BPInsights: July 19, 2025

To Stop Scams, Start at the Source

Scams and fraud are growing at an alarming rate, with consumers losing billions of dollars a year in 2024. Banks witness such fraud as they help consumers deal with its effects, and they are motivated to prevent it — but they are missing crucial input from the tech and telecom industries where many scams take root. 

By the numbers: Newly released Federal Trade Commission data show that consumers reported losing more than $12.5 billion to fraud last year, a 25% increase over the prior year. These losses only represent reported cases, with some estimating the true loss is 10x higher.  

Where fraud originates: Social media, communications and messaging platforms are a powerful conduit for fraud and scams, through attacks such as spoofing, scam ads and bank impersonation messages.  

• According to the FTC, 36% of 2024 fraud reports involving a contact method originated via phone or text, leading to $1.5 billion in losses.  

• Social media was the initial contact point in frauds totaling $1.9 billion, or 15% of all reported losses.  

• JPMorgan Chase reported that nearly 50% of fraud complaints it received in the second half of 2024 were linked to social media.  

Call to action: Banks can’t protect consumers from social media and telecom fraud, but telecom companies and tech giants can. While some tech and telecom providers have taken steps to confront the rise in fraud on their networks, their response has been fragmented, episodic and generally insufficient. A more comprehensive, coordinated approach is essential to combat fraud. 

Five Key Things

1. President Discussed Firing Powell, But ‘Highly Unlikely’ to Do So

President Donald Trump said this week that he had discussed the prospect of dismissing Federal Reserve Chair Jay Powell with a group of members of Congress, but is “highly unlikely” to do so, according to media reports. He said that he polled the small group of conservative lawmakers, who were at the White House to discuss unrelated issues on crypto legislation, on whether he should fire the Fed chair, and “almost every one of them said I should.” Trump has frequently expressed frustration with Powell over the FOMC’s decision not to lower interest rates. Other media reports have speculated on who the next Fed chair pick will be after Powell, with Bloomberg naming Kevin Hassett, Kevin Warsh, Christopher Waller and Scott Bessent as potential candidates. 

2. A Fair Exchange: Why Data Aggregators Should Pay to Access Bank APIs 

Certain fintechs and data aggregators object to paying access fees for consumer data sharing APIs. A new BPI fact sheet highlights how these criticisms ignore the substantial costs associated with building and maintaining systems to provide secure data-sharing services and contradict standard business practices relied on by data aggregators themselves when facilitating data transfers. The criticisms also ignore the nature of what’s actually happening: this isn’t about a customer exporting transaction history or account records, a routine, low-cost interaction. It’s about high-volume, often continuous data extraction by data middlemen, frequently without the customer’s awareness, with the intent to store and resell the financial data. 

3. Supervision, ILCs, Indexing: What’s New from the FDIC

The FDIC held an open board meeting this week and issued several regulatory measures. Here’s a rundown of a few actions from the meeting.  

• Indexing proposal: The FDIC proposed to index several regulatory standards to inflation, which aims to avoid subjecting banks to unnecessarily stringent requirements not related to increases in their risk profiles, simply based on outdated thresholds. The standards affected by the proposal include annual audit and reporting requirements, insider lending and standards related to international activities. The proposed changes would “mean the size of an institution scoped into an asset-based threshold would not change based on the changing value of the dollar,” Acting Chairman Travis Hill said.  

• ILCs: The agency issued a request for information on industrial loan companies (ILCs) and withdrew a previous proposal on the topic that would have imposed stricter scrutiny on ILCs. The FDIC aims to undertake a review of the nature and structure of companies that apply for ILC charters and may adjust how it evaluates such applications. BPI has expressed concern about ILCs blurring the separation of banking and commerce and enabling commercial and Big Tech firms to provide banking services without the same level of protection provided by banks. 

• Supervisory appeals: The FDIC also proposed to replace the Supervision Appeals Review Committee with an independent Office of Supervisory Appeals as the FDIC’s final review authority to resolve major FDIC supervisory determinations (e.g., examination ratings) challenged by a bank.  Under the proposal, full time employees of the FDIC would not be eligible to serve in the Office. The move aims to increase transparency and independence in the appeals process and reverts to a structure similar to the one the FDIC put in place under former Chair Jelena McWilliams that BPI supported.  
• CRA: The agency approved a proposed joint rule (with the OCC and Federal Reserve) that would rescind the 2023 Community Reinvestment Act rules and return to the prior version of the rules issued in 1995. The agencies finalized amendments to the CRA regulations in 2023, which was challenged by several trade associations. The associations obtained a preliminary injunction staying the effective date of the rule. The agencies appealed the district court’s decision, but on March 28, 2025, the federal bank regulatory agencies announced their plans to rescind their CRA final rule and revert to the prior version of the rules in light of the ongoing litigation. 

