House Hearing on Prudential Regulators Oversight 06/04/2026

The Committee on Financial Services will come to order. Without objection, the Chair is authorized to declare recess the committee at any time. Today's hearing is entitled "Oversight of Our Prudential Regulators." Without objection, all members will have five legislative days within which to submit extraneous material to the Chair for inclusion in the record. I now recognize myself for four minutes for an opening statement. The Trump administration is returning prudential regulators to their core regulatory and supervisory mission of promoting safety and soundness in the financial system. Today's hearing will provide an opportunity to discuss how their recent actions, priorities, and policies align with their statutory mission entrusted to each of them by Congress. We will also highlight the work of this committee to right-size prudential regulations for institutions of all sizes, focus on the supervisory framework on material financial risks, and facilitate the formation of new depository institutions. Prudential regulation should foster economic opportunity, support responsible lending, and encourage long-term growth while maintaining confidence across our banking system. A sound prudential framework must be transparent, appropriately tailored, and rules that are clear, efficient, and proportionate to the size, complexity, and risk profile of the institution. In my view, a one-size-fits-all approach, by contrast, disproportionately harms community banks, credit unions, and our regional institutions. That's why this committee has held numerous hearings throughout the 119th Congress on our mission to make community banking great again, which has culminated in our proposed Main Street Capital Access Act. Many of the reforms contained in this legislation directly track the actions being taken before us today by our supervisory agencies. We also will highlight the progress being made to reverse some damaging Biden-era regulations and guidance that increase compliance cost, constrained lending, and threatened access to credit for American families and small businesses without providing clear benefits to overall safety and soundness. Among them was the original proposed Basel III endgame, which would have significantly raised costs for homebuyers, consumers, and financial institutions without meaningfully improving financial stability. The revised Basel III proposal and the corresponding changes to the standardized approach and the GSIB surcharge will better align capital with risk, address concerns about gold plating, and increase lending capacity while maintaining a very safe and sound banking system. I'm also proud of the work of this committee has done to advance legislation to provide a functional regulatory framework for our emerging innovative digital asset ecosystem. The Trump administration has taken important steps to turn the page on the Biden approach to digital assets. These steps including withdrawing burdensome supervisory non-objection regimes, providing greater clarity for banks using blockchain technology, and implementing the GENIUS Act to establish a clear framework for payment stablecoins. The administration is demonstrating a commitment to supporting innovation while preserving consumer protection and orderly markets. Clear, predictable rules allow financial institutions to manage compliance, reduce unnecessary costs, and expand access to credit, and invest in innovation as our financial system consistently evolves day after day, week after week. Policymakers must foster an environment that supports innovation while ensuring confidence in the strength and stability of our financial system. I look forward to our panel today, our discussion among members on both sides of the aisle, and I yield back the balance of my time. I now recognize the ranking member of our full committee, Mrs. Waters, for four minutes for an opening statement.

Good morning. Trump's reckless and unlawful war in Iran has cost every American $450 more at the gas tank. In parts of my district, gas is nearly $7 a gallon. Yet, when asked about this, Trump's reply is, "Couldn't care less." Well, Mr. Chairman, Democrats do care, and we urge this committee and the president to focus on affordability. It's not just gas. Families are also being crushed by rising rents, higher utility bills, and skyrocketing grocery prices fueled about Trump's failed economic policies. But Trump doesn't care, and it shows. When he's not running the economy, he's busy tearing down the White House to build a billion-dollar ballroom, promoting fight night on the South Lawn, and trying to slap his name and picture on everything as if he were an idol to be worshipped. At the same time, his administration is busy dismantling the agencies and safeguards that protect consumers, workers, and small businesses. In fact, since returning to office, Trump has launched the most aggressive, the most deregulatory campaign we've ever seen. His administration has gutted the Consumer Financial Protection Bureau, undermined the independence of our central bank, and handed Wall Street, big banks, fintech firms, AI companies, and crypto bros pardons and the freedom to take risk with Americans' money. The consequences are already hitting working families. A recent report found that Trump's attacks on the CFPB alone have cost Americans nearly $19 billion in just one year. And while he has largely shut down the CFPB, Americans have filed more consumer complaints about predatory lending and other financial abuses in the past 14 months than the previous 14 years combined. And it does not stop there. The prudential regulators here today have weakened mega bank capital, stress testing, and other requirements designed to prevent another financial crisis. They are rubber stamping bank mergers, rolling back the civil rights laws like the Community Reinvestment Act, and loosening guardrails for crypto and fintech businesses who act like banks but don't want to be regulated as such. They have downplayed climate-related financial risk just in time for hurricane and wildfire season, and gone easy on bank executives and their pay skyrockets. Sadly, Republicans have stood by and enabled all of it. Instead of standing up for families, Republicans idolize Trump, doing little to push back when he weakens consumer protection and strips away the safeguards that prevent another financial crisis. Instead of addressing the affordability crisis, they side with Wall Street mega banks and crypto bros. Committee Democrats are focused on lowering costs for working families and ensuring Americans can access affordable mortgages, small business loans, and financial products. We're fighting to support our community banks and credit unions and making sure consumers, not mega banks or other powerful corporations, come first. This is a difference between protecting the wealthy and the well-connected and fighting for the American people and an economy that works for everyone. Mr. Chairman and members, you all know what I just said is the truth and I want to tell you—

Time has expired.

—against all of this deregulation.

Time has expired.

Well,

I recognize the chair of the subcommittee on financial institutions, Mr. Barr, for one minute.

Thank you, Mr. Chairman. Thank you to our witnesses also for joining us today. It's encouraging to see prudential regulators in this committee aligned in our work to return regulation and supervision back to their core mission of safety and soundness. To realize this goal, banks and credit unions must be evaluated on objective, clear standards. That's why I introduced the FIRM Act, which prohibits consideration of reputational risk in the supervisory process, ensuring regulators focus on material financial risks rather than subjective or process-oriented concerns. The same commitment to transparency and objective decision-making should extend to the merger approval process as well. The Bank Failure Prevention Act increases clarity in the merger process by setting clear expectations and timelines for merger reviews to prevent prolonged reviews that unnecessarily consume time and resources. Ensuring a risk-focused regulatory system also requires tailoring requirements appropriately to the financial institution's size and risk profile. I'm glad to see that the regulators listen to bipartisan calls from this committee and apply these principles in their agencies, including in recently Basel III re-proposal.

Gentleman's time has expired.

Thank you. I yield back.

And now I recognize the ranking member for the subcommittee on financial institutions, Dr. Foster of Illinois. You're recognized one minute for an opening statement.

Thank you, Chairman Hill. America's banks and credit unions are operating during a time of unprecedented change in the financial system. Consumers and markets are moving faster than ever with improved access to information, 24-hour banking, and the reduced friction of modern payment systems, and soon personal AI financial agents. Now, fintech partnerships promote innovation and competition, but come with unique risks. Banks and credit unions are also facing a wave of fraud driven by artificial intelligence and deepfakes, while bad actors continue to exploit older banking tools such as paper checks for illicit purposes. Our prudential regulatory agencies must be agile and well-resourced to respond to these risks. Preparing for liquidity risks of internet-driven bank runs and cyber threats from emerging AI tools should be a top priority, and our regulatory bodies need to maintain the necessary technology and human resources to do so effectively. This administration's move to cut supervision and staff across the Federal Reserve, FDIC, and OCC is a step in the wrong direction. Thank you again, Chairman Hill, and I yield back.

