BPInsights: June 27, 2026

Fed Releases Stress Test Results

The Federal Reserve on Wednesday released the results of this year's annual stress test, which assesses large banks' resilience to sharp economic downturns. The results confirmed that large banks can withstand a severe recession while continuing to support businesses and households, the Fed said in an accompanying press release.

• Bank capital declined only 1.6 percentage points in aggregate under this year's tests, despite more than $708 billion in total loan losses under the hypothetical scenario.
• All 32 banks undergoing the test remained above their minimum capital requirements.
• This year's scenario involved a severe global recession, a 39 percent decline in commercial real estate prices, a 30 percent decline in house prices and a 10 percent peak unemployment rate.

Changes in the Works: This year's test follows 2025 Fed proposals to open the stress test models and scenarios to public input, in line with a 2024 legal challenge by the banking industry. This week's results will not affect large banks' capital requirements. Current requirements will stay in place until 2027, when the stress test will include models that have taken public comments into consideration.

BPI Reaction: BPI President and CEO Greg Baer released a statement in response to the results. "Today's stress test results demonstrate the resilience of large banks against a range of macroeconomic shocks," Baer said. "This year marks a transition between the Federal Reserve's existing stress test framework and an updated one that aims to enhance transparency, reduce volatility and provide opportunities for public comment on the models and scenarios. We hope that the revised framework will shed more light on inputs and provide more certainty. We have also recommended that the most recent Basel proposal be updated to eliminate overlaps with the stress test. These combined changes will allow banks to plan capital more efficiently and support more lending and capital markets financing."

Five Key Things

1. 5 Takeaways: BPI's Paridon Testifies at House Hearing on Payments

BPI Executive Vice President & Co-Head of Regulatory Affairs Paige Pidano Paridon testified on Wednesday before the House Financial Services Committee at a hearing titled "Future of Payments: Promoting Innovation and Fair Markets." Paridon discussed banks' track record of innovation, and the risks of novel bank charters and expanded Federal Reserve master account access, arguing that innovation should strengthen the existing regulatory framework rather than circumvent it.

Here are a few takeaways from the hearing:

1. Banks support payments innovation and stand ready to compete on a level playing field. "Banks welcome competition, and banks want to innovate within the banking sector, and for many years previously, some of the banking regulators were skeptical and prevented banks from using innovative technology to provide services to their customers that they wanted to use," Paridon said in response to Rep. Bryan Steil (R-WI). "For example, banks were essentially prohibited for several years from experimenting and using distributed ledger technology. So we welcome the ability of banks in the banking sector to innovate. Of course, subject to them being able to demonstrate that they're able to manage the risks, and banks are very expert at managing risks. We welcome innovation and competition within the payment ecosystem itself, and we commend the Federal Reserve for inviting public input into whether it should expand its account access to provide a limited payment account to certain entities that have not traditionally had access to master accounts."
2. Banks' protections support innovation while keeping consumers and small businesses safe. Access to the Fed's infrastructure is a privilege, and the benefits should come with appropriate regulatory responsibilities. "Institutions seeking novel charters seek access to the Federal Reserve payment infrastructure and the implicit imprimatur of federal oversight without accepting the full scope of those obligations." Paridon said. "That is not a formula for innovation. It is a formula for regulatory arbitrage, and for the gradual erosion of the safety and soundness standards that protect the American public."
3. Bank deposits uniquely support small business lending and community investment. Rep. Brad Sherman (D-CA) raised concerns about yield-bearing causing bank deposit flight and driving down small business and community lending. "There is concern, particularly if stablecoin issuers through affiliate and other third parties are able to pay interest, that there could be a flight of deposits out of insured banks to stablecoin issuers, and as you note correctly, bank deposits fund loans to consumers, small businesses, including consumers of all economic levels," Paridon said. "And there would be, based on the research we've done, a reduction in loans, or at a minimum increase in the cost of credit and a reduction in the availability of credit, were there to be deposit flight out of the regulated banking system."
4. Expanding Fed master account access to uninsured institutions risks deposit flight, credit and settlement risk to the payment system and new vectors for illicit finance. This warrants a studied approach. Rep. Dan Meuser (R-PA) asked Paridon about the potential risks of expanding master account access to businesses outside the traditional banking system. "We do have concerns that, depending on whether the Fed ultimately does open up skinny accounts or payment accounts to entities that have not traditionally had access," Paridon responded. "Number one, it could potentially fundamentally shift deposits from insured institutions to uninsured institutions. The Fed itself has acknowledged that the institutions most likely to seek payment, a payment account, are going to be uninsured institutions. We have concerns, of course, with uninsured institutions, because they run and would not have the protection of deposit insurance. Beyond that, it's critically important, as the Fed does acknowledge that institutions with access to the Fed payment systems and a master account do not have the ability to present credit risk to the Reserve Bank itself, to present settlement risk to other participants in the payment ecosystem, and that they do not serve as a transmission vector for illicit finance risk into the system."
5. AI agents raise new questions around liability and consumer protection. Rep. Bill Foster (D-IL) asked about the implications of the transition to agentic finance, where transactions are facilitated by AI agents. "I think the advent of that technology and capability raises a lot of questions that are just beginning to be investigated and considered, and I do think regulators and the Congress should carefully consider all of the possible implications, including, as you note, what happens if an agent executes a transaction or makes a payment that it wasn't authorized to do, and who is a consumer in that situation? Who is the institution serving, and in the investment advisor space, who are the fiduciary duties owed to, etc.," Paridon said.

