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The stablecoin bill is now law. What’s next for banks?

By   Claire Williams

WASHINGTON — Now that President Donald Trump has signed the stablecoin bill into law, banks are gearing up to lobby regulators as they make rules that could either further threaten or protect banks’ traditional turf.
The stablecoin bill poses both an existential threat and opportunity for bankers, experts say….”The issues on which we’re more focused with our banking clients are really the rules that will be forthcoming about how the nonbank issuers can engage on stablecoin,” said Karen Petrou, co-founder of Federal Financial Analytics. “There certainly is the question of the extent to which a bank holding company or an insurance or subsidiary of an IDI could engage in stablecoins. But the bigger issue from most of our clients is what the marketplace is likely to look like and who’s coming at them.” The Fed is also responsible for a key piece. The stablecoin bill says that master account status for nonbank payment stablecoins maintains the status quo, not explicitly banning nonbanks from access.  “Arguably, the Fed has the authority to open master accounts,” Petrou said. “Now, that’s what the stablecoin issuers believe. Banks say no, and the status quo says ‘back over to you, Fed — you decide.”

https://www.americanbanker.com/news/the-stablecoin-bill-is-now-law-whats-next-for-banks

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The matter of central bank independence

Who should the head of the Federal Reserve be accountable to? We’ll discuss that and more with Karen Petrou of Federal Financial Analytics.

https://www.marketplace.org/episode/2025/07/22/the-matter-of-central-bank-independence…

Why Banks Are on High Alert About Stablecoins

By Dylan Tokar and Gina Heeb

Stablecoins are poised to become a part of the mainstream financial system, and banks are on high alert about how the cryptocurrency could threaten their business. The House voted 308-122 Thursday to pass a bill that spells out some ground rules for stablecoins, which function as digital dollars in the wider crypto world. The Genius Act is now headed to President Trump, who has indicated he would sign it. A major issue for banks is whether stablecoin issuers will lure away customer deposits. A Treasury Department report in April estimated that stablecoins could lead to as much as $6.6 trillion in deposit outflows, depending in part on whether issuers could offer yields similar to bank accounts….Those concerns would be especially acute if nonbank stablecoin issuers were to get access to the Federal Reserve system, said Karen Petrou, managing partner of consulting firm Federal Financial Analytics, in a recent memo. The Genius Act doesn’t prohibit access to the Fed by nonbank stablecoin issuers, so it will remain up to Fed officials to determine who gets access. The Fed system gives banks access to extra cash in the event of market stress. The trade-off for banks are costly liquidity requirements, which don’t currently apply to stablecoin issuers. Nonbank stablecoin issuers could sap deposits from banks and simply invest them for their own benefit, rather than use them to help fund loans “that benefit banks, borrowers and …

‘Huge deal’: White House probe fuels speculation Trump could oust Powell

By Sam Sutton

President Donald Trump swore that he wouldn’t attempt to fire Federal Reserve Chair Jerome Powell before his term expires next spring. A new White House investigation of cost overruns at the Fed’s headquarters has reignited speculation that he just might try. White House Budget Director Russ Vought’s probe into a yearslong, $2.5 billion renovation of the central bank’s Washington offices represents a serious escalation in the administration’s offensive against Powell. Trump and other top officials have blasted the Fed chair repeatedly over his refusal to cut interest rates. …. “They appear to be trying to build a strong case for mismanagement and the violation of certain federal rules,” said Karen Petrou, the managing partner of Federal Financial Analytics. “All of the accusations on monetary policy are irrelevant to this. It is a straightforward administrative action.” The Supreme Court has signaled that the president can’t summarily dismiss central bankers. But the White House’s investigation into Powell’s oversight of agency finances — rather than his monetary policy decisions…

https://bit.ly/44G0stG

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Making sense of the ‘crazy quilt’ of financial regulators

Caitlin Mullen Senior Reporter

As the U.S. bank regulatory system has grown throughout history, so have calls to simplify it. Bank of America CEO Brian Moynihan this year lamented “the spaghetti chart of overlap” among bank regulators and reiterated suggestions from big-bank executives that it’s time to “start with a fresh sheet of paper.” …It’s an issue that can pit large banks against small: Bigger banks tend to be annoyed by the plethora of regulators, but smaller banks like the choice, Hsu said. “It does feel like Hamilton versus Jefferson,” he said during a June Brookings event. “That tension’s always been there.” And the resources required to stay on top of such a large and complicated banking system demand a sizable apparatus. There’s a comfort factor, too: Consolidation attempts fail “because individual institutions want things the way they are,” said Karen Petrou, managing partner at Federal Financial Analytics. There are, to some degree, captive regulators “everybody’s quite comfortable with,” and arbitrage opportunities between national and state charters that banks don’t want to lose, she added….

https://www.bankingdive.com/news/bank-regulators-fed-occ-fdic-consolidation-supervision-treasury-trump/751240/

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