USAA Missteps, CFPB Uncertainties, and a Changing Banking Landscape: Top November Banking News 2024
As November 2024 concludes, the banking industry finds itself at a pivotal crossroads shaped by significant developments involving USAA, the Consumer Financial Protection Bureau (CFPB), and the implications of President-elect Donald Trump’s return to power. Industry watchers and stakeholders are digesting a series of regulatory, leadership, and policy shifts that are poised to reshape the financial services landscape in the coming years. Here is an in-depth look at the top banking news stories that defined November.
USAA’s Regulatory Troubles and Internal Challenges
Once celebrated for its long-standing commitment to military members, USAA is now navigating a rocky path marked by regulatory scrutiny and operational missteps. A joint investigation by American Banker and the San Antonio Current revealed a “fundamental breakdown” at USAA’s banking division, highlighting a failure to adequately invest in critical areas to satisfy both regulators and longtime customers.
Despite years of customer base growth, USAA has faced a wave of regulatory penalties that have yet to prompt meaningful internal reform. Leadership upheavals continue, with CEO Wayne Peacock announcing his forthcoming retirement amid the chaos. Compounding the banks’ troubles is its lack of profitability, forcing USAA to initiate layoffs as part of a cost-cutting measure. These developments have placed the San Antonio-based financial institution under a regulatory microscope, challenging its once-sterling reputation.
Trump Presidency Ushers in an Era of Deregulation and Policy Shifts
Donald Trump’s electoral victory in November’s presidential race signals a swift pivot toward deregulatory policies in the banking sector. Trump’s ability to appoint key regulatory officials and influence federal bodies like the Federal Reserve and the CFPB has industry leaders preparing for a markedly different regulatory environment. Notably, the former president won back critical swing states including Georgia, Pennsylvania, and Wisconsin, underscoring broad support for his platform advocating reduced oversight on banks.
Federal Reserve Shake-Ups on the Horizon
With Trump’s return to office, substantial changes are anticipated within the Federal Reserve Board of Governors. The president will have the authority to appoint two new governors and potentially reshape leadership within the central bank. Advisors close to Trump have called for enhanced executive influence over monetary policy, with rumors circulating about possible moves to demote the Fed’s Vice Chair for Supervision, Michael Barr. These developments hint at a more hands-on approach to the Fed’s operations and regulatory oversight in the coming years.
The Future of the CFPB Under Trump’s Administration
The Consumer Financial Protection Bureau, an agency that has faced both praise and criticism since Director Rohit Chopra took office in 2021, is expected to undergo significant directional changes under the new administration. Trump’s previous tenure was marked by appointing CFPB leaders skeptical of its broad regulatory authority, such as Mick Mulvaney, although his selection of Kathy Kraninger as director followed a more moderate path.
Industry observers speculate that while the bureau will see a shift away from its current enforcement intensity, these changes might be less sweeping than some industry opponents anticipate. Nonetheless, the CFPB’s regulatory posture and supervisory approach are poised for recalibration, introducing a new era of policy and enforcement dynamics.
Swipe Fees Face Political Pressure with Potential Legislative Action
Another area grabbing congressional attention is the cost of swipe fees charged by major payment networks like Visa and Mastercard. Bipartisan lawmakers have pressed executives from these companies to address concerns raised by small businesses and consumers about these fees. Republican leaders, emboldened by controlling the White House and Congress, have proposed legislation requiring banks with assets exceeding $100 billion to offer retailers a choice between two unaffiliated card networks, potentially excluding Visa and Mastercard.
Although legislation enjoys support from key figures such as Senator JD Vance, its fate remains uncertain under the incoming Trump administration, which may also reconsider ongoing antitrust litigation against Visa spearheaded by the Department of Justice.
Call for Expanded Deposit Insurance Following Bank Failure
In the wake of the recent failure of the First National Bank of Lindsay in Oklahoma—closed after fraud allegations surfaced—CFPB Director Rohit Chopra has called on Congress to revisit deposit insurance limits. Unlike systemic risk exceptions granted during the collapses of Silicon Valley Bank and Signature Bank last year, depositors affected by the Oklahoma bank failure face significant uninsured losses with only partial access to their funds.
Chopra’s appeals aim to tighten protections for consumers and ensure broader insurance coverage, underscoring ongoing concerns about deposit safety across smaller financial institutions.
CFPB Cracks Down Before Transition
As the next administration prepares to take office, the CFPB under Director Chopra remains active in enforcement efforts targeting banks and financial institutions. While some bankers hope for a more industry-friendly agency in the future, there is cautious skepticism about the prospects for significant relief.
Upon his appointment in 2021, Chopra’s history of skepticism toward big tech and robust regulatory stance rekindled fears among Republicans that the bureau would revert to a stringent approach reminiscent of the Obama era. These efforts continue to shape compliance landscapes as the bureau pushes forward ahead of anticipated policy reversals.
Delay in Basel III Implementation and Banking Regulations Expected
Trump’s victory also suggests delays are likely in finalizing and implementing Basel III capital standards, which aim to bolster the resilience of large banks. Given the president’s track record of regulatory rollback and the potential for swift leadership changes at the Office of the Comptroller of the Currency and the CFPB, the timeline for adopting these new capital requirements has been pushed further down the road.
This regulatory uncertainty injects additional complexity into the banking sector’s strategic planning as institutions brace for an extended period of evolving capital and compliance demands.
FDIC Faces Cultural Challenges Under Trump
Finally, the Federal Deposit Insurance Corporation (FDIC) is set to confront cultural and operational challenges amid shifting priorities under a Trump administration. Following criticism about its responsiveness and enforcement rigor, the FDIC will need to ramp up efforts to restore confidence and adjust to policy changes reflecting the new administration’s deregulatory stance.
Conclusion
November 2024 has proven to be a transformative month for the U.S. banking industry. Persistent issues at USAA highlight the ongoing challenges within financial institutions, while the future regulatory landscape is being reshaped by political changes, particularly the reemergence of Donald Trump as president. Structural shifts at key agencies such as the CFPB, the Federal Reserve, and the FDIC, along with important legislative and supervisory developments, signal an era defined by deregulation, industry pushback, and heightened uncertainty.
For bankers, regulators, and consumers alike, the months ahead will require vigilance and adaptation as policies and leadership undergo significant transformation. Stay tuned to Smart Money Mindset for continued coverage and analysis of these evolving stories.
— Written by Frank Gargano and contributors for Smart Money Mindset, based on reporting from American Banker and associated sources.