Gentleman yields back. We're delighted today to welcome the testimony of our bank supervisory leaders, the Honorable Michelle Bowman, Vice Chairman of Supervision at the Board of Governors for the Federal Reserve System, the Honorable Jonathan Gould, our Comptroller of the Currency, the Honorable Kyle Hauptman, the Chair of the National Credit Union Administration, and the Honorable Travis Hill, Chairman of the Federal Deposit Insurance Corporation. We thank all of you for participating with us today. Thanks for taking your time to be here. Each of you will be recognized for five minutes to give an oral presentation of your testimony. Without objection, your written statements will be made part of the record. Vice Chairman Bowman, you're now recognized for five—

Vice Chair, could you move a little closer to the mic? Thank you so much.

Thanks to the gentlewoman. Mr. Gould, you're recognized for five minutes.

Chairman Hill, Ranking Member Waters, and members of the committee, thank you for the opportunity to appear before you. It is an honor to discuss the Office of the Comptroller of the Currency's work implementing the president's economic agenda by ensuring that America's federal banking system is safe and sound and remains the world's most trusted, dynamic, and resilient. After the 2008 financial crisis, Washington too often sought to eliminate rather than manage risks, resulting in a less relevant and diverse banking system. This approach drove financial activities into less regulated and visible parts of our economy, making risks harder to monitor and mitigate. The Dodd-Frank Act, far from ending too big to fail, created a moat around the largest banks and introduced too small to succeed. Unelected bureaucrats discourage prudent risk-taking and reduced credit availability in many communities. In particular, community banks suffered from these misguided policies. The number of banks with less than $1 billion in total assets declined by 50%. The OCC has introduced reforms to address this decline. We've removed fixed examination requirements, tailored examinations to actual risk, and imposed workday limits on examinations. We also created a supervision group focused on community banks. These actions, among others, represent a down payment on future reforms to promote a more relevant and diverse banking system. Community banks are not the only casualty of the post-Dodd-Frank banking system. In the years that followed, new bank formation in this country nearly ceased. From 1990 to 2008, the OCC received and approved over 1,000 de novo charter applications. After 2008, application volume and approvals fell by 90%, but the OCC is open for business again. The agency received as many applications in 2025 alone as it did in the previous four years. For the first time in five years, a full-service national bank opened its doors, and we have conditionally approved 10 more banks this year. This is the result of us once again following the law and our publicly stated procedures. The OCC is also returning to risk-based supervision rooted in law and emphasizing examiner judgment, not arbitrary checklists. We are hardwiring the foundations of supervision, such as the definition of unsafe and unsound practices, into regulation, and are reviewing past supervisory criticisms and enforcement actions to ensure alignment with our standard for material financial risks. But we, like the banking system itself, must always look towards the future. Our job is to facilitate, not stymie, responsible innovation. We are working to respond to comments on our GENIUS Act proposal and finalize it. Just as the National Bank Act brought an end to the wildcat banking of the 1800s, the GENIUS Act and our rule will help ensure appropriate consumer protections for stablecoin users. In other words, our regulation will help ensure that all OCC institutions are able to satisfy their obligations, including both deposits and stablecoins. The OCC is working to facilitate innovation outside the GENIUS Act as well. We, along with the other federal banking agencies, revised our model risk management guidance to avoid impeding banks' use of AI. We also plan to seek information from the public on what additional guidance would be helpful. Our banking system will only remain relevant and trusted if it resists pressure to deny access based on political or religious beliefs or lawful business activity. We have made considerable progress in reviewing the activities of the largest national banks and are investigating complaints of alleged debanking consistent with the president's executive order. We will continue to follow the evidence and report on our findings as appropriate. We have moved quickly to fix long-standing problems of agency management. The OCC too often relied on costly outside contractors for many core IT functions. Since I arrived, we have eliminated the need for 165 contractors, saving $75 million in the process. Our bank examiners also lacked modern technology to do their jobs. This summer, we will begin replacing IT platforms from the early 2000s with modern tools. These efforts help fulfill our core mission while reducing assessment costs. Since its creation during the Civil War, the OCC's nationwide banking markets created the economic union necessary to support the political union forged on the battlefield. We at the OCC are proud of our role, particularly as we celebrate our country's 250th anniversary. But we take nothing for granted, and we work hard to support the growth and dynamism that have defined our federal banking system since its inception. Thank you.

Thank you, Mr. Gould. Mr. Hauptman, you're recognized for five minutes, sir.

Thank you, Chairman Hill, Ranking Member Waters, members of the committee. Thank you for the opportunity. As the current chair, I remain dedicated to serving in this role and no other until my successor is confirmed. President Trump has nominated Mr. John Cruise to the NCUA board. He's a seasoned, committed leader, track record of balancing innovation. In other words, he's well-suited for the role. I'm confident Mr. Cruise will strengthen the agency even further and I wish him best as he goes through the Senate confirmation process. Over the past year, NCUA has experienced significant changes. My primary goals as chairman have been to lead NCUA and be ready to embrace the future, supporting a robust and innovative credit union industry and protect our share insurance fund through effective, appropriate supervision that is focused on material risks. I'm also proud we delivered a cost savings averaging about $9,000 per federal credit union through our cost reductions. I pursued all of our goals by championing regulatory improvements, embracing innovations like stablecoins, and improving our customer service. As digital currency and stablecoins reshape the global financial system, credit unions have an opportunity to embrace this transformation from a solid foundation of safety and soundness. Stablecoins can make payments faster, cheaper, and more inclusive. On May 15th, we announced a proposed rulemaking for permitted payment stablecoin issuers, our second rulemaking required under the GENIUS Act. This rule puts credit unions on equal footing with banks. Credit unions are well-poised to benefit from this long-overdue update to America's payment system. As stablecoins become more widely adopted, we Americans may no longer be made fun of for speaking of how many business days a payment will take to settle. Every day is a business day with stablecoins. All 365 days of the year and all 24 hours of the day are equal in terms of sending payments with stablecoins. Our tax refunds may eventually arrive on Sundays or holidays. And if we ever have a repeat of COVID in March 2020, Americans should be able to receive stimulus funds in a much more timely and secure manner. Beyond the consumer benefits, the big-picture benefit of stablecoins is maintaining the US dollar's status. The GENIUS Act should stimulate demand for Treasuries, thereby lowering borrowing costs for both the US government and consumers. Even repo rates on Treasuries may fall, all else being equal, given that the GENIUS Act allows for investing in Treasury reverse repos, and Treasuries are more attractive when they can be used to obtain cheap financing. And for all the debate about the effect on deposits held at our domestic banks and credit unions, a large portion of the money is expected to flow into stablecoins from abroad. Over 80% of existing dollar stablecoin usage is outside the United States. When Americans use the phrase dollar stablecoins, we tend to focus on the stablecoin part, because stablecoins are a much better settlement token than dollars. They're a bit like using poker chips in that the transactions are easier, but they only work if they are indeed stable and interchangeable with US dollars. But for people abroad, it's the dollar part of the phrase dollar stablecoin that's important to them. We as Americans may have gotten so used to the dollar's global dominance that we don't notice what an advantage we have. But just ask the British what it's like to lose reserve currency status. The GENIUS Act and dollar-denominated stablecoins are ways of striking back against those in Beijing, Tehran, or Moscow who continually push for the US dollar to be less important, less ubiquitous, and less useful. So, I'm pleased to work with my colleagues here at the table to do our part in that effort. Turning to the financial literacy efforts, that's a big part of the administration's observance of America's 250th anniversary. Last month, I joined my colleagues at this table for a financial literacy event hosted by the OCC. It was a wonderful opportunity to hear from banks and credit unions of all sizes how they empower people and their communities by educating people of all ages, from the elderly all the way to kids in kindergarten. I want to note that my five-year-old has read both of these books, including *The Berenstain Bears Visit the Credit Union*. I spoke about how financial security is essentially an amazing product and one that can be purchased on the open market via saving and investing. Today approximately 4,300 credit unions serve over 145 million members and manage more than $2 trillion in assets. The industry is healthy and continues to balance innovation, access, and safety and soundness. As of the end of last year, the aggregate net worth ratio—that's how credit unions report capital levels—was strong at 11.3%, slightly higher than the year before. Asset growth was a solid 5%, up from 2% growth. From a safety and soundness perspective, the system is in a good place. And finally, given my successor has been announced and this is probably my last appearance before this committee, I want to make one final point. Regulation falls hardest on the smallest institutions, but we are a better, more prosperous country because of the unique American system that contains over 8,000 banks and credit unions. Many of them serve niche communities. We don't want to be one of those countries with four or five big banks like Canada. We're best served with the system we have, with every corner of this country, every industry being served by a bank or a credit union. Thank you, Mr. Chairman.

