Banking News Roundup – 2025: Week 15
Tariff fallout, "fast flux" cyber attacks, FSB's new leader, leveraged finance, First Citizens + SVB loans, earnings, crypto news, and the latest from D.C., all in a five-minute read.
Bankeration’s weekly news roundups will be on hiatus for a couple of weeks. We’ll be back the first week of May. We may post a couple of longer reads during the break. You can follow us on X (formerly Twitter), Bluesky, or Attion Consulting’s LinkedIn page for updates. As always, if you have a burning question—or a hot take you want to share—feel free to DM me.
Tariffs
The good news: bank valuations didn’t get any worse. The bad news: they’re not materially better, either. The KBW Bank Index closed up 3.1% for the week, while the KBW Regional Banking Index ended slightly lower. Morgan Stanley downgraded its outlook on large- and mid-cap bank stocks from “attractive” to “in-line.”
Interest rate volatility and deal uncertainty were the biggest immediate pain points for most of the banking community following the tariff announcement. Reports on M&A were mixed, with most chatter suggesting that dealmaking has come to a standstill. The Wall Street Journal reports that a merger between two regional banks, which looked promising last week, may now be derailed. American Banker reports a broader slowdown in merger activity but said that small banks—especially those with thinly traded shares—may still be receptive to acquisition offers.
In flight-to-safety trades, the dollar hit a six-month low on Friday. The Swiss franc reached 0.8259 per U.S. dollar, and gold prices hit a record high.
Treasury yields, which initially dropped after Trump’s tariff announcement, reversed sharply in a selloff that intensified as the week progressed. The 10-year yield saw its largest weekly gain since the aftermath of 9/11, closing at 4.492%. The two-year yield rose to 3.950%. While futures markets priced in 4–6 rate cuts, some market watchers are concerned the Fed might hike rates to fight inflation, rather than drop rates to stimulate growth. Municipal bonds also took a hit, with the Bloomberg Municipal Index rising to a 15-year high of 4.5%.
Earnings
The largest U.S. banks reported earnings Friday. Results were strong, but the tone was cautious. JPMorgan beat earnings estimates by nearly 10% and held its 2025 outlook steady. CEO Jamie Dimon said a JPMorgan economist now places the odds of a recession at 50/50.
Wells Fargo also beat expectations, thanks largely to improved credit quality and a $95 million drop in CRE charge-offs. However, the bank missed net interest income projections by $300 million. Both JPM and Wells noted that commercial borrowers haven’t rushed to draw down on their lines of credit despite the tariff chaos.
BNY Mellon posted a record quarter. Morgan Stanley and JPMorgan increased their credit loss reserves due to changes in economic forecasts. CEOs across the board hedged on the outlook: too soon to tell, too volatile to predict.
Washington D.C.
Paul Atkins was confirmed as Chair of the Securities and Exchange Commission. The former SEC commissioner and founder of Patomak Global Partners is expected to push a deregulatory agenda, improve relations with the cryptocurrency industry, and scale back corporate disclosure rules.
Federal Housing Finance Agency (FHFA) Director Bill Pulte continued his shake-up of the GSEs, firing 100 Fannie Mae employees for misconduct and announcing that FHFA has reduced its workforce by 25%.
The House voted to overturn Consumer Financial Protection Bureau (CFPB) rules capping overdraft fees and expanding oversight of non-bank payment providers. Once signed by the President, the resolutions will not only nullify the rules but block similar regulations going forward.
Meanwhile, Congress reintroduced bills to stop “trigger leads” — those annoying solicitations you get when you apply for a mortgage — and DOGE finally landed at the FDIC, looking to cut staffing by up to 20%.
Credit
Leveraged-finance deals are being postponed as investors back away from risk assets. Bloomberg reports that lender commitments for HIG Capital, LLC and ITG Communications LLC transactions evaporated, and that other deals may be in danger.
First Citizens terminated its loss-sharing agreement on Silicon Valley Bank loans ahead of schedule, signaling it expects no more than $5 billion in losses. Early termination also relieves the bank of certain reporting requirements.
Regulation
The CFPB is back to work on enforcement, but not supervision. A few weeks ago, a judge ordered the agency to rehire its staff—but last week, a federal appeals court issued an administrative stay. However, an earlier order to rehire probationary employees stands, and that portion of the workforce is back at their desks. American Banker reports that of the 37 CFPB enforcement cases pending at inauguration, at least 10 have been dismissed and around a dozen are paused. Acting Director Russell Vought has allowed seven to proceed, including actions against MoneyLion, First Cash, and FDATR. An outstanding case against Comerica was dropped this week.
Bank of England Gov. Andrew Bailey will lead the Financial Stability Board (FSB) after Chair Klaas Knot leaves in June. The FSB would traditionally flip to North American leadership following Knot’s stint at the wheel. The global watchdog announced it would set up a taskforce to study how the shadow banking system—including hedge funds, insurers, and investment funds—could trigger broader financial instability. The carry trade1 and basis trade2 are both under scrutiny following August’s yen carry trade unwind and Europe’s discovery of hedge funds carrying $220 billion in 18x leveraged market bets earlier this year. The FSB previously announced it would release recommendations to manage nonbank financial institution (NBFI) related systemic risks by early 2025.
Cybersecurity
Cybersecurity agencies across the U.S., Australia, Canada, and New Zealand issued a warning about “fast flux”—a technique that lets hackers evade detection by rapidly changing domain names and IP addresses. Agencies are urging DNS providers and internet companies to help detect the tactic, and asking businesses to report suspicious traffic and share intel.
A cybersecurity breach at the Office of the Comptroller of the Currency (OCC) exposed sensitive email data, including supervisory details about a federally regulated bank. Bloomberg reports that the compromised account lacked multifactor authentication. Hackers guessed the password in a “sprayword” attack. The OCC classified the incident as a major breach, enlisted third-party cybersecurity experts, and is overhauling its IT protocols. This follows a separate Treasury Department breach in January tied to Chinese hackers.
Digital Assets (aka Cyrptocurrency)
President Trump signed a bill into law overturning the IRS’s DeFi broker rule. Critics of the rule argued that decentralized protocols cannot comply with tax reporting requirements designed for traditional brokers.
The SEC dropped its lawsuit against Nova Labs over the Helium Network. Nova Labs celebrated the decision as a win for decentralized infrastructure. The company will pay a $200,000 fine related to its Series D financing but admitted no wrongdoing.
The DOJ has shut down its National Cryptocurrency Enforcement Team. Crypto enforcement will now be handled by other regulators. The DOJ also clarified that it will no longer prosecute unintentional violations of the Bank Secrecy Act, focusing instead on cases involving fraud or hacking.
Transactions
Pittsburgh-based FNB Corp. agreed to acquire boutique investment bank Raptor Partners. The $49 billion-asset bank generated $24.2 million in income from its existing capital markets group in 2024. Terms were not disclosed.
San Diego County Credit Union and California Coast Credit Union announced plans to merge. The combined credit union will have $12.6 billion in assets and operate under the California Coast name. Terms were not disclosed.
To learn more about the carry trade, click here: https://www.jhinvestments.com/viewpoints/investing-basics/what-is-a-carry-trade-.
To learn more abut the basis trade, click here: https://www.apolloacademy.com/what-is-the-basis-trade/