FinReg Currents - Week 14

Each week of the first 100 days of the new Trump administration, we will publish updates on key federal financial services regulatory and related developments.

This week, we review the following developments as of Wednesday:

• Consumer Financial Protection Bureau (CFPB) Memorandum on Supervision and Enforcement Focus
• Reduction of CFPB and Federal Deposit Insurance Corporation (FDIC) Workforces
• FDIC Large Bank Resolution Planning Update
• National Credit Union Administration (NCUA) Board Member Terminations
• Federal Reserve Board (FRB) Governor Barr Speech on Cybersecurity in Banking
• Commodity Futures Trading Commission (CFTC) Requests for Comment on 24/7 Trading and Perpetual Contracts

CFPB Memorandum on Supervision and Enforcement Focus

In a memorandum to staff on April 16, 2025, CFPB Chief Legal Officer Mark Paoletta set out the agency’s 2025 Supervision and Enforcement Priorities, which rescind prior supervision and enforcement priority documents and shift resources from actions that can be completed by states. The 11 priorities include a 50% reduction in supervisory events, a shift of focus from nonbanks to depository institutions, and a “focus on actual fraud against consumers.” The priorities also limit fines and investigations of racial discrimination, as well as deprioritizing activities with justice-involved individuals, medical debt, peer-to-peer platforms, student loans, remittances, consumer data, and digital payments.

Reduction of CFPB and FDIC Workforces

According to news reports, the CFPB is targeting 1,500 employees in a reduction-in-force effort. The CFPB reported that it had approximately 1,700 employees in late 2024.

The FDIC is planning to reduce its workforce by about 1,250 employees, roughly 20% of the workforce, in addition to the 500 employees who resigned through its buyout offer.

FDIC Large Bank Resolution Planning Update

On April 18, 2025, the FDIC released updated FAQs regarding resolution plans filed by large insured depository institutions. The updates are intended to refocus resolution planning on information required to “resolve a large bank through a weekend sale or…operate the institution for a short period of time.” The FDIC has exempted insured depository institutions (IDIs) from content requirements, including requirements to utilize bridge bank strategy and a hypothetical failure scenario. The new FAQs discuss the FDIC’s treatment of credibility findings, digital services and electronic platforms, covered IDI assessment of the full resolution submission, changes since prior submissions, and non-deposit claims. The FDIC also revised 11 additional questions.

NCUA Board Member Terminations

On April 15, 2025, President Trump notified NCUA board members Todd Harper and Tanya Otsuka that their positions were terminated before the completion of their terms. Harper was appointed to the board by Trump in 2019 and nominated again by President Biden in 2021. Otsuka was nominated by Biden in 2023. With the removal of two members, Chairman Kyle Hauptman is the only remaining member of the board. In a staff message on April 18, 2025, the NCUA stated that it has “precedent and standing delegations of authority in place to continue performing all operational and statutory requirements under the authority of a single Board Member.”

FRB Governor Barr Speech on Cybersecurity and AI in Banking

In a speech at the Federal Reserve Bank of New York on April 17, 2025, FRB Governor Michael Barr discussed the rising threat of cybercrime utilizing generative AI and deepfakes. He emphasized the importance of preventing attacks by deploying similarly advanced technology in banks, ensuring that bank staff is educated in fraud innovations, and enabling customer multi-factor identification. Barr also reviewed ways to make cyber attacks more expensive and difficult for criminals, including coordination among law enforcement, data sharing among financial institutions, and increased penalties for AI-enabled fraud.

CFTC Request for Comment on 24/7 Trading and Perpetual Contracts

On April 21, 2025, the CFTC Divisions of Market Oversight, Clearing and Risk, and Market Participants released requests for comment regarding 24/7 trading and perpetual contracts in derivative markets. In the request for comments on 24/7 trading, CFTC staff is inviting comments on the risks that are specific to 24/7 trading and how entities would ensure system resilience and compliance with continuous trading activity. Comments are also requested on what models and technologies would be necessary for continuous models. In the request for comments on perpetual contracts in derivative markets, CFTC staff seeks comments on the risks and uses of perpetual contracts, as well as a working definition of perpetual derivatives and risks particular to perpetual derivatives. Comments are due by May 21, 2025.

For more details on any of these developments, or to discuss how these changes may impact your business, please reach out to our team.

You may use the following links to access our prior issues:

• FinReg Currents - Week 13 | Morrison Foerster
• FinReg Currents - Week 12 | Morrison Foerster
• FinReg Currents - Week 11 | Morrison Foerster
• FinReg Currents – Week 10 | Morrison Foerster
• FinReg Currents – Week 9 | Morrison Foerster
• FinReg Currents – Week 8 | Morrison Foerster
• FinReg Currents – Week 7 | Morrison Foerster
• FinReg Currents – Week 6 | Morrison Foerster
• FinReg Currents – Week 5 | Morrison Foerster
• FinReg Currents – Week 4 | Morrison Foerster
• FinReg Currents – Week 3 | Morrison Foerster
• FinReg Currents – Week 2 | Morrison Foerster
• FinReg Currents – Week 1 | Morrison Foerster