September 3, 2025

Big changes are happening in how U.S. banks are checked by regulators! Under President Donald Trump’s administration, bank exams and disciplinary actions have softened. More than six banking insiders say regulators like the Office of the Comptroller of the Currency (OCC), Federal Reserve, and Consumer Financial Protection Bureau (CFPB) have recently delayed, scaled back, or even canceled some bank exams. This lighter approach mostly skips over issues that aren’t at the heart of banking, such as reputational risk, climate change risk, and diversity and inclusion, the insiders revealed. Supervisors are now using clearer, more focused language at the start of exams to explain what exactly they'll check. They also stick more closely to original exam rules, instead of adding extra points. Plus, they are gentler when telling banks to fix problems. Normally, officials send formal warning letters called "matters requiring attention" or "matters requiring immediate attention" to make banks quickly fix issues. Banks have long complained these notices are too tough and too many. Now, supervisors prefer softer, informal chats to guide banks instead of harsh official letters, sources said. This new style is part of Trump's broader plan to zoom in on the most crucial financial health signs of banks, like safety and soundness. Some say staff shortages due to government hiring freezes and layoffs also forced regulators to pull back. These insiders, who asked to stay unnamed, mainly know about changes at big and mid-sized banks. But Democrats and many experts warn against weak supervision. They say strong checks should look at all bank risks carefully. Supervisory failures partly caused the collapse of three banks in 2023. Because of that, regulators had increased their exams and controls later that year. While Trump-appointed officials promise to fix supervision which they say focused too much on things beyond core financial risks, the details are kept secret. This news report reveals for the first time how quickly the lighter approach is shaking up the banking world and making life easier for banks. The OCC told Reuters, "The OCC is reexamining its supervisory approach to ensure it conforms to its statutory mission and reflects a risk tolerance enabling banks to support economic growth." They said supervision changes based on the bank's size, complexity, and risk, focusing on serious financial risks. The Fed did not comment, and the CFPB did not respond to questions. Michelle Bowman, Fed’s vice chair for supervision and a Trump appointee, said in June she wants a "more sensible" rating system for bank supervision. Earlier this year, U.S. regulators also stopped policing "reputational risk," meaning they won’t check if bad press could hurt banks. Trump’s team has also cut CFPB staff and reduced its oversight power dramatically. Bank exams have been the backbone of watching banks carefully. Examiners look into banks in person, help spot problems, and can tell banks what to fix. In the past, exams focused on core measures like capital, cash flow, and management skills. The CFPB checks if banks follow consumer protection laws. But lately, exams grew bigger and began checking social and environmental issues too, like climate change, diversity, and inclusion. Around the world, regulators have become stricter about climate risks. Banks have complained exams take too long, seem too unclear, and focus on pointless rules rather than real risks. They say examiners can be too harsh and unfriendly. Big banks argued that these side issues distracted supervisors, making them miss serious money problems. JPMorgan Chase CEO Jamie Dimon fiercely criticized regulators in October 2024, saying, "It's time to fight back." He warned that many banks are scared to argue with regulators because they get punished more. "We are suing our regulators over and over and over, because things are becoming unfair and unjust," Dimon stated. With these fresh changes, U.S. banks now enjoy some breathing room during exams, focusing more on money matters and less on extra non-financial issues. Will this new approach help banks grow stronger or could skipping some checks cause trouble later? Only time will tell!

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Tags: Bank exams, U.s. regulators, Trump administration, Bank supervision, Regulatory changes, Bank risks,