4. Banking Agencies Flag Risk Management Considerations for Banks’ Crypto Safekeeping

The Federal Reserve, FDIC and OCC this week issued a joint statement outlining considerations for banks offering safekeeping services for crypto-assets. The statement specifically applied to “safekeeping” – “the service of holding an asset on a customer’s behalf” – as opposed to the broader category of “custody” services. In the context of crypto safekeeping, banks should consider their organization’s core financial risks, their ability to understand a complex and evolving asset class, ability to ensure strong controls and contingency planning for unanticipated challenges, the agencies said.  

• Lost keys: The statement notes that a primary risk of crypto-asset safekeeping is the compromise or loss of cryptographic keys that could result in crypto-assets being transferred out of the bank’s control. Effective safekeeping involves maintaining control of cryptographic keys and related sensitive information, the statement said. 

• AML: The statement reiterates that banks’ crypto safekeeping activities must comply with anti-money laundering and Bank Secrecy Act rules, including Know Your Customer requirements. Crypto safekeeping may involve elevated levels of compliance and legal risks due to the evolving regulatory landscape, the statement said.  
• Broader context: The joint statement comes as the federal banking agencies, under new leadership, have transitioned away from an overly restrictive supervisory posture toward digital assets. For example, the OCC and FDIC rescinded or revised interpretive letters that required explicit supervisory signoff for banks to engage in crypto activities. 

5. OCC Eliminates ‘Disparate Impact’ from Examination

The OCC this week announced that it has scrapped “disparate impact” reviews in its bank supervision activities relating to bank lending activities. The term disparate impact refers to a concept in which a financial institution’s policies or practices, though appearing neutral on the surface, negatively affect a certain group more than other groups, even without intentional discrimination. The OCC’s move comes after an executive order in April directed federal agencies to “eliminate the use of disparate impact liability in all contexts.” The OCC’s examination process overseeing fair lending compliance no longer will include examining for disparate impact liability, the agency said. The other federal banking agencies are expected to follow suit.  
 

In Case You Missed It

Traversing the Pond

Here’s what’s new in international banking policy.

• BoE Basel delay: The Bank of England’s Prudential Regulation Authority this week announced a proposal to delay the Basel market risk capital requirement — Fundamental Review of the Trading Book — for banks who want to use internal model approaches until Jan. 1, 2028. 
• UK regulatory reform: Chancellor of the Exchequer Rachel Reeves outlined her plans to recalibrate the country’s financial regulatory framework during her Mansion House speech this week. Key measures include raising the asset threshold for MREL (Minimum Requirements for own funds and Eligible Liquidity – a resolution requirement), implementing lower Basel 3.1 capital requirements for domestically focused banks and committing to significant reform of the ringfencing regime. Reeves noted pending changes to the Senior Managers and Certification Regime  aimed at enabling banks to recruit and hire new talent more quickly. She mentioned an intended “ambitious design for a new digital gilt instrument” and a focus on digital assets innovation. Reeves said she welcomes the Financial Policy Committee’s forthcoming review of the overall necessary level of bank capital in the UK.  
• Other highlights: Her speech also reaffirmed her priority to “deliver resilience, growth and competitiveness” towards UK financial stability. “I know that the changes that we have made will reform and transform our economy and our country,” she noted. 
• Reeves calls for predictable, proportionate regulatory system: In a Financial Times op-ed, Rachel Reeves argued that the UK’s regulatory culture had become excessively risk-averse, stifling growth and innovation. She framed the Leeds reforms – a set of regulatory reforms aimed at promoting economic growth — as a blueprint for restoring competitiveness and attracting investment while maintaining financial stability.  
• ECB stress test to assess geopolitical risk: The European Central Bank announced its next stress test will introduce scenarios that examine the impact of geopolitical tensions on bank solvency. The shift reflects growing concerns over risks such as trade disruptions and armed conflicts.   
• BoE governor cautions against stablecoins:  Bank of England Governor Andrew Bailey warned against banks issuing their own stablecoins, citing concerns that it would drain deposits from the banking system and reduce funds available for lending. Bailey said he “would much rather” banks focus on tokenized deposits than develop stablecoins. Bailey later this week delivered remarks focusing partly on payments innovation, saying: “There may well be a role for stablecoins going forward, but I don’t see them as a substitute for commercial bank money. Moreover, our job will be to ensure that those stablecoins that purport to be money are safe. Perhaps there may also be a role for retail central bank digital currency, but I remain to be convinced why the natural next step is to create a new form of money rather than put digital technology into retail payments and bank accounts.” 