Thank you, sir, and thank you for your service since 2020 at the NCUA. We appreciate that. Chairman Hill.

Chairman Hill, Ranking Member Waters, and members of the committee, thank you for the opportunity to testify today about the FDIC's ongoing work to strengthen our regulatory and supervisory framework while we continue to fulfill our core mission of insuring deposits, promoting bank safety and soundness, and resolving failed institutions. Over the past year and a half, we have advanced a number of key policy priorities, including reforming supervision to focus on material financial risks, modernizing capital standards, improving our resolution readiness, and implementing the GENIUS Act, among others. Beginning with supervision reform, we issued a proposed rule last fall with the OCC to define key terms related to supervisory criticisms, which we are working to finalize in the coming weeks. In parallel, we have been conducting a comprehensive look back of all outstanding supervisory criticisms as we work to implement the new approach in a consistent manner. We have also been working with our FFIEC counterparts to modernize the CAMELS rating system, and we issued a proposal last month that would place greater emphasis on factors most critical to safety and soundness of institutions and better align the overall rating with the bank's true risk profile. With respect to capital standards, we recently issued two proposals to modernize risk-based capital requirements. These proposals improve risk sensitivity, simplify core components of the framework, and provide more appropriate capital treatment across mortgage, retail, and business lending. In addition, we finalized revisions to the community bank leverage ratio framework to encourage broader adoption for community banks. We also continue to strengthen our readiness to resolve failed banks. Among other things, we are working on changes to our resolution planning rule for insured depository institutions and have taken steps to enhance the competitiveness of our bidding process. Relatedly, we are working to remove barriers for non-banks to provide capital in failed bank auctions, including rescinding a 2009 policy statement that imposed overly restrictive conditions on private capital investors and exploring potential changes to the shelf charter process to allow a non-bank entity to act quickly in the event of a sudden, unexpected failure. In the digital asset space, implementation of the GENIUS Act remains a top priority. We have issued proposed rules to establish an application framework, prudential requirements, and BSA and sanctions compliance for FDIC-supervised stablecoin issuers. We are also advancing other important policy initiatives. These include modernizing BSA/AML program requirements, updating our information disclosure rules, and revising model risk and third-party risk management guidance to remove unnecessary barriers and encourage appropriate use of new technologies. We are also reevaluating our bank merger review process to improve clarity, timeliness, and transparency, and are working to make the de novo application process more efficient. Earlier this year, we finalized a rule removing reputation risk as a basis of supervisory criticism. The rule makes clear that the FDIC will not require, instruct, or encourage an institution to close customer accounts or take other actions on the basis of a person's or entity's political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of politically disfavored but lawful business activities perceived to present reputation risk. Finally, the FDIC continues to make progress in improving workplace culture. We have taken significant steps to improve accountability, enhance reporting response processes, and reinforce expectations for professional conduct across the organization. I remain committed to ensuring that the FDIC maintains a culture grounded in professionalism, accountability, and respect to ensure that our workforce continues to fulfill our important mission. Thank you for the opportunity to testify today. I look forward to answering your questions.

Gentleman yields back. Thank you all for your opening statements. We'll now turn to member questions. I recognize myself for five minutes for some questions. I referenced in my opening statement that among our core work on improving bank supervision and echoing some of the good work you're doing in each of your agencies, that we've been advancing a series of bills under our Main Street Capital Access Act, which we hope to bring to the House floor in incoming weeks. And you've touched on it in your hearings, that our banking sector has faced numerous challenges ranging from a drought in new bank formation—and thank you, Mr. Gould, for setting the record straight on what the OCC's been doing there—a post-crisis prudential framework that's pushed activity away from banks and squeezed many of our community and mid-size institutions from the rules that I think again are not effectively tailored and discriminate against home lending, for example, to the politicization that we all witnessed of bank supervision and regulation in recent years. So, now 15 years following the great financial crisis and the resulting Dodd-Frank Act, it warrants that we take careful assessment of what's happened in that past 15 years and how we need to propose changes, and I think that is at the heart of the work we've done on Main Street capital access. So, let me ask each of the witnesses, start with you, Vice Chairman Bowman. Can you talk about how these principles in Main Street capital access mirror the work that's being done by the Federal Reserve and its supervisory process, and how statutory changes can make that work durable, and cement that effort to give the certainty to our financial institutions, depository institution management, that they can count on that in the out years?

Yeah. Thank you. Well, Chairman Barr and I have just worked so hard on this over many, many years, and we really appreciate the work of the agencies, but we're trying to put it into law. Our nation is best governed by laws agreed to by the Congress and not just on executive orders that vary radically between different executive branches. Recently, the White House issued an executive order promoting access to mortgage credit, which underscored how tackling housing affordability requires not just more housing supply, but also better access to the financing. Let me stick with you, Vice Chairman. Do you agree that housing affordability depends not only on just whether homes can be built, but whether banks have the capacity, funding, and regulatory flexibility to undertake that one-to-four family construction? And you've heard me say, and we've said in this committee many times, six out of 10 home construction loans on bank balance sheets are by banks under $10 billion, and many of our largest institutions are just out of that business. So clearly there's a regulatory mix in there that I think is at the heart of some of the post-crisis decisions. Can you reflect on that?

Well, I think it's very important, and it was in the Joe Biden last Council of Economic Advisers report a whole chapter acknowledging that saying those were important changes to make. Ranking Member Waters and I collaborated on our Road to 21st Century Housing bill which got 396 votes here on the House floor, but we believe that with that and with the tailoring of community banking proposals in it more needs to be done, and so I thank you for your comments. Let me recognize that Ranking Member from California of the full committee, Ms. Waters, for her five minutes of questions.

Thank you very much, Mr. Chairman. I am so focused on affordability and what our constituents are saying about their ability to have a decent quality of life. Let me ask each of the members here: could you tell me what city you're from and how much the gasoline prices are in your city, starting with Ms. Bowman. What city?

I'm sorry, I can't hear you. Did you say you will not answer that?

What city are you from?

Gasoline in whatever city you want to claim?

Gould, what city are you from?