2. FDIC Proposes Streamlining Resolution Requirements, Lowering Assessments

The FDIC on Thursday proposed changes to streamline bank resolution plan requirements, as well as adjusting thresholds for assessment categories. The resolution proposal would revise requirements to "focus on the information that most directly supports the FDIC's readiness to resolve the institution in a cost-effective manner," the agency said in a release. It would raise the asset threshold for determining whether an insured depository institution is subject to the rule (from $50 billion to $100 billion) and provide for automatic future adjustments. Chairman Travis Hill had previewed these reforms in a recent speech.

• Assessments. Proposed changes to the assessment framework would increase the threshold for large institutions from $10 billion to $30 billion in assets, which would result in more banks paying lower assessments, and periodically adjust thresholds through indexing. The proposal would also decrease the initial base assessment rate schedules for all banks, "in recognition of the recent growth in the Deposit Insurance Fund (DIF) and the reserve ratio." The proposal also includes a new "resolution readiness adjustment" that would provide a downward adjustment of up to one basis point for large banks that provide the FDIC with certain resolution-related data. In his statement, Chairman Hill explained that "banks that successfully opt in to the RRA are expected to cost the FDIC less upon failure, thus justifying a downward adjustment to premiums."
• Of note: FDIC Board member, Comptroller Jonathan Gould, said he supported the assessments proposal because the proposed changes and resolution readiness adjustment are "worth investigating." He cautioned, however, "my experience as Comptroller and the bank data breach at the OCC that occurred during the last Administration have reinforced my belief that a banking agency should be clear about how sensitive bank information is not only collected but also used and safeguarded by the agency that requests it, particularly when that agency is not the bank's primary federal regulator."
• Disclosure of Information. The FDIC board adopted a separate, third proposal that would revise the FDIC's information disclosure rules (commonly referred to as confidential supervisory information, or CSI). The proposal would allow FDIC-supervised institutions to share more information with third parties "such as attorneys, accountants, affiliates, consultants, a limited number of potential merger partners, and certain service providers, among others," without seeking prior FDIC approval. The proposal would make additional changes to the FDIC's information disclosure rules, including related to disclosure of information under the Freedom of Information Act and how the FDIC discloses its own confidential information. In a statement at the FDIC Board meeting, Comptroller Gould said an OCC proposal on CSI reforms is "not far off."

BPI issued the following statement of support on X: "We are encouraged by the FDIC's persistent focus under Chairman Hill's leadership on improving its readiness to resolve failing banks. For too long, our resolution framework has prioritized paperwork over practical readiness. We look forward to reviewing and commenting on the proposals to streamline bank resolution documentation and adjust deposit insurance assessments."

