Acting Chairman Travis Hill of the Federal Deposit Insurance Corporation (FDIC) delivered a speech at the American Bankers Association Washington Summit on April 8, 2025, providing an update on key policy issues the agency is currently focusing on. His remarks highlighted a commitment to fostering a vibrant and resilient banking system by addressing challenges in new bank formation, embracing innovation in digital assets, improving resolution planning, and reevaluating asset thresholds.
A significant portion of Chairman Hill’s speech addressed the decline in new bank formation. He noted the sharp decrease in the number of bank charters since the 2008 financial crisis, emphasizing that this decline is more attributable to a lack of new banks than increased merger activity. To counter this trend and preserve the community bank model, the FDIC is actively considering ways to encourage new bank formation, including potentially adjusting standards for certain types of applicants, such as traditional, non-complex community banks in under-served areas. The FDIC is also reevaluating how it processes deposit insurance applications from organizers proposing banks with new or innovative business models, including fintech firms and industrial loan companies (ILCs), with an open mind while still maintaining rigorous approval standards.
Regarding digital assets and blockchain, Chairman Hill announced a more open-minded approach to innovation. The FDIC recently rescinded a prior notification requirement for crypto- and blockchain-related activities, clarifying that FDIC-supervised institutions can engage in permissible activities without prior approval. The agency intends to issue further guidance on specific crypto-related activities, including permissibility, the use of public, permissionless blockchains, payment stable-coins, and the tokenization of real-world assets and liabilities. A key principle is ensuring that “deposits are deposits, regardless of the technology or record keeping deployed”.
On the topic of resolution planning, Chairman Hill discussed the updated IDI resolution planning rule and expressed concerns about the costliness of bridge bank solutions, citing the significant deposit runs experienced by Silicon Valley Bank and Signature Bank post-failure. The FDIC plans to issue updated FAQs related to upcoming IDI Rule submissions, de-emphasizing hypothetical failure scenarios and focusing on information needed for rapid marketing and short-term operation of a failing institution. The FDIC will also proactively engage with large institutions as potential acquirers and explore partnerships with non-bank bidders to improve the efficiency and cost-effectiveness of bank resolutions.
Finally, Chairman Hill touched on asset thresholds, noting that many have not been adjusted for inflation or macroeconomic growth. The FDIC is currently inventorying and analyzing its numerical thresholds to consider options for indexing them.
In conclusion, Chairman Hill emphasized the FDIC’s commitment to promoting a vibrant and resilient banking system through a balanced approach that encourages new entrants, embraces responsible innovation, improves resolution preparedness, and ensures regulatory thresholds remain relevant.
The full text of the speech can be found here:
https://www.fdic.gov/news/speeches/2025/view-fdic-update-key-policy-issues