Well, I'm originally from Lynchburg, Virginia, but I can't—

What is gasoline there?

I haven't been there a while. I can't speak to the prices of gasoline there.

I can't hear you.

I haven't been to Lynchburg, Virginia, for a while, where I was where I grew up, so I can't speak to the prices of gasoline there.

Okay. Who's next on the list over there? What city are you from?

I'm originally from Bar Harbor, Maine. I think it's about $4.25 or $4.30 around there.

Mr. Hill?

Originally from New York. I don't know the exact price of gas, but I believe nationally it's somewhere between $4 and $5 a gallon.

Do you know what it is in California? Between $6.30 and $7 a gallon for gasoline. And I think it's important for us—

Order, please.

I think it's important for us to know exactly what's going on in America with affordability. And so that's why I'm asking you if you know and understand what your constituents are paying, even if you are here in Washington, where you really from and where you're going back to and how much they are paying. And it appears that there is not a consensus here that you all know what the cost of gasoline is. Again, it can cost $6 or even $7 a gallon in California. And that's real money hitting family budgets, especially for those who need to drive to work. It has gotten so bad that one in 10 Americans skipped a meal yesterday. Why? Because everything is too expensive, from putting gasoline in the car to buying a home to putting food on the table. Wages are not keeping up with affordability crisis fueled by Trump's reckless policies. Last year, Americans were taking out loans and buy now, pay later products to buy groceries. Do you know what that is? Do you know what buy now, pay later is? Do you understand how that works? Raise your hand if you understand it and you know how it works.

Yes, I know what buy now, pay later loans are.

Mr. Gould, what did you say?

I said yes, I know what a buy now, pay later loan is.

Would you tell your constituents right now what it means?

Well, my constituents are the American public. I'm not an—

That's right. It's the American public. What does that mean? Buy now groceries, pay later. What does that mean?

Pardon me?

Okay. All right, we'll move on. And do you know who is doing well? Corporate executives. Their compensation grew 20 times faster than working Americans last year. Did you know that, Ms. Bowman?

Did you know that, Mr. Gould?

Not aware of the facts what you're talking about. Be happy to look into them.

Okay. Their compensation grew 20 times faster than working Americans last year. Who knows that and who understands that? Mr. Hill, did you know that?

Like the Comptroller, we'd have to look into that, but happy to follow up.

Now, we're not that far removed from a close call we had to a big financial crisis when Silicon Valley Bank and two other regional banks failed three years ago. Community banks and credit unions are having a tougher time to compete with the mega banks. But looking at your actions, you seem to be doing all you can to make life easier for the biggest banks and their executives. This includes the Trump administration's efforts to shut down the Consumer Financial Protection Bureau. As a result, there are no exams being done of mega banks to see if they're complying with consumer protection laws. Does anyone think the mega banks, which have paid hundreds of billions of dollars in fines for violating the law, are now perfect angels? Are they doing okay?

Congresswoman, the CEO of the biggest—

Gentlewoman's time has expired. Chair now recognizes our vice chairman—

Mr. Chairman, I have a point of order. I just want to submit for the record that California currently has the highest gas prices in the United States, as prices are driven up by high—

Thank you, Mr. Lawler. The chair recognizes the vice chairman of the full committee.

Mr. Chairman, I'd like to say that the price of the gasoline has skyrocketed since President Trump has been in office.

If that's a point of order, I'd like to make the same point.

I just want to make sure the price in California—

Mr. Lawler—

Mr. Vargas.

Mr. Lawler is out of order.

I've already ruled Mr. Lawler out of order. Everyone is out of order.

Are we in order when we're talking about the—

The gentlewoman's time has expired.

I need more time.

I'll give you more time later. A friend that'll yield it to you, I promise. I know. The vice chairman of the full committee who is patiently waiting, Mr. Huizenga of Michigan, you're recognized for five minutes. Thank you.

Well, thank you, Mr. Chairman. And not to add to the cacophony, but I bought gas at $3.93 a gallon at my local Sam's Club in Holland, Michigan on Saturday, and $3.99 was the predominant price. I too have my own understandings of why gas might be 50% more than that in California, but nonetheless. I'm going to start with you, Vice Chair Bowman. I was going to ask before we had launched into SVB, "How's it going?" But I think we see the state of how it's going all the way around. So let's just get right to SVB. It's been more than three years since the failure of Silicon Valley Bank, which was regulated at the federal level by the Federal Reserve System. The Biden administration had a limited review regarding the failure conducted by Fed staff and hastily published only a week later or weeks later. It was used to justify a slew of misguided regulatory proposals that not only punished all the rest of the banks that actually acted as sources of strength during the fallout, but also proposed to impose burdens on banks in ways that had nothing to do with SVB's failure. So, Vice Chairman Bowman, now that we have had the benefit of more time to reflect on the SVB failure, I understand and appreciate that you've been commissioned to do an independent review. Are you addressing the aforementioned shortcomings in the independent review that we saw coming out of that staff-led Fed review, and are you seeking the cooperation of those who were in positions of responsibility at that time as you were exploring the reasons why that happened?

And you felt it was necessary to do an additional independent review, not just rely on what had been hastily put together previously?

And who is leading that review?

Okay, and they have presumably played a role in this.

Excellent. Okay, well, I appreciate your work on that because there are still lessons to be learned from that. And by the way, I echo the chairman's concern about the lack of involvement on local banks with mortgages. When I graduated with my also employable political science degree, I went into real estate full-time and I sat at the closing table many a time with those local community banks who held those mortgages in their portfolio. And I believe it made their risk assessment and their decision-making better, not worse. Mr. Chairman, the other Chairman Hill, let me go to this. I have introduced legislation, HR 3446, the FDIC Board Accountability Act, to replace the CFPB director on the FDIC Board and instead require one FDIC Board member to have actual experience with small banks of less than $10 billion. I might actually nominate Mickey Bowman to join that with her experience as a community banker and a state regulator. This bill was included in the Main Street Act. How important is it for the FDIC Board itself to include members with direct experience working with community banks, and could having that expertise at the board level lead to better informed policy making?

Well, thank you, Congressman. As you know, the FDIC is the primary federal supervisor for the majority of community banks in America. And so I think having direct experience with community banks is vital and would be extremely valuable for the FDIC. We would certainly welcome the Vice Chairwoman if she wanted to join our board, though I think she—

She's going to be the Marco Rubio of regulators, I think. Yeah, one more hat. Well, it just seems to me that while we have some colleagues calling this, quote, "reckless deregulation," it seems to me that most should actually call this common sense. When I look at a CFPB director who's politically appointed versus an actual practitioner, I side with the practitioner. So with that, Mr. Chairman, unless apparently I could have the ranking member's extra time that she had been advised of— I will yield back to the chair.

The chair recognizes the ranking member of our subcommittee on Capital Markets, the gentleman from California, Mr. Sherman. You're recognized for 5 minutes.