3. Trades Support FCC Effort to Strengthen 'Know Your Customer' Safeguards on Telecom Providers

A group of trades including BPI, the American Bankers Association, Consumer Bankers Association and Financial Technology Association expressed support for an FCC proposal to subject telecom providers to stronger "know your customer" requirements. In a comment letter this week, the trades recommended changes to existing FCC rules that would further protect consumers from spoofed calls and other exploitation of telecom networks that perpetuate fraud. They recommended that the FCC:

• Require originating providers to collect specific information from business callers - including confirmation that the business is bonded (or has equivalent financial responsibility); the product or service that the business offers; and assurance that owners of the business have not been convicted of telemarketing law violations.
• Codify a base forfeiture amount for violations of these FCC rules.
• Allocate additional resources to enforce the enhanced KYC regime for originating providers.
• Ban SIM boxes.

The comment letter notes that, unlike financial institutions that have Know Your Customer (KYC) and customer due diligence (CDD) obligations to help identify and report potential fraud and other illicit activity, voice service providers are not held to commensurate obligations, which facilitates the exploitation of calling networks by fraudsters.

• In January 2026, the Associations had urged the Commission to specify the steps that voice service providers must take to prevent criminals from originating fraudulent calls. The Associations therefore strongly support the FCC's proposal, which represents an important step toward requiring originating providers to "know their customer"-i.e., to collect specific information about a prospective customer-before the customer may originate calls on the provider's network.
• The letter emphasizes that fraud and scams are a pervasive problem that often take an extraordinary financial and emotional toll on consumers. In a December 2025 report, the Federal Trade Commission estimated that 2024 fraud and scam losses totaled a staggering $196 billion. The financial services industry spends billions of dollars each year to educate and protect consumers from fraud and scams, investigate/refer potential criminal activity, and help affected consumers recover their hard-earned money. But financial institutions cannot do this work alone.

4. The Crypto Ledger

Here's the latest in crypto.

• Iran Crypto Hub. CoinEx, a crypto exchange founded by a Chinese engineer, has played a crucial role in Iran's evasion of U.S. sanctions, the Wall Street Journal reported this week. Iran-linked wallets have moved more than $3.84 billion through the exchange since 2019, according to the Journal. Wallets hosted by the exchange have received hacked crypto acquired by Iran's central bank and transacted directly with Iranian Revolutionary Guard accounts. The Journal published an infographic showing how Iran used Tether and DeFi to evade U.S. sanctions, a risk that BPI publications have flagged. CoinEx "agreed to exit from the U.S. market after being fined in 2023 by New York's attorney general" for aiding Iran. "The ability of Iranians to use CoinEx highlights the difficulty the U.S. faces enforcing sanctions against the Islamic Republic," the article said. "The country has publicly embraced cryptocurrency, and the industry provides a range of sometimes obscure platforms operating largely outside the reach of the U.S. that connect Iran's domestic economy to the global crypto ecosystem."
• Catholic Leaders, Police and Consumer Groups Express Concern with Clarity Act. The Clarity Act has generated concern among a broad swath of stakeholders, from police to Catholic leaders to consumer advocates. The crypto bill garnered objections from 82 Catholic leaders and organizations, who warned that provisions in the legislation would enable the financing of human trafficking. "The test of any financial system is not simply whether it generates wealth or innovation, but whether it safeguards human life and dignity," the Catholic leaders wrote. The concerns center on a provision known as Section 604 or the Blockchain Regulatory Certainty Act, which law enforcement groups warned could shield criminals from investigation. "Our concern is not with individuals who merely write or publish software code, nor with responsible technological innovation," the letter said. "Rather, our concern is with broad exemptions that may shield individuals or entities whose activities facilitate the movement of digital assets, create obstacles to legitimate oversight, or weaken longstanding investigative and enforcement authorities relied upon by law enforcement."
• Binance Intends to Stay in EU Despite License Denial. Crypto exchange Binance plans to keep operating in the European Union despite the rejection of its license application in Greece. Under the EU's Markets in Crypto Assets (MiCA) law, crypto companies must apply under a national regulatory regime to be able to operate across the bloc. "We may just have a different pathway to being authorised," senior Binance executive Gillian Lynch said in a Reuters interview. "If it is not Greece, I'm looking at other alternatives." The company, which has spoken with regulators in Ireland, Latvia and Greece but faced resistance in all three jurisdictions, has one week to secure a license before it must cease operations in the EU.
• Circle Says It's Not Liable to Users for Drift Hack. Circle on Monday urged a federal court in Massachusetts to dismiss a lawsuit from crypto users who claim Circle's inaction allowed $280 million to be drained from crypto project Drift Protocol. Circle argued that the proposed class action suit does not demonstrate that the stablecoin issuer aided and abetted the hackers.

