On January 20, Travis Hill became the Acting Chairman of the Federal Deposit Insurance Corporation (FDIC). Following his remarks on FDIC policy issues on January 10 at the American Bankers Association, in his first statement as Acting Chairman, Hill highlighted various priorities and mentioned new initiatives, emphasizing a commitment to regulatory reform, innovation, and a focus on core financial risks.

Hill’s statement today also mentioned the withdrawal of “problematic proposals” (including both the FDIC’s brokered deposit proposal and corporate governance guidelines) and the replacement of the FDIC statement of policy on bank merger transactions.

The FDIC’s priorities over the coming months include:

  • Regulatory Review and Innovation: Conducting a comprehensive review of regulations, guidance, and manuals to ensure they promote economic growth. Hill stressed the importance of adopting a more open-minded approach to innovation and technology, including a more transparent approach to fintech partnerships and addressing growing technology costs for community banks.
  • Bank Merger Approval and Policy Withdrawal: Improving the bank merger approval process and replacing the 2024 Statement of Policy to ensure that merger transactions satisfying the Bank Merger Act are approved in a timely manner.
  • Supervisory and Capital Adjustments: Improving the supervisory process to focus on core financial risks and reevaluating the supervisory appeals process. Hill also mentioned pursuing adjustments to capital and liquidity rules to balance economic growth with safety and soundness.
  • Banking Access and De Novo Activity: Ensuring law-abiding customers maintain access to banking services and encouraging more de novo activity so there is healthy pipeline of new entrants in the banking sector. Hill also emphasized modernizing the implementation of the Bank Secrecy Act.
  • Enhancing the FDIC’s Readinessfor Resolving Large Financial Institutions: Incorporating lessons from the “far-too-costly” failures of 2023, including “the need to be more proactive and nimble and to improve the bidding process.”
  • Internal Efficiency and Workforce Culture: Enhancing internal efficiencies to serve as responsible stewards of the Deposit Insurance Fund and reestablishing a strong workforce culture where misconduct is not tolerated and those who engage in misconduct are held accountable.

Prior Remarks at ABA Event

On January 10, then Vice Chairman Hill delivered remarks at an American Bar Association event, where he previewed his vision for the FDIC. Hill criticized the current emphasis on process over core financial risks, citing the 2023 regional bank failures as an example. He called for a shift in the FDIC’s approach to the CAMELS rating system and examination manuals, emphasizing the need to focus on core financial risks rather than process-related issues.

Hill also stressed the need for the FDIC to adopt a more open-minded approach to innovation and technology, criticizing the abandonment of the innovation lab, FDiTech. He called for its rejuvenation and the hiring of more staff with hands-on experience in new technologies. Hill suggested issuing additional guidance on fintech partnerships, artificial intelligence, and digital assets and tokenization.

Addressing the issue of “debanking,” Hill condemned the practice of denying banking services to individuals and businesses associated with the crypto industry and other politically disfavored groups. He called for regulators to end efforts to debank law-abiding customers and suggested reevaluating the implementation of the BSA.

Hill reiterated his opposition to the FDIC’s focus on climate-related financial risks, arguing that there is no evidence that such events pose an elevated safety and soundness risk for banks. He called for the FDIC to withdraw from the international Network for Greening the Financial System and stated that the FDIC would not issue any climate disclosure regime for banks in the U.S.

In discussing capital, Hill expressed his opposition to the 2023 Basel III endgame proposal and concerns about the 2024 draft, calling for a capital-neutral proposal. He emphasized the need for comprehensive changes to the Fundamental Review of the Trading Book and the global market shock in the stress test.

Our Take

Both Acting Chairman Hill’s speeches from January outline a wide-ranging and clear set of policy priorities for the FDIC. While it is not yet known whether Hill will be formally nominated for FDIC Chairmanship, his collective remarks signal meaningful thought and positive direction for the agency, and a clear emphasis on ensuring the FDIC acts within its statutory mandate.

Photo of Alexandra Steinberg Barrage Alexandra Steinberg Barrage

Alex draws on her experience as a former FDIC executive and comprehensive knowledge of bank regulations to advise a wide array of banks and technology companies. She is a sought-after advisor on complex supervisory, regulatory, payments, and transactional issues.

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The world’s leading banks trust Kevin to manage their regulatory challenges. An in-depth understanding of regulators and their objectives, coupled with his comprehensive knowledge of the banking business, have positioned him as a trusted advisor to clients across the financial sector.

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James is the co-leader of the firm’s Financial Services Industry Group. He has significant experience working with clients across the entire financial services sector, regularly working with public and private companies such as banks, neobanks, marketplace lenders, and other fintech and financial services…

James is the co-leader of the firm’s Financial Services Industry Group. He has significant experience working with clients across the entire financial services sector, regularly working with public and private companies such as banks, neobanks, marketplace lenders, and other fintech and financial services providers and partners.