Our Take: financial services regulatory update – January 23, 2026

January 23, 2026

Change remains a constant in financial services regulation

Read "our take" on the latest developments and what they mean.

FDIC reintroduces Office of Supervisory Appeals

What happened? On January 22^nd, the FDIC finalized revisions to its Guidelines for Appeals of Material Supervisory Determinations, replacing the Supervision Appeals Review Committee (SARC) with an independent Office of Supervisory Appeals (OSA). The OSA was first introduced in 2021 but was never fully implemented as the FDIC reverted to the SARC in 2022.

How will the OSA work? The revised guidelines describe the procedures and limitations of the OSA:

Independent office structure: The OSA will operate as a standalone entity, reporting directly to the FDIC Chairperson, with delegated authority to resolve appeals. Panels will consist of three reviewing officials, including at least one with bank supervisory experience and one with industry experience. Reviewing officials will be externally hired for fixed terms, and current FDIC employees are not eligible. This differs from the SARC, which was composed of FDIC Board members and senior staff, and from the July 2025 OSA proposal, which required supervisory experience but did not mandate industry experience.
Expanded appeal rights: Institutions will be able to appeal certain supervisory determinations, including those related to compliance with informal enforcement actions and conditions imposed through supervision or application processes. The revised guidelines also preserve appeal rights for supervisory determinations that contribute to a potential or pending enforcement action, subject to defined limitations. Under the SARC guidelines, enforcement-related determinations, and the underlying facts supporting them, were generally excluded from appeal once enforcement was contemplated.
Transparency and oversight: Decisions will be published in redacted form, and background information on reviewing officials will be available on the FDIC website. The Ombudsman will act as a neutral liaison, monitor for retaliation, and verify that both parties receive all materials considered in an appeal.
Standard of review: The OSA will apply a de novo review standard, assessing consistency with FDIC policies and the reasonableness of positions without deferring to either party. The SARC reviewed for consistency with FDIC policies but its guidelines did not explicitly state that it would not defer to either party’s judgment.
Timelines and expedited review: Appeals must follow strict timelines, with expedited review available for cases linked to proposed enforcement actions. Institutions must toll statutes of limitations when enforcement actions are pending.

What’s next? The revised guidelines will become effective once the OSA is “fully operational.” At the FDIC Board meeting finalizing the guidelines, Comptroller of the Currency Jonathan Gould said the OCC would propose a similar supervisory appeals structure.

Our Take

Industry is getting a seat at the appeals table

The reinstatement of the previously short-lived OSA reflects a revived effort to respond to longstanding industry concerns about the fairness and transparency of the supervisory process. Under the SARC framework, appeals were relatively infrequent and the vast majority of determinations were found in favor of the FDIC, reinforcing the perception that material supervisory judgments, particularly those tied to ratings or enforcement trajectories, were difficult to challenge once issued. Against that backdrop, the inclusion of a panelist with industry experience is a notable departure not only from past practice but from the previous OSA proposal. It responds directly to concerns that supervisory disputes were evaluated almost exclusively through a regulatory lens and increases the likelihood that arguments grounded in business context, proportionality, and execution realities are meaningfully weighed alongside supervisory policy considerations. In addition, applying a de novo standard of review shifts the focus of appeals away from policy conformity alone and toward the strength of the underlying record, increasing the likelihood of meaningful scrutiny over the supervisory process and basis for decisions. Although other ongoing changes to the supervisory framework are likely to produce fewer examination and enforcement decisions that warrant appeal in the near term, establishing a fully operational appeals office now has significance beyond the present cycle. Given the conditions being imposed in connection with deposit insurance applications (see below), and the possibility that supervisory expectations tighten or enforcement activity increases in the future, the existence of an appeals body with defined authority and external participation could influence both supervisory behavior and industry willingness to challenge determinations.

Two large auto manufacturers receive ILC Charter approvals

What happened? On January 22^nd, the FDIC conditionally approved two deposit insurance applications that will lead to the establishment of two Utah-chartered industrial loan companies (“ILCs”): Ford Credit Bank and GM Credit Bank. Both auto manufacturers have stated that their charters will be used for the financing of new and used automobiles.

What are the conditions of the approvals? Both firms will be required to adhere to a substantial list of requirements including:

Maintaining a minimum 15% tier 1 capital to assets leverage ratio;
Meeting or exceeding the FDIC’s definition of “well capitalized;”
Maintaining an adequate allowance for credit losses;
Entering into an agreement with the FDIC that the parent companies will provide capital and liquidity support for the ILC;
Obtaining prior written approval from the FDIC Regional Director before entering into any transactions with affiliates for services material to the ILC;
Developing and testing a credit decisioning engine, to be reviewed and approved by the FDIC Regional Director; and
Appointment of a Chief Compliance Officer with sufficient knowledge, experience and capabilities for the position, to be approved by the FDIC Regional Director.