First want to comment on the proposal to create a $250 bill. Now most Democrats are concerned about the proposal as to whose picture will be on that bill. But the real question for me is who needs a $250 bill? Clearly, drug dealers in America face a major problem in dealing with large amounts of currency, and the issuance of such a bill would make their lives two and a half times better. There is no other reason for the creation of a $250 bill. Basel III is, when you finally implement it in your regulations, is going to have some unintended consequences, and I look forward to each of the regulators providing for the record what mechanisms you have for future adjustments and recalibrations as you take your vehicle out on the road and test drive it. Dodd-Frank kept America safe from 2008. It continues to keep America safe. And I see in this room the picture of Barney Frank and appreciate all of the work that was done in this room to protect us from that meltdown. One hole in that bill was it left to the regulators how to deal with interest rate risk. And of course, the regulators failed to deal with interest rate risk with regard to Silicon Valley Bank and others. This proposal moves us in the right direction in terms of mark-to-market for held-for-sale securities, but there needs to be a comprehensive review of interest rate risk looking not only at held-to-maturity securities, but even very long-term non-marketable securities. The proposals for Basel III have had a number of improvements in the area of clean energy credits, some progress on private mortgage insurance, and a whole lot of progress in dealing with the capital markets and fee income. So, at least the regulators and your predecessors and you have listened to us. Mr. Hauptman, you talk about government payments in stablecoin. I can't think of a worse idea. It would sanctify an alternative to the US dollar, an alternative designed to facilitate a tax evasion economy. And I would point out to all of our regulators here that the GENIUS Act requires that there be no interest paid on stablecoin. The smartest or at least the best-paid lawyers in the country are being paid to try to evade that requirement, and I'm counting on you to write regulations that withstand that. Mr. Gould, thank you for talking about not de-banking unpopular businesses. And I now have a question for Ms. Bowman. We're supposed to account for economic growth in drafting these regulations. Your scoring methodology uses a base year of 2019 rather than 2015, so you're not reflecting economic growth that occurred after the regulation process began. Is there any justification to explain why the proposal does not account for economic growth from 2015 to 2019? And does that put us at a disadvantage in competing with foreign banks?

Exactly.

But what justifies, other than saying, "Well, we got together and we picked it," what justifies ignoring growth between 2015 and 2019?

Yes, the chairman commented that the capital levels were just about right in 2019. So, then you go back to 2015. I'm surprised. The only defense you have for this rule is, "Well, we got together and we discussed it and some people wanted to do it." So, that wanted to go in one direction or the other direction. I don't think there's any reason to ignore the four years back economic, but I yield back.

Thank you for that, Mr. Sherman. Recognize the chair of our Housing and Insurance Subcommittee, the gentleman from Nebraska, Mr. Flood. You're recognized for 5 minutes.

Thank you, Mr. Chairman. I'd like to focus my questions this morning on two subtopics: number one, the rollout of the Basel III endgame proposal, and the implementation of the GENIUS Act for stablecoins. I sent a letter with Senator Ricketts back in February requesting that you all address the cap on mortgage servicing assets as applied to the Common Equity Tier 1 formula for banks across the country. This cap is a significant barrier, particularly for smaller banks that have very little capacity to participate in mortgage servicing with the cap. I was very pleased to see that the current proposal removes the mortgage servicing deduction entirely, and I do believe that this change will make it easier for institutions, both large and small, to participate in mortgage servicing. This question is for Vice Chair Bowman, Comptroller Gould, and Chairman Hill. Can you each address why you thought the cap should be removed on mortgage servicing assets in the proposal? And then can you also talk about any other changes that you'd like to highlight in the rulemaking that you feel will help get banks back in the mortgage business? We'll start with Ms. Bowman.

Thank you very much. Mr. Comptroller.

Thank you. I would just note that we made a number of changes post-2008 that pushed some of these activities, including mortgages, outside of the banking system, I think to our detriment. If I could make a broader contextual point, if I may: last week, Secretary Bessent gave a tour de force speech at the Reagan Economic Summit—some of you, I think, were there—entitled "While America Slept," and he linked specifically the connection between economic security and national security. A lot of what we are doing today, a lot of what I'm doing at the OCC, is making sure that we are empowering banks and restoring to them their proper role of being able to promote economic growth in this country, which is essential to economic security, which as Secretary Bessent has so eloquently linked it, is also essential to national security. So, that is a broader context in which I think you should view many of the actions that I, at least at the OCC, am taking. Thank you, Chairman.

Chairman Hill.

Yeah, I would just echo that I think removing some of the obstacles to banks engaging in the mortgage business is extremely important. One other piece of the Basel proposal that is also, I think, very important is the improved risk sensitivity for mortgages that are held on balance sheet by tying it to loan-to-value ratios. I think that will go a long way in encouraging banks to originate and retain more mortgages and reduce the amount of mortgages that are being funneled through the GSEs.

Thank you. Next, I'd like to talk about the implementation of the GENIUS Act. In April, the Department of Treasury issued an advance notice of proposed rulemaking for determining whether an existing state-level stablecoin regulatory regime is substantially similar to the federal regime pursuant to the GENIUS Act. This is the first step towards a process that will ultimately allow some stablecoin issuers to be regulated at the state level. I passed a bill to make Nebraska the second state in the nation to allow state-chartered banks to custody digital assets. Once these rules are finalized, an entity called the Stablecoin Certification Review Committee will review state laws to ensure they meet the criteria for the GENIUS Act. The committee will be the Secretary of Treasury, either the chair of the Federal Reserve or the vice chair of supervision, and the chair of the Federal Deposit Corporation. Vice Chair Bowman, have you discussed this with Chairman Warsh, and do you know whether you'll be the representative from the Federal Reserve on the Stablecoin Certification Review Committee or if it will be Chairman Warsh?

Thank you. It's important to me that we continue to keep this state and federal pathway in stablecoins. I served in the state legislature for 10 years. States are little laboratories for democracy, and there's a lot of innovation that's happening there. I guess with the remaining time I have, I would advise this committee that thanks to Nebraska corn, gasoline is 40% cheaper if you use ethanol. And so, if we want to bring down gas prices, buy more ethanol. Year-round E15, and go Huskers. I yield back.

Gentleman yields back. My pleasure to recognize the gentleman from New York, our ranking member of our House Foreign Affairs Committee, Mr. Meeks. You're recognized for 5 minutes.

Thank you, Mr. Chairman. And just to that, let me just say, I think it's just to get the record straight since I am the ranking member on the House Foreign Affairs Committee, that since the President's choice in Iran, across America, Americans are paying more than 50%—between 40% and 50% more—per gallon since the Iran war. That's according to the AAA. Just want that record to be clear that Americans are paying more across the country, including in Mr. Lawler's district, where it's about $4.50 if I recall correctly, because I'm in New York, also. But let me ask this question. Let me make this quote, folks: "The business of banking is built on trust and confidence. Competent bank supervision is a prerequisite to restoring that trust and confidence." Does that statement sound familiar to anybody? No? Well, I'll tell you where the statement came from. That statement was made by Mr. Gould back in 2023 in front of this body in a subcommittee hearing. Do you recall that, Mr. Gould?

I don't recall the exact quote, but it sure sounds like my words. Thank you, Congressman.

And would you stand by that today?

Yes, and specifically I would note that we lacked competent bank supervision in the lead-up to Silicon Valley Bank.

Okay, good. So, you would probably also agree that competent bank supervision requires holding everyone to the same standard regardless of who they are. Is that also correct? Yes or no, because I've got to—

Is that to me, Congressman?

Yes, to you.

Well, Congressman, I would note that we do tailor our regulation and supervision based on the nature of the bank and the complexity of the—

Okay, got you. So, I hear you. So let me give you an example, then, of what I believe equal standards should look like, and you tell me. There's a fintech company called Wise who doesn't seem to have any direct links with top officials in the administration, so they don't have any pull or anything of that nature. When its sponsor bank had AML problems, it was your agency who issued a consent order. And when Wise itself had AML problems, state regulators and the CFPB acted. So, I think that the OCC seems to have the tools necessary to conduct adequate oversight. I think that they do have that. Now, Mr. Gould, can an applicant obtain an OCC charter without demonstrating adequate BSA or AML compliance? Yes or no?