5. Warsh Hires Veteran Central Bank Economists as Advisers

Federal Reserve Chair Kevin Warsh has appointed two Fed staff economists as new advisers, according to the Wall Street Journal this week. Warsh, who recently announced a series of task forces to focus on key issues, has tapped senior economists Daniel Covitz and Eric Engstrom as advisers. Covitz is one of three deputy directors in the division of research and statistics, and Engstrom is a senior associate director in the division of monetary affairs.

In Case You Missed It

Traversing the Pond

Here's the latest in international banking policy.

• Digital Euro Clears Hurdle. The European Central Bank secured approval of draft rules on the digital euro from the economic committee of the European Parliament, clearing a key hurdle on the path to launching the currency. The draft regulation framed the digital euro as a way to reduce reliance on non-European payment providers.
• Bank of England Plans £40 Billion Stablecoin Issuer Limit. The Bank of England said on Monday that it will replace proposed stablecoin ownership limits with a £40 billion stablecoin issuance limit. It also reduced the proportion of assets backing stablecoins that must be held in zero-interest deposits at the central bank. Crypto companies had pushed back on the stringency of previous proposals. The current proposal retains the strict interest ban, but payment-linked incentives are allowed, provided they support the use of the stablecoin as an everyday payment tool and do not undermine wider policy objectives.
• BoE Proposes Changes to Trading Capital Charges. The Bank of England late last week proposed adjustments to the Basel Fundamental Review of the Trading Book, the market risk component of capital requirements for large banks. The proposals would make it easier for banks to use internal models to calculate market risk capital rather than a standardized approach. The BoE's Prudential Regulation Authority issued a consultation paper seeking comment on the proposals.
• Simplifying Rules Could Boost Lending by Trillions of Euros, Report Says. Simplifying banking regulations could increase lending by more than €2 trillion, according to a report by Spanish banking associations AEB, CECA and UNACC. The report pointed to regulatory complexity and overlapping capital requirements as factors constraining European economic growth.

Member News

Bank of America Celebrates America 250 by Giving Customers Free Access to 250 Museums and Support for Cultural Programs Nationwide

In honor of the 250th anniversary of the United States' founding, Bank of America will offer free access to 250 cultural and civic institutions as an expansion of the bank's "Museums on Us" program. The program aims to enhance public access to cultural attractions by offering eligible cardholders free general admission during the first full weekend of every month.

Upcoming Events

• 7/14/2026: House Financial Services Committee Hearing: Federal Reserve Semi-Annual Monetary Policy Report
• 7/15/2026: HFSC Hearing: Semi-Annual Report of the Bureau of Consumer Financial Protection
• 7/17/2026: HFSC Subcommittee on Digital Assets, Financial Technology and Artificial Intelligence Field Hearing: Building the Future of Finance: How the CLARITY Act Unlocks Innovation
• 7/21/2026: HFSC Subcommittee on National Security, Illicit Finance and International Financial Institutions Hearing: Oversight of the Financial Crimes Enforcement Network
• 7/21/2026: HFSC Subcommittee on Housing and Insurance Hearing: Oversight of the Federal Home Loan Bank System