What’s next? The FDIC’s conditional approvals will expire in 12 months. Both firms may request an extension if needed.

Our Take

The FDIC joins the chartering party

Just nine days after Travis Hill was sworn in as FDIC Chair, he has moved rapidly to act on his stated mission of promoting new bank formation and the use of the ILC charter. This week’s conditional approvals mark the first ILC charter approvals granted to a non-financial enterprise in over 20 years.

The FDIC’s strong signal that the ILC charter is open for business will undoubtedly attract a wave of new applications, especially from organizations that are primarily non-financial in nature such as auto manufacturers and large retail businesses. The ILC charter is particularly attractive to these firms as it allows them to accept deposits and provide lending services while avoiding requirements to form bank holding companies (BHCs) and restrictions on nonbanking activities.

Firms interested in pursuing an ILC charter should act soon while the window remains open. The ILC charter, especially for firms seeking to conduct nonbanking activities alongside financial services, has been politically contentious. The window may not be open for long, particularly if a Democrat were to win the Presidency in 2028.

A controversial charter with high FDIC expectations

The ILC charter has long been a subject of controversy, with critics from the industry and certain policymakers describing it as a “loophole” that allows large businesses to concentrate power without full oversight of the bank’s parent company. Critics have stated that this arrangement would reduce competition, create an unequal playing field, pose a threat to financial stability and risk breaches or misuse of consumer data.

Those in favor of the ILC charter would point out that the conditions attached to the approvals show that the FDIC is not taking a light touch approach toward reinvigorating this chartering path. The required 15% tier 1 leverage ratio is significantly higher than that generally expected of de novo banks with national or state charters, and the approvals also come with strict limitations on affiliate transactions or pursuing activities outside of the stated business plan.

For firms pursuing ILC charters, developing the required credit decisioning engine and other back office banking infrastructure will also be a significant lift. We have recently seen several newly-chartered banks choosing to rely on partnerships with more established banks or other third parties for much of their back office operations rather than building it from scratch, especially under the tight 12 month timeline to become operational. While the window is now clearly open for ILC charters, most firms will have a significant lift to have sufficient capital and liquidity, demonstrate leadership and staffing with sufficient expertise, and develop the back office infrastructure necessary to meet the FDIC’s high expectations.

On our radar

New York Stock Exchange plans tokenized securities platform. On January 19^th, the New York Stock Exchange (NYSE) announced that it is developing a platform for trading and on-chain settlement of tokenized securities and will be seeking regulatory approval for the new platform. The new platform will offer 24/7 trading consistent with other crypto exchanges and settle trades instantly. Users of the new platform will also be able to use stablecoins to fund trades.

FDIC approves final rule for official sign and advertising requirements. On January 22^nd, the FDIC Board approved a final rule simplifying requirements for how banks must display the FDIC official digital sign and non-deposit signage on websites, mobile applications, ATMs, and similar channels. The rule revises and streamlines requirements adopted in 2023 by narrowing where signage must appear and providing additional flexibility in design, with the goal of reducing compliance burden while maintaining clear consumer disclosures. The rule becomes effective 30 days after Federal Register publication, with a compliance date of April 1, 2027.

FSB outlines next steps to make resolution frameworks operational. On January 21^st, the FSB released its 2025 Resolution Report highlighting progress in bank, insurer, and FMI resolvability and identifying remaining challenges in cross-border bail-in execution and funding in resolution. The FSB’s 2026 priorities include a peer review of public sector backstop funding mechanisms, publication of a practices paper on funding in resolution, and a strategic review of crisis preparedness activities. The FSB also updated supplementary guidance to strengthen coordination between home and host authorities outside crisis management groups.

Chairman Boozman releases updated digital asset market structure legislation ahead of committee markup. On January 21^st, Senate Agriculture Committee Chair John Boozman published updated legislative text that would provide the CFTC with new authority to regulate digital commodities, building on a prior bipartisan discussion draft. The markup has been scheduled for January 27^th.

White House issues Executive Order on investor purchases of single family homes. On January 20, the President issued an order that directs several federal agencies to take actions that would limit transfer of single family homes to “large institutional investors” and promote sales to individual owner-occupants. The order also directs the White House staff to develop legislative proposals to codify the stated policy that large institutional investors should not buy single-family homes that could otherwise be purchased by families.

PwC releases 2026 Global Crypto Regulation Report. The report explores the rapidly evolving regulatory landscape for digital assets, with a particular focus this year on stablecoins – their issuance models, reserve and redemption requirements, and supervisory frameworks – alongside key policy shifts and emerging trends in over 50 jurisdictions.