Well, Congressman, the OCC's guidelines are established by statute and are detailed and exquisite.

I just need to know, do they have to have BSA and/or AML compliance?

Well, Congressman, it's not as simple as a yes or no, and I think I'd be—

So, they could be out of compliance.

I'd be doing a disservice to the members of this committee if I pretended that it was as simple as that.

Okay, I just tried to say simply. Let's talk about something else then. Let's talk about President Trump and his son's crypto company called World Liberty Financial. That company applied to the OCC for a federal banking license to issue their own digital dollar. And at the same time, a foreign government-linked investor reportedly acquired nearly half of the company. And I'm sure you're aware that the crypto exchange Binance, which holds nearly 90% of the digital dollar issued by World Liberty Financial, pleaded guilty in 2023 to sanctions and money laundering violations. And it doesn't stop there. That same exchange permitted more than $1 billion in cryptocurrency transactions to Iran and terrorist organizations. But that didn't stop the President and his sons from putting their flagship digital assets on the criminal exchange. And that same company directly involves and actively lines the pockets of the President's family today. So let's not beat around the bush, Mr. Gould, because I'm going to ask you a few questions that I know you may want to filibuster. Will you commit today that you will do your job as a regulator and ensure that World Liberty Financial is held to the same level of scrutiny as every other applicant likewise before the OCC? Because this is giving you an opportunity to prove if you're still working on behalf of the American people, or have you sealed your role to serve as a fixer for the Trump family? Which is it, Mr. Gould? Are you working for the American people or are you working for the Trump family?

Let the gentleman answer. The gentleman can answer in writing. It's a good question. He'll answer it in writing.

Now.

The chair recognizes the House Majority Whip, Mr. Emmer of Minnesota, for 5 minutes.

Thank you, Mr. Chairman, and thank you all for being here today. I'd like to start by commending the agencies for the meaningful improvements that have been made to the original 2023 Basel III proposal. There's a significant amount of technical and highly complex work that went into developing this updated proposal, and we recognize that calibrating a modern capital framework requires careful judgment across a range of competing objectives. There is no hiding that the 2023 proposal caused serious heartburn across a broad spectrum of industries and political viewpoints, with criticism emerging from multiple sectors of the economy and spanning across party and ideological lines. Chief among those concerns was the why. US banks are some of the most resilient and well-capitalized in the world, yet former Vice Chair Barr and the rest of the Biden-era prudential regulators believed that there needed to be higher capital requirements without adequately demonstrating the need for them through quantitative analysis. Unfortunately, all of this was done at the expense of everyday Americans. Higher capital requirements reduce credit availability, increasing borrowing costs, and limiting access to financing for first-time homebuyers and small businesses. That said, it's evident that those concerns were carefully considered, and I believe this updated proposal is in a much better place today than it was 2 and 1/2 years ago. One of those improvements is the continued focus on tailoring, recognizing that not all institutions pose the same level of risk, and that regulatory frameworks should reflect difference in size, complexity, and business model. Vice Chair Bowman, as you move toward a final rule, how are you ensuring that the framework remains appropriately tailored and risk-sensitive over time so firms are not inadvertently captured simply due to growth or broader economic changes?

Okay, great. I was also pleased, by the way, to see that the 2026 proposal excludes client-facing cleared derivatives from credit valuation adjustment capital requirements. However, I noticed there isn't a full CVA exemption for end users, with the proposal increasing capital on these transactions by 96%. Vice Chair Bowman, again, can you briefly walk us through your thinking on this, as it's vitally important to allow our farmers and ag businesses to hedge risk in the most effective way possible?

Well, and I know you want to get this done as soon as possible, but would you be open to additional feedback even from us on this issue?

Separately, under the 2026 proposal, Category III and IV banks must now include accumulated other comprehensive income in Common Equity Tier 1 capital. It's my understanding that this change is subject to a multi-year phase-in. However, for banks that cross into Category II, there would be an immediate inclusion. Vice Chair Bowman, how are you thinking about structuring the final rule to avoid unintended cliff effects, so firms can make an orderly transition into a new category without disrupting credit availability or market functioning?

Well, thank you. I see the time is running short. I may have some things that I'll follow up with separate from the hearing. And with that, Mr. Chairman, I yield back.

Gentleman yields back. We're going to suspend for a moment. Chair now recognizes the ranking member of our subcommittee on Digital Assets, Mr. Lynch of Massachusetts. You're recognized for 5 minutes.

Thank you, Mr. Chairman. At this time, I'd like to yield some time to the ranking member of the Foreign Affairs Committee, the gentleman from New York, Mr. Meeks.

Thank you, Mr. Lynch. I just want to go back to Mr. Gould because he didn't have the opportunity to answer the question of whether or not he is working for the American people or working as a Trump fixer. Which one is it?

Well, thank you for the opportunity to respond. You can recite unsubstantiated allegation after unsubstantiated allegation, and you can attempt to pressure me as your Democratic colleagues are doing to an extraordinary extent, but we at the OCC—our job is to follow the law and follow all ethics laws. Thank you, sir.

So, let me just ask you this. Let me just ask you this, thank you, sir. Let me just ask you this, and I'm going to give Mr. Lynch back his time. If the OCC approves this application, will you commit that you will come back to this committee to personally appear before this committee and explain your decision? Because we're talking about transparency here. Transparency for the American people. Will you—

Congressman, your attempts to continue to pressure me are the only political pressure I've felt other than your Senate colleagues.

Well, that is very unfortunate. I reclaim my time. I reclaim my time. Obviously, you will not come back. Obviously, you do not want the American people to see transparency. Obviously, you are— Reclaiming my time.

What we would obviously do, Congressman—

Ms. Bowman, I've got an overriding concern about just generally the convergence of traditional banking, where we have a lot of safeguards and guardrails, and what's happening in crypto. As I'm sure you're aware, we've been experiencing a so-called crypto crash recently. And I know that Kraken was recently—well, a while back—was given a Federal Reserve master account. That was granted even before we had the framework set up. Are we looking closely at what's going on with Kraken and whether they're in full compliance given the nosedive that crypto has taken recently?

Okay, that's fair. Thank you. I do want to comment, though, each of the regulators has rescinded its earlier guidance. So, we go back a year and a half, two years ago, we had a standard guidance to banks just to use caution because crypto is a speculative asset, as we've seen recently. And yet, all of the lessons we've learned going back to the Great Depression, the bank crisis, even as recently as 2008, was to try to create stability in the banks. So, those missions seem to be in conflict: the speculative asset aspect of crypto, and yet the stability and safety and soundness of these banks seem to be in conflict. And now we don't have the CFPB, so they're not the cop on the beat anymore. You've relinquished the one guidance that was out there that told banks, "Be careful, be careful about investing in crypto." So, what are we doing now? What's out there that's going to protect depositors and retail investors and the banks themselves in terms of safety and soundness now that we're not giving them that type of guidance?

Gentleman's time has expired.

Can I just ask, will there be a report at the end when Kraken—when that period expires, and would you offer that to the committee?

Gentleman's time is up. Now recognize the gentleman from New York, Mr. Lawler, 3 minutes.

