Banking News Roundup – 2025: Week 19
Rates stay put, McKernan heads to Treasury, stablecoin bills hit a snag, the OCC merger rule is nixed, consumers stay skittish, junk debt gets hot, and bank branches come and go—in a five-minute read.
Rates
The Federal Reserve held rates steady at 4.25–4.5% in May, extending its pause amid growing uncertainty. Chair Jerome Powell emphasized that monetary policy remains restrictive and that the Fed is in no rush to act. Recent data shows steady hiring and a 4.2% unemployment rate, giving the Fed the ability to remain patient.
Washington D.C.
It looks like the Consumer Financial Protection Bureau (CFPB) won’t have a permanent head by September after all! President Trump is withdrawing Jonathan McKernan’s nomination for CFPB Director and is instead nominating him for Treasury Undersecretary for Domestic Finance. McKernan has already been advising Treasury while awaiting confirmation, coordinating interagency regulatory reform.
We’re still on course for permanent leadership elsewhere. The Senate Banking Committee advanced Michelle Bowman’s nomination to become the Federal Reserve’s Vice Chair for Supervision in a party-line vote. Bowman, a sitting Fed governor, is expected to take a more industry-friendly regulatory stance.
The Senate voted 52-47 to overturn a Biden-era OCC rule that tightened bank merger reviews and eliminated expedited processes. The resolution—led by Sen. John Kennedy—is expected to pass the House and be signed by President Trump. The vote curtails the OCC's future ability to issue similar rules.
American Banker reports that the Conference of State Bank Supervisors (CSBS) petitioned the OCC to repeal its 2011 preemption rule. In a letter to Acting Comptroller Rodney Hood, CSBS argued the rule conflicts with Dodd-Frank, recent Supreme Court rulings, and Trump-era executive orders. The group says the OCC’s broad preemption of state consumer laws unfairly favors national banks and violates the legal requirement for a case-by-case “significant interference” analysis.
Digital Assets (aka Cryptocurrency)
Efforts to pass stablecoin legislation in Congress collapsed this week amid mounting political tension over President Trump’s crypto ventures. The GENIUS Act, a bipartisan bill establishing a federal framework for dollar-backed stablecoins, failed a Senate cloture vote after key Democrats withdrew support, citing concerns over national security, anti-money laundering provisions, and rushed amendments.
Treasury Secretary Scott Bessent condemned the vote, calling it a missed ‘once-in-a-generation’ opportunity for U.S. leadership in digital assets. Industry voices like Coinbase’s Brian Armstrong and Circle’s Dante Disparte urged lawmakers to continue negotiations, warning that inaction risks undermining innovation and dollar dominance.
In the House, Rep. Maxine Waters led a Democratic walkout from a crypto hearing, protesting Republicans’ refusal to include conflict-of-interest protections. Meanwhile, Sen. Ruben Gallego and eight other Senate Democrats threatened a filibuster if stronger safeguards weren’t added to the GENIUS Act—further fracturing the previously bipartisan coalition.
Despite the breakdown, talks are expected to resume, with lawmakers expressing optimism that a revised bill could emerge from negotiations.
In other crypto news: the SEC and Ripple reached a settlement, ending a four-year legal battle. Ripple will pay $50 million—far less than the $2 billion originally sought—and reclaim $75 million previously held in escrow. The the new settlement awaits court approval. SEC Commissioner Caroline Crenshaw blasted the agreement as a disservice to investors and a retreat from clear enforcement.
eToro, a “social trading” and multi-asset investment company, launched its U.S. IPO roadshow this week, targeting a valuation of up to $4.12 billion. The firm operates a registered broker-dealer and also has a New York State BitLicense, which is notoriously difficult to obtain. Digital assets accounted for 37% of its Q1 2025 trading commission revenue. It reported $192.4 million in net income for 2024 and pitches itself as both a trading innovator and a crypto pioneer.
And in a first, New Hampshire has enacted legislation allowing its treasury to invest up to 5% of public funds—approximately $181 million—in cryptocurrency. The strategic reserve is permitted to hold gold, silver, and digital assets with a market cap over $500 billion. Bitcoin is the only cryptocurrency over the threshold at this time. Governor Kelly Ayotte signed the bill on May 6.
Credit
The Federal Reserve Bank of New York’s April 2025 Survey of Consumer Expectations showed growing household concern about credit. Consumers expect slower income growth, have a dimmer financial outlook, and see a higher likelihood—up 0.3 percentage points to 13.9%—of missing debt payments. Perceptions about access to credit ticked up modestly.
After a brief freeze triggered by Trump’s tariff announcements, junk-debt markets are surging back. Banks are rushing to meet investor demand with high-yield deals including payment-in-kind (PIK) notes, dividend recaps, and large-scale buyout financings. The uptick in activity is largely driven by European deals, but U.S. markets saw notable action too — investor demand for QXO Inc.'s deal to finance its acquisition of Beacon Roofing Supply Inc. was so strong, the offering was upsized by $500 million. The revival may be brief depending on tariff outcomes, but for now, Wall Street is closing deals.
Branches
The bank branch is dead; long live the bank branch! Santander is closing 18 of its ~400 U.S. branches—4.5% of its footprint—by August. Locations impacted include six in Massachusetts, four each in New Jersey and Pennsylvania, two in New York, and one each in Rhode Island and New Hampshire. The closures reflect Santander’s growing focus on digital banking.
The move aligns with broader trends. U.S. Bank closed 50 branches in Q1, Flagstar plans 60 closures this year, and TD will shutter 38 by early June.
While others retrench, Wells Fargo is going on the offensive. CEO Charlie Scharf unveiled plans to open up to 20 new branches in New York City by 2026. The goal: expand Wells Fargo’s 2% deposit share in the city and compete more directly with JPMorgan Chase. The expansion is part of a broader branch network revamp expected to be 90% complete by 2027. The bank’s consumer and small business division—its largest revenue driver—has 31 million digital users but the bank is doubling down on in-person presence in key markets like New York and Chicago.
Transactions
CorePlus Federal Credit Union and Scient Federal Credit Union agreed to merge. The two Connecticut institutions will combine to form a $700 million credit union. Terms were not disclosed.