New FDIC Chair Pledges ‘Wholesale Review’ of Bank Regulations

One of America’s newest financial watchdogs wants to conduct a sweeping review of bank regulations.

Travis Hill, named acting head of the Federal Deposit Insurance Corporation (FDIC) by President Donald Trump, placed that review at the top of a lengthy list released Tuesday (Jan. 21) of matters he hopes to address in the weeks and months ahead.

At the top of the list: plans for a “wholesale review of regulations, guidance, and manuals to ensure our rules and approach promote a vibrant, growing economy.”

Hill, who became vice chair of the regulator in 2023, also plans for a “more open-minded approach to innovation and technology adoption,” including “more transparent approach to fintech partnerships.”

This follows a report from last month that the FDIC — still under the Biden administration — was increasing scrutiny on partnerships between banks and FinTechs.

Regulators were already looking at the “downstream risks associated with know your customer (KYC), compliance and risk management, fraud, and the financial safety of FinTechs and their partners,” as PYMNTS wrote earlier in the year.

Then came the Synapse bankruptcy in April, further underlining the pressures on middleman relationships within BaaS.

The FDIC called out the Synapse situation when proposing a rule that would bolster recordkeeping for bank deposits from third-party, non-bank companies that accept those transactions on behalf of consumers and businesses.

Hill also called for the withdrawal of “problematic proposals from the past three years, such as proposals on brokered deposits and corporate governance.”

In addition, he said the FDIC needs to improve its readiness for “resolving large financial institutions, incorporating lessons from the far-too-costly failures of 2023,” a year in which several regional banks collapsed.

And he called for updates to the bank merger approval process, replacing last year’s Statement of Policy “to ensure that merger transactions that satisfy the Bank Merger Act are approved in a timely way.”

Hill’s proposal comes as the banking sector is anticipating a period of relaxed regulation under the new president.

“If you look at the last administration and the number of new, significant regulations, it was eight times the number of significant new regulations versus the prior Trump administration,” Mary Erdoes, head of asset and wealth management for J.P. Morgan Chase, said at the World Economic Forum in Davos Tuesday.

“With that comes multiple millions of man hours of paperwork. Work . . . that clogs up the system and stops the economy from continuing to have that very healthy flywheel. So we’re really looking forward to that.”