Thank you, Mr. Chairman. I'd like to submit for the record an article from US News, "A Look at Gas Prices Around the World," which explains why California has the highest gas prices in America.

Without objection.

Thank you, Mr. Chairman, and thank you to our witnesses for your testimony today. I appreciate the work and leadership each of you has put into revising the original Basel III proposal. I support the revised proposal. It represents a significant improvement. The new proposal attempts to address the overlap between risk-based capital and stress tests in the treatment of market and operational risk. While I appreciate the consideration behind the agency's approach, more comprehensive amendments to include stress testing would be needed to address this overlap fully. Vice Chair Bowman, how do you plan to more finely tune the requirements to optimize the balance between capital requirements and costs?

Now, we've seen a dramatic rise in fraud from AI-generated impersonation scams to criminals exploiting gaps in the telecom and payments ecosystem. The reality is that fraudsters are innovating faster than the system built to stop them, and consumers and financial institutions are paying the price. Comptroller Gould, how can the government do more to help consumers and financial institutions prevent fraudsters from being successful?

Well, thank you very much for the question, Congressman. The agencies together did an RFI last year, and from that RFI, I think, or at least I learned a number of things, including the necessity of increasing data sharing around fraud so that more stakeholders have access to potential fraud actors. I think it was also a humbling experience because I believe that at least, again, I learned that we at the OCC are not alone, meaning we can't solve the problem on our own. This is something that transcends just the federal banking agencies and involves other aspects of the US government as well. And so, as my colleague mentioned with the flag, we also work together on financial literacy across the board. I would note here that financial literacy is at least potentially a part of the solution, and Trump accounts, I think, will be very valuable in that regard since it teaches financial literacy at a young age. I actually signed up my youngest son for it the other day, so I'm excited about that. So, again, I think this is going to require a multifaceted approach across a number of government agencies to address. I recognize there are issues around who bears the burden of some of these fraud events, including just among and within banks across the industry. And I know there's been some tension between larger banks and smaller banks, and the OCC, given the fact that we supervise many of the largest banks, has been attempting to facilitate some of those disputes.

Last year, you said that the failure to innovate is itself a risk, and I agree. But innovation also brings new risks that must be understood and managed. And AI is going to be a defining feature of the future of banking, from fraud detection to underwriting to compliance. The question is how we capture the benefits while guarding against bias, model drift, and operational vulnerabilities. So, can you describe the approach you are taking to examine the use of AI and share your views on both the benefits and the risks associated with its development and deployment? And what issues do you believe we should be monitoring more closely as AI advances?

Well, I thank you very much for the question, and I think you hit the nail on the head in terms of striking the right balance between innovation and safety. Obviously, the President's spoken to this issue recently with an EO that came out just a couple days ago. In terms of the OCC, we view AI as both a potential opportunity, both to improve how we manage our own agency, as well as how we supervise banks, including larger banks where it is very hard for us to do enough statistical sampling and credit file reviews to get direct experience of the risks in those banks. So, AI is an opportunity. On the other hand, of course, as we've read about more recently in the newspaper around things like Mythos and other frontier models, we recognize they can also be used to identify vulnerabilities. So, I think we at the OCC, working with main Treasury and of course our federal banking agency and credit union colleagues, want to make sure that frontier models and AI is also being used responsibly by banks of all sizes as well as, importantly, their service providers.

Gentleman's time is expired. I now recognize the ranking member of the Subcommittee on Oversight and Investigations, Mr. Green of Texas, for 5 minutes.

Thank you, Mr. Chairman. I thank the ranking member, thank the witnesses for appearing. I would like to ask Vice Chair Powell a question. Vice Chair Powell, do you agree that as a general rule to control high inflation, the Fed will raise interest rates?

Mr. Green, who is the question directed to?

Ms. Bowman, excuse me.

Okay.

Could I do this, please? Just as a general rule, if you have high inflation that you desire to control, do you raise interest rates as a general rule?

I understand the dual mandate. Do you raise interest— Well, maybe you don't know. Do you know whether you would raise interest rates?

Okay, would you raise interest rates if inflation is high?

As a general rule, when inflation is high and you want to tame it, would you raise interest rates?

Okay. And as a general rule, what would happen if you lowered the interest rates when inflation is high?

And when you stimulate the economy, what happens if you have high inflation?

Inflation continues to go up, correct?

Okay. Well, if you have a president who desires to lower the interest rates for political purposes, and the Fed believes that the interest rate should be raised, then you will have a president who is at odds and who would probably increase inflation. I mention this because I'm concerned about the independence of the Fed. And you have a president who wants control of that process. If the president can control that process, the president can do something that can be very harmful to the economy, especially this president who does things to benefit himself as opposed to the people who actually need the benefit, which is the American people. I said Powell earlier. That's because I have such great respect for him. And I am absolutely a person who believes that he has done the right thing by standing up to this president. He has made a difference. He has shown us how one person who is bold enough to take a stand can make a difference for the American people. I believe so strongly in this that I will personally have a flag flown over the Capitol to support him and to acknowledge him for the courage that he has shown at a very difficult time in our country's history. He is no longer the chair. I trust that this chair will have the courage of Chair Powell. And pardon me for initially starting with his name, but it was on my mind because I think so highly of him and I had planned to make these comments. Now, let's talk for just a moment about meme coins. Generally speaking, there's something that is known as the greater fool theory. And this greater fool theory depends upon someone who has made a purchase having another person pay more for that purchase than the initial person who made the purchase. That's how you make your money. A meme coin is highly dependent on the greater fool theory: someone buying at a higher price than the person who bought initially. Is there anybody who differs with me on that? Good. Because a meme coin means literally that you buy nothing when you make your purchase, but you do have the opportunity to either make money or lose money. Well, the President has found a way to manipulate meme coins, and he and his family have made hundreds of millions of dollars with the manipulation of these meme coins. I stand against it, and I also stand against the crypto criminals who are making it possible for this to occur. At some point, people who invest in nothing will get what they are purchasing. I'm going to protect the American people as long as I have the opportunity to do so. Yes, I'm Al Green, unbought, unbossed, liberated Democrat who's also unelected but is still fighting.

Gentleman's time has expired. I'll now recognize myself for 5 minutes. Mr. Gould, in recent years, merger reviews have often been conducted using competitive effects analysis that treat insured depository institutions as if they operate in an isolated marketplace, even as fintech lenders, credit unions, farm credit institutions, and other non-bank financial firms now provide overlapping loan and deposit products at scale. As the OCC evaluates future transactions, how do you intend to incorporate kind of the non-bank competitors into the assessment of market concentration?

Thank you very much for the question. You're right that deposits are and can be a poor proxy of market power, particularly given the fact that many banks do compete with non-banks across a range of services. And that is why back in 2020, when the then Justice Department was reevaluating their 1995 bank merger guidelines, the OCC submitted a letter to that effect making that very point that I've just made here today. We would continue to work with the DOJ and their antitrust team in terms of ensuring that when we evaluate mergers and we look to the DOJ for their advice on the competitive factors, that they are in fact reflecting the fact that the banking system and the members of it compete with a much broader range of entities than they did say back in 1995.

Can you give me any idea on the analytical framework that you would think is most appropriate to ensure that the competition reviews reflect the full range of providers serving consumers?

Sir, I'd be happy to get back to you on that, but in general, the OCC looks to and receives guidance from the DOJ around that. So, their antitrust department gives us advice on that.