House Panel Examines Dodd-Frank 15 Years On

The House Financial Services Committee this week held a hearing to examine the consequences of the Dodd-Frank Act 15 years after its enactment. Several lawmakers expressed concerns about the unintended consequences of a proliferation of regulations after the Global Financial Crisis and critiqued the roles of the CFPB and the Financial Stability Oversight Council. Here are a few highlights. 

• Market risk: Rep. Frank Lucas (R-OK) asked SIFMA’s Kenneth Bentsen, a witness at the hearing, what regulators should consider on the market risk component of the Basel capital proposal when they repropose the rule. Bentsen responded that the agencies should avoid “gold-plating” market risk requirements and should consider the overall interactions between different rules. 

• Tailoring: Rep. Warren Davidson (R-OH) suggested that the Basel Endgame proposal takes a one-size-fits-all approach to capital, in contrast to the intent of bank regulatory tailoring legislation. “The problem with the proposal that’s put forth is that we already are at historically high levels of capital,” Kenneth Bentsen said in response to Davidson. “ The way that rule was originally proposed would increase the total aggregate amount of capital for the largest institutions beyond their already [historic] levels.” 
• CFPB oversight: Rep. Andy Barr (R-KY) mentioned his legislation to subject the CFPB to congressional appropriations for its funding in order to provide more direct oversight over the agency. Barr also asked witness Lindsey Johnson, CEO of the Consumer Bankers Association, about whether “guard rails” are needed around the definition of Unfair, Deceptive and Abusive Acts and Practices (UDAAP), a metric used by the CFPB in enforcement. “[F]or far too long it has been undefined, and entities that are regulated by the CFPB don’t have the clarity needed to understand what constitutes as an abusive act or practice, what constitutes — and how that differs from, say, deceptive or unfair acts and practices,” Johnson responded. 

Crypto’s Big Win

Here’s the latest in crypto. 

• Crypto week: During the House’s “Crypto Week,” lawmakers passed the GENIUS Act, the Senate’s stablecoin regulation bill, along with the CLARITY Act and anti-CBDC legislation. Both GENIUS and CLARITY passed on a strongly bipartisan basis: CLARITY cleared the House 294-134 (with 78 Democrats voting in favor), and GENIUS passed 308-122 (including 102 Democrats). GENIUS went to the President’s desk and has been signed into law. Anti-CBDC legislation passed by a narrower, more partisan margin of 219-210. While significant improvements were made to GENIUS from earlier versions, the banking industry continues to raise concerns around ensuring AML standards apply to digital asset intermediaries and preventing evasion of the bill’s prohibition on paying interest or yield, including through affiliates of stablecoin issuers. 

• Banks and digital assets: Citigroup CEO Jane Fraser said this week on an earnings call that Citi is exploring the issuance of a Citi stablecoin, but the main emphasis for the bank is probably “the tokenized deposit space, where we’re very active.” The bank is also exploring reserve management for stablecoins and crypto-asset custody services. Bank of America CEO Brian Moynihan also recently mentioned potential stablecoin development at BofA.

Senate Confirms Pettit to Treasury Position

The Senate on Tuesday confirmed Luke Pettit, a former senior policy advisor to Sen. Bill Hagerty (R-TN), as Treasury’s assistant secretary for financial institutions, a role that focuses on financial regulation and policy. The vote was 69-30. In his new role, he will oversee financial regulation and policy.  

Member News

GS CEO David Solomon: How Europe Can Reach its Potential  

Goldman Sachs CEO David Solomon recently published an op-ed in French news outlet Les Echos (available in English here and original French here) offering recommendations for how Europe can achieve growth and dynamism “by reducing cross-border frictions and harnessing the power of a more integrated capital market and banking union.” His top recommendation: “I would encourage EU policymakers to look at the regulatory infrastructure that has mushroomed over the years in Brussels. Reducing or eliminating unwieldy and ineffective structures and processes will send a loud message that the EU is focused on efficiency, results, and economic growth.” Read more here.