White House Weighs Folding FDIC Into Other Agencies

The Trump administration is reportedly considering plans to shrink one of America’s banking regulation bodies.

These talks propose folding the Federal Deposit Insurance Corp. (FDIC) into the Treasury Department, the Wall Street Journal reported late Tuesday (Feb. 11), citing sources familiar with the matter.

In another scenario — one that the report said would be carried out without Congressional involvement — the administration would combine the FDIC’s regulatory role with the Office of the Comptroller of the Currency (OCC), a division of the Treasury.

There’s also the possibility of having one person oversee both the OCC and the FDIC, sources told the WSJ. This would let the OCC take over all of the FDIC’s supervision efforts — including its role in shutting down failed banks — while the FDIC would handle deposit insurance.

As the report notes, banks have been hopeful that Trump would take a more open position on things like capital requirements, mergers and acquisitions and technology partnerships than the Biden White House.

“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 wealth and asset management for J.P. Morgan, said during the World Economic Forum in Davos last month.

“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.”

However, the WSJ report adds, banks would argue against any change that threatens the ability of the government to insure deposits, uncover risks and handle orderly bank closures. Some bankers have lobbied for the government to expand deposit insurance, especially after a series of banking failures in 2023.

Trump’s apparent efforts to consolidate/shrink the FDIC follow his targeting of another financial regulator, the Consumer Financial Protection Bureau (CFPB).

The president this weekend named Russell Vought, the head of the Office of Management and Budget, as acting director of the agency. Vought quickly moved to shut down the CFPB offices and instructed its workers to cease all enforcement efforts.

PYMNTS wrote earlier this week about what these changes could mean for recent CFPB rules on open banking.

“If future rulemaking is indeed dead in the water and existing rules could be cut back, the sweeping moves would presumably include the October issuance of the final rule that would shape how personal financial data is handled, and by extension, how open banking evolves,” that report said.