider adjustments to its capital and liquidity rules to achieve this balance, potentially leading to changes to banks’ capital requirements.
Putting It Into Practice: Chairman Hill’s statement suggests a shift in the FDIC’s regulatory approach, which could represent a notable departure from enforcement patterns and guidance under prior FDIC leadership (previously discussed here, here, and here). The primary focus Hill’s statement appears to be cutting unnecessary red tape and emphasis on the promotion of innovation and economic growth. This could mean a more favorable business environment for banks, particularly those engaged in fintech partnerships or other innovative activities.
