Our Take: financial services regulatory update – October 17, 2025

October 17, 2025

Change remains a constant in financial services regulation

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

OCC conditionally approves de novo bank charter application

What happened? On October 15, 2025, the OCC granted preliminary conditional approval to Erebor Bank’s application for a de novo national bank charter. The approval letter describes Erebor Bank’s intent to become an “insured national bank that plans to target its products and services to technology companies and ultra-high-net-worth individuals that utilize virtual currencies.” It also notes that Erebor’s plan to hold digital assets on its balance sheet to pay transaction fees is a permissible activity incidental to the business of banking.

What are the conditions for approval? Prior to opening, Erebor will need to apply for stock in a Federal Reserve Bank and obtain deposit insurance from the FDIC. It will also be subject to a pre-opening examination by the OCC, which will include reviews of a broad range of areas including the bank’s audited financial statements, BSA/AML program, credit risk program and data security program. Further, Erebor will be subject to enhanced scrutiny for its first three years of operation, which includes:

A minimum 12% Tier 1 leverage ratio; and
Obtaining written non-objection from the OCC prior to deviating from its business plan or making any changes to its senior management or Board of Directors.

What’s next? The preliminary conditional approval notice will expire if Erebor fails to raise sufficient capital within 12 months or if it does not open for business within 18 months.

Our Take

The Administration is open for bank chartering business

Erebor’s approval shows that the OCC is open to granting de novo bank charters, including those for banks with digital asset strategies – and applications will not sit on the agency’s desk for long. This pro-chartering position is increasingly reflected across the federal banking agencies, with Acting FDIC Chairman Travis Hill stating earlier this year that he intends to “find ways to support more de novo bank formation, including those that involve novel or innovative business models.” For Erebor and future applicants, Chair Hill’s comments make the green light even more clear as all applicants for full-service charters must secure FDIC insurance.

However, becoming a bank isn’t easy. The regulators’ willingness to grant charters does not reduce their strict expectations around capital, liquidity, governance, risk management, and BSA/AML compliance. Conditional approval is not a license to operate — it’s a green light to begin building with regulatory oversight every step of the way. The institutions that succeed will be those that pair innovation with operational discipline, credible leadership, and strong compliance infrastructure from day one.

What’s the bottom line? The ability to obtain de novo bank charters for innovative strategies is now a reality. But a charter is only the first step, and the journey up the mountain will come with high regulatory expectations.

Hill speaks on resolution

What happened? On October 15^th, Acting FDIC Chairman Travis Hill spoke on the FDIC’s evolving approach to resolution planning in light of the 2023 bank failures.

What did Hill say? Hill described the 2023 bank failures as demonstrating a “melting ice cube” problem, with extended bridge bank scenarios resulting in value erosion and depositor attrition. He called for a shift to prioritize speed and market-based outcomes. His remarks focused on four areas:

Insured depository institutions (IDIs): Hill stated that the FDIC would seek to codify FAQs issued in April 2025, which clarified that Group A IDIs (those with over $100 billion in assets) did not need to submit a failure scenario or submit a bridge bank strategy. Hill also questioned whether it remains necessary for firms with single-point-of-entry (SPOE) strategies — where the parent company enters bankruptcy while subsidiaries continue operating — to file separate IDI plans, given the potential redundancy. He further said the FDIC is considering further streamlining content to focus on the elements most critical to executing a successful resolution.
Bidding process: Hill highlighted planned updates to standard transaction documents to accommodate bank–nonbank partnerships and clearer guidance on what types of seller financing the FDIC can provide. He emphasized that better-prepared virtual data rooms (VDRs) — including internal risk reports and current liquidity data — are key to attracting competitive bids. The FDIC will also launch a nonbank prequalification program in January 2026 and is considering easing eligibility requirements in large failures to avoid limiting the pool of potential acquirers.
Receivership funding: Hill pointed to the FDIC’s heavy reliance on Federal Reserve borrowings in 2023 – which reached $273 billion and incurred $1 billion in penalty interest – as a clear signal that more rapid liquidity solutions are needed. To address this, he said the FDIC is working with the Federal Financing Bank to securitize receivership assets more quickly in order to better preserve franchise value and limit losses to the Deposit Insurance Fund during large, complex resolutions.
Operational readiness: He described a broader focus on capabilities testing, peacetime engagement with firms, and readiness to execute resolutions quickly under pressure. Specifically, Hill said the FDIC has rebuilt its least-cost test model to run in hours rather than days and launched a “Large Bank Ready Reserve” to cross-train staff who can be deployed during high-volume or complex failures.

