Banks face favorable, uncertain regulatory environment

SAN DIEGO — Community bankers enjoy a more favorable regulatory environment with less-experienced examiners under the Trump administration, said two IntraFi executives on March 7 during ICBA LIVE 2026. .The panel included Rae-Ann Miller, chief risk officer for IntraFi; and Senior Managing Director Diane Ellis. Regulatory agencies have lost a significant number of staff over the past 15 months, Miller said. Federal Reserve Vice Chair for Supervision Michelle Bowman is leading a restructuring at the Fed, where supervision staffing is expected to be reduced 30 percent by the end of this year to 350 from 500. The FDIC is aiming to cut its workforce by roughly 20 percent. In February 2025, the OCC fired dozens of probationary employees, while 140 employees accepted voluntary buyouts. The CAMELS rating system will likely be revised, Miller said. During the second term of the Trump administration, regulators have signaled a willingness to focus more on material financial risks. Some proposals have included evaluating the management component and possibly reducing examiner discretion. There has been “policy whiplash” between the two terms of the Trump administration and four-year presidency of Democrat Joe Biden, said Ellis, former FDIC director of the Division of Insurance and Research. The past decade of regulatory changes requires bankers to be on alert for potentially tougher standards after Trump leaves office, she added. Ellis and Miller discussed fintech giant Kraken earlier this week becoming the first to receive a Federal Reserve Master Account. Ellis said the Trump administration seems to want to entrench fintechs into the Fed Master Account space so that they can’t be removed if/when the regulatory landscape shifts. Following the approval, ICBA said it had “deep concerns over the Federal Reserve Bank of Kansas City’s approval, claiming that such access to nonbanks poses major risks to the banking industry.Consumer protection laws are still in place, despite the Consumer Financial Protection Bureau being effectively shut down, Miller said. Miller and Ellis also discussed top considerations between regulators and bank management. Miller said bank leaders should have strong escalation policies to ensure transparency between the groups, and proactively engage with examiners.