Bank Regulatory Update
November 4, 2025
While the forthcoming bank capital proposal has dominated recent regulatory headlines, the banking agencies themselves are undergoing significant change.
Federal Reserve
The Wall Street Journal reported that, according to an internal Fed memo, the agency plans to cut supervision staff by 30% by year-end 2026, reducing the head count from a “previously authorized” 500 to 350.
- Federal Reserve Vice-Chair of Supervision Michelle Bowman announced these reduction-in-staff efforts during a morning meeting.
- Yes, but: In May, its worth noting that Fed Chair Jerome Powell said there would be a 10% reduction in staff across the agency
What’s Next. The article also noted Bowman’s comments that, going forward, the Fed’s supervision and regulation division will move to a flatter management structure.
- The Fed plans to rename its operations unit the “business enablement group” and create a new industry engagement role.
The Federal Deposit Insurance Corp (FDIC)
On October 30, the Senate Banking Committee held a nomination hearing for Acting FDIC Chair to serve as permanent Chair. Hill faced bipartisan scrutiny in his confirmation hearing over the FDIC’s workplace culture.
- Sen. Elizabeth Warren (D-MA) condemned Hill’s actions in response to reports of workplace misconduct at the FDIC.
- Sen. John Kennedy (R-LA) said he would withhold support pending a 30-day report detailing disciplinary actions against offenders.
- Hill pledged that “reforming the culture continues to be a top priority,” emphasizing accountability and structural reform.
Members of the Committee also questioned Hill on shifts in regulatory priorities, including a reduction in the number of examiners and emphasis on deregulation.
- Hill defended the small reduction in the number of bank examiners and reiterated his commitment to tailoring regulations by bank size, refocusing supervision on material financial risks and advancing capital framework adjustments.
- Lawmakers additionally pressed Hill on deposit insurance reform, with Sens. Bill Hagerty and Angela Alsobrooks urging expanded coverage for business accounts as outlined in their recent bill.