Our Take

Resolution planning is pivoting to focus on faster execution

The FDIC appears ready to formalize a slimmer, more execution-focused version of the IDI rule – one that trims narrative content and prioritizes capabilities that can be tested, not just documented. A revised rule could carve out certain filers entirely, particularly firms with SPOE strategies, by recognizing the limited incremental value of separate bank-level planning when the resolution path is consolidated at the parent. More broadly, the FDIC is likely to shift attention toward operational capabilities that support a timely sale, such as firms’ ability to quickly populate VDRs, map critical functions, and identify key personnel – while dialing back detailed requirements that don’t directly support a weekend sale. Hill’s remarks show that the FDIC will also do its part in developing VDR infrastructure, a retooled least-cost test model, and a prequalification track for nonbank bidders. Firms should expect a move away from resolution “plans” as an annual compliance obligation and towards a structure where firms are expected to prove they can execute.

What’s the bottom line? The FDIC is moving to streamline IDI planning and retool its own resolution playbook – expect banks to show they can execute, and the FDIC to ensure more bidders can too.

On our radar

These notable developments hit our radar recently:

Fed appeals debit fee ruling. On October 10th, the Fed filed notice that it will appeal an August district court decision vacating its Regulation II rule governing debit card interchange fee caps. The case challenged the Fed’s authority to set a uniform cap rather than issuer-specific standards. The Fed’s filing with the Eighth Circuit Court of Appeals follows its request for clarification that the lower court’s ruling applies only to interchange fee standards, not the entire regulation.

SEC Chair Atkins comments on court ruling on access fee caps. On October 15th, SEC Chairman Paul Atkins issued a statement after a U.S. Court of Appeals upheld the Commission’s 2024 amendments to Regulation NMS Rule 610, which lowered access fee caps for protected quotations. Atkins said the SEC will evaluate whether adjustments to compliance dates for both the access fee cap and minimum pricing increment changes may be warranted to provide market participants additional time to comply.

Fed’s Bowman outlines stress testing reforms as lawsuit stay is extended. On October 16th, Fed Vice Chair for Supervision Michelle Bowman delivered remarks at the Federal Reserve Stress Testing Research Conference, highlighting upcoming stress testing reforms aimed at increasing transparency, reliability, and public input. Bowman discussed the Fed’s upcoming proposals inviting public comment on key modeling assumptions and scenario variables. This follows a joint filing by the Fed and a coalition of financial industry groups to extend the stay in their litigation over the Fed’s stress testing framework. The filing states that the Fed will issue the relevant proposals by October 24th.

Fed’s Barr discusses benefits and risks of new payment technologies. On October 16th, Fed Governor Michael Barr spoke at D.C. Fintech Week, highlighting both the promise and risks of stablecoins and other emerging payment technologies. Barr said stablecoins could improve cross-border payments, remittances, and liquidity management but warned that unregulated issuers remain vulnerable to run risk and financial instability.

Agencies announce withdrawal of climate risk management principles. On October 16th, the FDIC, Federal Reserve, and OCC jointly announced the withdrawal of the interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions. The withdrawal, effective immediately upon publication in the Federal Register, rescinds the principles originally issued in October 2023.