Very good. Thank you. Vice Chair Bowman, you previously noted that banks now compete directly with credit unions, which I'm well aware of—I've been in many meetings with bankers and credit unions—and fintech firms and other non-banks offering similar financial products. In the context of bank merger reviews, would it be helpful for the Federal Reserve to update the competitive analysis to reflect the broader landscape, including all of these different entities? Because it probably would give us a better snapshot of the concentration findings that probably match the reality of the markets out there right now.

Very good. Mr. Gould, I'm going to go back to you. Under the prior administration, the OCC's merger posture largely ignored the reality that small and mid-sized banks face escalating compliance burdens and competition from unregulated institutions. We often hear community banks say consolidation is no longer optional, but almost a means of survival out there as a survival mechanism due to compliance costs and competitive asymmetries. How do you view that landscape right now?

Thank you for the question. Just to make sure I understand right, are we talking about smaller banks or mid-size regionals, or just the whole gamut?

Yeah, I mean, when people come into my office and we visit with the banks, it's kind of a myriad of discussion about what's developing regionally in a state, or how might they better position themselves.

Well, I think it's definitely been the case, as the Vice Chairman noted, that some of the expectations, particularly supervisory expectations, have over time bled down since 2008 to smaller and smaller banks, requiring them to seek economies of scale so they can cover the cost of that additional—

Right. Very good. I will yield back, and now I recognize the ranking member of the Subcommittee on Housing and Insurance, Mr. Cleaver of Missouri, for five minutes.

Thank you, Mr. Chairman. Ms. Bowman, thank you and all of our witnesses for being here. Over the last year and a half, I think some of us—Mike Flood, chair of the Housing Committee, myself, Chairman Hill, our ranking member Maxine Waters—we've spent a rather large amount of time putting together the 21st Century Road to Housing Act. And amazingly, some would probably say magically, it passed the House 396 to 13, which is almost weird. But we did. And so, I mention that only because I'm right now, and maybe most of my life, preoccupied with issues related to housing.

And the U.S. Commodity Futures Trading Commission put out a report a couple of years ago, and in that report, they essentially said climate change poses major risk to the stability of the U.S. financial system and to its ability to sustain the American economy. Climate change is already impacting every facet of our economy, including the infrastructure, including commercial and privately held property, and agriculture. And in 2021, the Financial Stability Oversight Council identified climate change as an emerging and increasing threat to U.S. financial stability.

Right now, some of us—and I wish the whole Congress would focus on this—I'm concerned about climate risk and trying to figure out right now, given the physical risk from severe weather events and transition risk associated with changing market technologies and policies continue to affect financial institutions, what specific steps can the Federal Reserve take or any of us to ensure that banks appropriately identify this issue and that they monitor and manage climate change-related financial risk? And is the Federal Reserve committed to and involved in climate risk as it relates to the financial world?

Well, let me ask any of the other members: How do you assess the United States' current supervisory approach to climate-related financial risk compared to our international peers? Mr. Hill.

Yeah, thank you for the question, Congressman. We look at things similarly to the Federal Reserve. We do expect banks to be prepared for risks in their operating environment, and that generally would include the potential for weather events. Historically, extreme weather events generally have not presented safety and soundness risk to banks. We have no evidence of banks failing as a result of weather events. That always could change in the future, and so we—

Yes, that's the point.

—want banks to be prepared, but we don't view this as a risk that deserves outsized attention compared to other risks.

Thank you. Yeah, thank you. Thank you very much.

Thank you, sir. I'll now recognize myself for five minutes. I first like to ask Comptroller Gould a question on the GENIUS Act, which we recently passed, of course, here in Congress. How is the OCC preparing to implement the GENIUS Act? What is the timeline, and what are the key rules you'll put in place so that those folks who are in the stablecoin business can have clear direction in which to move forward?

Thank you very much for the question, sir. As you probably know, we have proposed a pretty significant rulemaking. The comment period closed. I think we received over 300 comments. We're in the process of reviewing those comments as quickly as we can and making changes and responding to those comments as necessary to make sure that our final output is something we're proud of and something that appropriately balances both the potential as well as some of the risks that many have noted associated with payment stablecoins.

Separately, I would say, sir, we are very well aware of the statutory deadlines that Congress has imposed on us, and we're doing our utmost to meet those statutory deadlines without compromising, hopefully, the quality of the work product. Separately, there are efforts underway, other rulemakings that we're doing, including with main Treasury on the BSA/AML side, which are very important as well, and so those are also going on too.

You recognize the idea of the timeline. Do you feel you'll meet that congressional timeline?

Sir, I couldn't in good faith tell you right now whether we will or will not, but we are working very hard. Our teams have been working almost since before the bill was signed into law by the president. So we've been working very, very hard.

I'd like to ask Ms. Bowman, if I could, a question. As we all recognize, with the sharp rise in interest rates starting in 2022, banks like Silicon Valley Bank, of course, just simply failed. And I'd like to know from your perspective: What are we doing now to mitigate those risks moving forward on liquidity issues, capital, balance sheets, you name it? What are we doing to make sure that might not happen? We all recognize the challenges with interest rates as they rose dramatically in the previous administration. I know Chairman Powell is before us—in fact, he had to answer my question. I asked him the question of why did interest rates rise so quickly? His answer was pretty simple. He said the government was spending too much money. But that being said, on the interest rate question and the effect of SVB, what are we doing to mitigate those risks moving forward?

Thank you so much. I'll just close with this: As we've had these very kind comments about our former Chair, Mr. Powell, again in this very committee earlier this year or maybe late last year, it was the recognition of the Chairman that the reason why we had such high interest rates was just the out-of-control spending that took place in that time period. And that was his own testimony when I asked him in this committee. With that, the Chair recognizes the ranking member of our Subcommittee on Financial Institutions, Dr. Foster, for five minutes.

Thank you, Mr. Chair, and to our witnesses. Early last month, the Treasury Department convened an emergency briefing with the CEOs of America's G-SIBs and other CEOs to discuss the cybersecurity risks of Anthropic's Mythos model, which excels at finding and exploiting cyber vulnerabilities at an alarming rate. To date, Anthropic claims that the model has been used to find more than 10,000 high and critical-level security flaws in otherwise trusted software. Anthropic has provided early access to Mythos to large companies, including U.S. G-SIBs, so that they may scrub their software for vulnerabilities. But I worry that smaller financial institutions have not received equivalent access in a timely manner. So, what's the policy here? Who exactly received access to Mythos on what timescale? And I guess I'll just go down the line here with Vice Chair Bowman.

Just what has happened so far?

Okay, but still it's unquestionably true that small banks with their private systems have not been given the same level of cyber defense that the large ones have, which is not irrational. But it seems to me that you're going to need a very clear position on this. You're going to have to define the defensive perimeter and say, this is the software stack that we're going to defend to the best of our abilities, and other institutions that are using different software stacks are going to have to just accept that they're a lesser priority.

And I think there's a lot to be done here. I think first and foremost, frankly, have the federal government define a software stack that we are going to defend. This is done on the cloud computing infrastructure. Even small banks use cloud-based systems, and at the heart of these cloud-based systems are open-source software things. They're communally defended, and we're some of the highest priorities in defending when Mythos hit. And so I think that all the regulators should focus on defining the set of software that we are going to defend the same way that the cloud infrastructure stuff is defended as open-source projects. I think that's the best and really the only way forward on this. So I urge you to think about that. Comptroller Gould, who's received what so far?

I'm sorry, sir.