New Executive Order Targets Regulatory Overreach Affecting Bank Account Access
Bank Policy Institute
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The Administration issued an executive order on Thursday to promote access to financial services in America. The Executive Order aligns with the spirit of several ongoing efforts on Capitol Hill and among the financial institution regulatory agencies to address bank account access concerns driven by regulatory overreach and supervisory discretion.
The Bank Policy Institute, American Bankers Association, Consumer Bankers Association and Financial Services Forum issued a statement in response and published a set of principles that policymakers should consider as they work to implement the President’s Executive Order. Importantly, the groups recommend that federal requirements must broadly and expressly preempt any non-federal fair access or account closure laws to avoid inconsistent requirements affecting customers across all 50 states.
A sample of the initiatives already underway includes:
1. eSLR Reform Aligns Leverage Requirement with Original Objective
When regulators introduced the eSLR in 2014, policymakers cautioned that it might become unduly binding and push banks toward riskier assets. Concerns were largely eased at the time based on the assumption that the eSLR would merely serve as a capital backstop, and reserve balances would shrink as the Fed unwound its crisis-era balance sheet. This change was also expected to ease binding constraints already facing several institutions.
It didn’t.
Instead, the Fed began to oversupply reserve balances starting in 2019, and expanded its balance sheet even further during the pandemic. As a result, the leverage ratio has become more binding than regulators anticipated, forcing leading banks to limit crucial activities in Treasury markets, especially during times of stress, without improving financial stability.
Our latest blog post explores why the latest proposed recalibration — introduced on June 17 — will better balance safety with supporting healthy market activity.
2. Trump Nominates Economic Adviser Stephen Miran to Federal Reserve Board
President Trump announced plans on Thursday to nominate Stephen Miran, current chair of the Council of Economic Advisers, to the Federal Reserve Board. Miran will replace Adriana Kugler, who resigned last week to return to Georgetown University as a professor for the fall semester. Kugler’s term expires in January 2026. Miran previously served as senior advisor for economic policy at the Treasury Department during the first Trump Administration and was a senior strategist at Hudson Bay Capital.
3. U.S. District Court Strikes Federal Reserve’s 2011 Debit Interchange Fee Cap Rule
A federal judge in the U.S. District Court for the District of North Dakota issued a ruling Corner Post v. Board of Governors of the Federal Reserve System late Wednesday, vacating the Board’s 2011 debit interchange fee cap rule. The court concluded that the Fed lacked authority under the Durbin Amendment to include certain costs in the fee cap calculation.
The Bank Policy Institute and The Clearing House Association issued the following statement in response:
“We are severely disappointed in the Court’s interpretation of the Durbin Amendment. The payment system is secure, convenient and reliable because of significant investment by banks, and today’s decision, if affirmed, would undermine that system. It would disincentivize innovation and perpetuate a misguided notion that banks should be forced to offer products and services without being able to recover the costs necessary to sustain those investments. We will evaluate the Court’s decision and continue to pursue every avenue to ensure that banks can recover their costs and reasonable return, as the Durbin Amendment itself provides.”
Corner Post, a North Dakota-based truck stop, filed a lawsuit against the Federal Reserve in 2021, arguing that the Fed’s 2011 rule violated the Durbin Amendment. The rule requires the Fed to establish standards for assessing whether interchange revenue is “reasonable and proportional” to the costs incurred by issuers in processing debit transactions, and the plaintiffs argued that the Fed should not have permitted financial institutions to account for certain costs, such as the costs incurred in monitoring debit transactions, when calculating interchange rates.
The Court stayed its ruling, pending the resolution of any appeal to the United States Circuit Court for the Eighth Circuit.
4. European Banks Remain Well Capitalized in 2025 Stress Tests
The European Banking Authority’s 2025 stress test found that major EU banks remain well-capitalized even under a hypothetical global trade breakdown and deep recession featuring a 6.3% GDP contraction, reported Bloomberg. The adverse scenario led to projected losses of €547 billion across 64 banks, but the average CET1 capital ratio fell just 3.7 percentage points to 12.1%, an improvement from the previous round of stress tests in 2023.
Most large institutions, including Deutsche Bank and BNP Paribas, experienced smaller capital effects than in the previous test, supported in part by higher net interest income. Southern European banks performed especially well, reported El País, especially Spain’s Bankinter and CaixaBank. Bankinter saw the smallest capital drawdown of any bank in the exercise, with its CET1 ratio falling just 55 basis points, while CaixaBank’s fell by 162 basis points—both well below the EU average of 304 basis points.
Unlike U.S. stress tests, the EBA’s results do not directly limit banks’ capital distributions. However, they reportedly play a role in how the European Central Bank sets institution-specific capital requirements known as Pillar 2 requirements, whose methodology and results are kept secret.
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