Banking with Interest

The former Kansas City Fed president talks about the persistence of inflation, when the central bank is likely to lower interest rates, how worried she is about office CRE, the lessons from the failures of three regional banks last year, whether she supports a central bank digital currency, and the future of community banks.

After a prominent regional bank slashed its dividend amid unexpected losses related to office commercial real estate loans, some in the media are raising fears that another round of failures could be in the offing. Jaret Seiberg, managing director of Cowen’s Washington Research Group, details what happened, how regulators are responding, and whether it’s a sign of more trouble or a one-off event.

Kate Berry, who covers the CFPB for American Banker, goes behind the scenes on the consumer agency’s latest proposals to limit overdraft fees and institute new limits around nonsufficient funds transactions.

Naomi Snyder, Editor-in-Chief of Bank Director, discusses why the bank M&A market was so bad in 2023 and the obstacles faced, including asset quality, pricing expectations, lack of suitable targets, cultural integration, and regulatory approval challenges. The chapter also explores the potential changes and proposals in bank M&A, such as dropping a 1996 OCC rule and collaboration with other agencies to assess competition in the industry.

John Pitts, head of policy for Plaid, argues a new CFPB open-data proposal could transform the financial services industry. He says bankers, many of whom are skeptical of the plan, could see significant opportunities, including a greater ability to attract new customers.  

Greg Baer, CEO of the Bank Policy Institute, discusses the ongoing battle between big banks and regulators over the Basel III capital plan. He highlights the concerns about the lack of data and analysis in the proposal. The chapter also mentions the potential outcomes of the plan and the likelihood of substantial changes by regulators. The discussion analyzes the missing points in the debate and the industry's reaction. It also speculates on the successor to Patrick McHenry as the top Republican on the House Financial Services Committee.

Derek Williams, chairman of ICBA and President and CEO of Century Bank & Trust in Milledgeville, Georgia, talks about the challenges and opportunities for community banks as they head into a new year, including how he sees economic issues and policy debates playing out.

As AI becomes more prevalent, what are the risks to banks and consumers, particularly as software can now allow fraudsters to imitate a person's voice? Emily Flitter, reporter for the New York Times, talks about the growing threat from AI on financial security, how it is already changing lending and what policymakers can do to address it.

Cornelius Hurley, professor at Boston University School of Law, breaks down the recent FHFA report calling for sweeping changes to the Home Loan Bank system. He discusses why it’s important to refocus the banks on mission and how the debates over the report’s finding will play out in future rulemakings and legislation.

Randal Quarles, the former Fed vice chair, details how the new Basel III capital proposal could hurt the economy, casts doubt on the legality of the Fed’s stress tests, and pushes back on criticism that his actions helped cause the failure of three regional banks earlier this spring.  He also talks about his biggest concerns in the financial system right now, where interest rates are likely to go from here and his fears about the current power dynamics at the Fed.