Banking News Roundup – 2025: Week 21
This week: action from D.C., good news on the DIF, bad news for open banking, the Fed + financial plumbing, incumbents + stablecoins, and private credit’s push to deploy capital—in a five-minute read.
Washington D.C.
Rep. French Hill is making good on his promise to Make Banking Great Again. This week, the House Financial Services Committee advanced 25 bills, many of which were bipartisan, aimed at strengthening community banks, easing burdens on small businesses, and expanding access to capital. Highlights include:
The Fair Investment Opportunities for Professional Experts Act, Encouraging Public Offerings Act, and Greenlighting Growth Act, all intended to expand investor access and boost capital-raising activity.
Tailoring-focused reforms like the TAILOR Act, Bank Failure Prevention Act, and FAIR Exams Act, which aim to scale regulation more appropriately for smaller institutions.
Several bills targeted at rural access, startup funding, and revisiting the accredited investor definition passed with overwhelming support—many by near-unanimous margins.
The bipartisan GENIUS Act cleared a key Senate vote, setting up what could become the U.S.’s first federal stablecoin framework. Recent amendments helped win over Democrats by strengthening consumer protections, anti-money laundering rules, and national security safeguards, while also adding limits on non-bank stablecoin issuers and clarifying naming restrictions. Still, opposition remains. House Democrats introduced the Stop TRUMP Act to ban crypto profiteering by elected officials. The bill is not expected to advance in the Republican-controlled House Financial Services Committee.
President Trump’s “big, beautiful” tax bill squeaked through the House, and a Senate rewrite looms. The House passed the sweeping tax and spending bill 215–214 after frantic dealmaking, including raising the SALT deduction cap to $40,000 and moving up Medicaid work requirements. The bill now heads to the Senate, where GOP divisions over spending cuts, green energy rollbacks, and healthcare changes make major revisions likely.
Rates
The debt markets had an allergic reaction to the House tax bill, with yields spiking in response. The 10-year Treasury hit 4.62% before closing the week at 4.508%, while the 30-year briefly topped 5.1%, nearing a two-decade high. Fed officials Bostic and Waller signaled no near-term cuts to the target rate, citing inflation and fiscal stability considerations.
Liquidity
The Fed is exploring whether banks could use the same collateral for both the discount window and the Federal Home Loan Bank (FHLB) System. It’s a welcome idea. The FHLB is fast, user-friendly, and operationally mature. In contrast, the Fed’s discount window remains clunky and outdated, still relying on phone calls and manual approvals. Vice Chair Philip Jefferson described this “interoperability” as a work in progress and part of broader efforts to modernize liquidity tools.
As the Fed continues shrinking its balance sheet, early signs of strain are emerging in money markets, according to Roberto Perli, head of market operations at the New York Fed. As reserves shift from “abundant” to merely “ample,” upward pressure on repo rates is expected—making the Standing Repo Facility (SRF) an increasingly important tool for rate control. Perli described the recent rise in repo rates as a normalization of liquidity conditions, not a cause for concern, but acknowledged the Fed is reviewing frictions that discourage use of the SRF, including balance sheet treatment and uncertainty around award allocations.
Regulation
The Deposit Insurance Fund (DIF) is on track to hit its 1.35% statutory reserve ratio by year-end 2025, roughly three years ahead of the legal deadline. The fund stood at $137.1 billion with a 1.28% ratio at the end of 2024. Acting FDIC Chair Travis Hill floated the idea of using the broader assessment base—rather than insured deposits—to calculate the ratio, citing a mismatch between how assessments are charged and how fund health is measured. No changes to the restoration plan have been proposed.
Treasury Secretary Scott Bessent said regulators may ease the Supplementary Leverage Ratio (SLR) this summer, potentially relieving balance sheet pressure and encouraging banks to increase their Treasury holdings. The SLR requires banks to hold capital against Treasuries and other assets without regard to risk, which banks argue limits flexibility during times of stress. Bessent noted that changes under discussion by the Fed, OCC, and FDIC could reduce Treasury yields by “tens of basis points.” He called it a meaningful structural fix, especially given the size of the U.S. debt market.
The Consumer Financial Protection Bureau (CFPB) is moving to kill its open banking rule, telling a federal judge it believes the regulation is unlawful. The rule, issued under Section 1033 of the Dodd-Frank Act, would have required banks to share customer account data with third-party fintechs upon consumer request. In a court filing, the Bureau said it plans to formally rescind the rule.
The CFPB rescinded a 2022 interpretive rule that had allowed state attorneys general to enforce federal consumer financial laws—narrowing state authority to bring claims under statutes like the Truth in Lending Act and Fair Credit Reporting Act.
Credit
Last week we told you about a decline in New York factory activity. This week, the Kansas City Fed reported that manufacturing in the Tenth District also contracted slightly in May, with the composite index at -3. Production, shipments, and new orders all declined, while backlogs fell sharply. Despite these signs of weakness, most firms said they hadn’t changed hiring or capital spending plans. Price increases for both inputs and finished goods moderated, and expectations for future activity remained modestly positive
Direct lenders raised $113.2 billion last year. Now, they need a place to put it. With dealmaking slowed and leveraged buyouts scarce, firms are being forced to find demand. Big players, like Apollo, Ares, Blue Owl, and Sixth Street, have entered the market for niche consumer loans and complex projects, like data centers. One new market that may be opening up: U.S. infrastructure. As federal funding wanes and costs rise, private lenders see opportunity in public transit, water systems, and utilities.
A new Boston Fed report warns that the rapid growth of private credit could pose under-appreciated risks to financial stability—particularly through its ties to the banking system. Although banks don’t originate most private credit loans, they provide crucial liquidity to private credit funds via senior secured credit lines. While current conditions remain stable, the authors urge closer monitoring of bank–nonbank linkages and greater data transparency.
Digital Assets (aka Cryptocurrency)
According to an exclusive Wall Street Journal report, major U.S. banks—including JPMorgan, Bank of America, Citigroup, and Wells Fargo—are exploring a jointly issued stablecoin. The effort is being discussed through their shared ventures, Early Warning Services (which operates Zelle) and The Clearing House. The news comes as Tether signaled a shift away from the U.S., saying it will focus on serving emerging markets. Tether’s USDT already accounts for more than 60% of the stablecoin market, with 420 million users outside the U.S.
Michigan lawmakers introduced four crypto-related bills this week. One would permit pension funds to invest in Bitcoin via regulated ETFs, while another would bar state agencies from supporting a U.S. central bank digital currency (CBDC). Two additional bills would promote Bitcoin mining at abandoned oil wells by offering tax incentives linked to environmental remediation. Meanwhile, Texas is poised to become the second state after New Hampshire to adopt a state-managed Bitcoin reserve. The bipartisan bill has cleared all legislative hurdles and awaits a final concurrence vote before reaching Governor Greg Abbott’s desk.
Transactions
Capital One Financial Corp. closed on its takeover of Discover Financial Services.
PNC Bank announced a deal to acquire Aqueduct Capital Group, a Charlotte-based capital advisory firm. Terms were not disclosed.
BancFirst Corp. announced an agreement to acquire American Bank of Oklahoma. The $14 billion asset BankFirst will gain $385 million in assets via the transaction. Terms were not disclosed.
Citizens & Northern Corporation announced an agreement to acquire Susquehanna Community Financial in a $44.3 million stock deal. The two Pennsylvania banks will combine to form a $3.2 billion asset financial institution.
South Dakota-based First National Bank of Fort Pierre announced a deal to acquire Wyoming Bank & Trust. The combined banks will hold $2 billion in assets. Terms were not disclosed.