The Banker Next Door

This is the best of BND: The Lords of Easy Money. In this last episode of the series, we look at what has transpired from the end of the book in 2021 to today. I pose the question one more time, did the Fed save the day or permanently destroy our economy? What do you think?

This is the best of BND: The Lords of Easy Money. This episode reviews Part 3 of the bank, which covers chapters 13-16.  

This is the best of BND: The Lords of Easy Money. This episode reviews Part 2 of the book, which covers chapters 7-12.   

This is the best of BND: The Lords of Easy Money. This episode reviews Part 1 of the book, which covers chapters 1-6. 

This July 4th we celebrate America’s 250th birthday by considering Adam Smith’s view of free trade. What did he get right and what might he have gotten wrong? We also consider 10 enduring lessons from Adam Smith. In addition, what American classics should you be reading this 4th of July? This episode reviewed multiple articles from The Epoch Times (subscription required).   

This is a great time for your bank to treat the 2Q CECL cycle as a ‘health check’ on the process. Consider questions such as: has anything changed in our portfolio and macro view? How did your ACL move from quarter to quarter? Do we need to consider any changes to our key assumptions and qualitative factors? Other components to review third-party models, overlays, qualitative factors, documentation, ALCO, and credit risk. Additional consideration, is your bank telling one story? Is credit, ALCO, risk, stress testing, and the Board all in sync with the same narrative? Finally, what should your bank be focusing on for the rest of 2026 and 2027? Refresh qualitative frameworks, clarify governance management of overlays, document how vendor models are configured, streamline CECL documentation, and use board and committee packages to connect CECL outcomes to the broader risk and performance picture. This episode examined a blog post from PCBB titled “CECL: Turning interest rate volatility into a governance check.” A link to the blog post is included below.    Link: CECL: Turning Interest Rate Volatility into A Governance Check

The Cleveland Federal Reserve Bank recently conducted a focus group with subjects representing the Unbanked and Underbanked demographic. What they found was that this group really likes cash, alternatives such as prepaid cards, fintech tools, and money orders were very popular, hacking fears and bank fees are a top concern, complained about the time it took to open a bank account, and had some negative experiences with banks. On the plus side, subjects stated that they liked checking accounts and debit cards and felt that having a bank account helped them to build credit. They also liked the convenience of bank branches. This episode reviewed a blog post from PCBB titled “The unbanked: Fears, fees, and missed connections.” A link to the blog post is included below.   Link: The Unbanked: Fears, Fees, and Missed Connections

An AI test was conducted using the largest four AI models. The test included Gemini, GPT, Grok, and Claude. Researchers built a virtual town with a town hall, marketplace, police station, and homes. Ten AI residents with jobs, names, memories, and relationships were created. The town was provided with an economy. Residents were expected to earn their keep, follow rules, carry out tasks, and create laws. Crimes had to be identified. AI residents were not supposed to commit crimes. Once everything was ready, the researchers stepped back and let the AI run the virtual town for 15 days. The researchers ran 5 versions of the test all with the same rules. Each AI system received 1 test and 1 test was comingled with all 4 systems. The results were a disaster! Grok failed in 4 days, everyone died.  Gemini failed while committing 700 crimes and the residents burned down the town. GPT residents stopped doing what was required to live and they all died. Claude made it through the 15 days but had an abnormally high level of agreement, which the researchers agreed was wrong. The final mixed test showed that “safety is not a static model property but an ecosystem property.” This test is a warning of the danger AI poses. AI is created by humans and thus subject to human flaws. This episode examined an article from The Epoch Times (subscription required) titled “The most important AI experiment you’ve never heard of.”

Bank News: First Reliance Bank buys Colony Bank. Superior National Bank to purchase Range Financial Corp. North Shore Bank to acquire 1895 Bancorp. Hancock Whitney Corp’s acquisition of OFB Bancshares was very strategic. Credit Union purchases of banks have slowed in 2026. Washington state de novo United Development Bank announces leadership team. Management shake up at JPMorgan. Big banks breeze through stress tests. Deluxe buys Celero Commerce. KeyBank is betting on relationships over tech. CFPB overhauls complaint system. D.C. Circuit Court remanded the CFPB workforce-reduction case back to the district court. GOP senator is looking into bank practice of deposit posting. Andrew Cuomo will co-chair a joint venture between cryptocurrency firm OKX and NYSE parent Intercontinental Exchange. This episode reviewed multiple articles from Banking Dive, S&P Global Market Intelligence, and The Wall Street Journal.  

Dr. Bill Minnis returns to BND to discuss academia, banking, AI, and efficiency. Higher education has many challenges at the moment. AI is changing the landscape. What does this mean for higher education’s future. How does this tie into banking? Where does efficiency come in? Dr. Minnis helps us to understand the current environment and what we should be focused on moving into the future.  

The Banker Next Door (BND) weekly live stream show. Strategy Room provides financial news, commentary, top stories in the business world, economic indicators, and all things banking for the week.

The Dallas Federal Reserve Bank recently conducted research on the effects of unauthorized or more accurately illegal immigration on U.S. labor and housing markets. The findings of the paper suggest that local employment increased without significant declines to local wages. However, on a per capita basis, illegal immigrant workers reduced wage compensation of the local workforce. In addition, the influx of illegal immigrants caused a demand shock, which increased the cost of local housing and dramatically increased the cost of housing on a national level. This episode reviewed a research paper from the Federal Reserve Bank of Dallas titled “The Impacts of Unauthorized Immigration on U.S. Labor and Housing Markets: New Evidence from Administrative Microdata.” A link to the research paper is included below. Link: The Impacts of Unauthorized Immigration on U.S. Labor and Housing Markets: New Evidence from Administrative Microdata - Research Dept. Working Paper No. 2607 - Dallas Fed

The Cleveland Federal Reserve Bank recently conducted research on the overall risk exposure of bank lending to nonbank financial institutions (NBFIs). Direct bank lending to the nonfinancial business sector in the U.S. has decreased in recent decades. However, bank lending to NBFIs, which then lends the money directly to the nonfinancial business sector has dramatically increased in recent years. What then is the true credit risk exposure to bank loans made to NBFIs? The researcher used the Federal Reserve’s novel issuer-to-holder data to create an estimate of the share of lending by NBFIs to nonfinancial businesses that are indirectly financed by the banking sector. This episode reviewed a research paper from the Federal Reserve Bank of Cleveland titled “How much nonbank business lending is indirectly funded by banks? Some evidence from a new data set.” A link to the research paper is included below. Link:  How Much Nonbank Business Lending Is Indirectly Funded by Banks? Some Evidence from a New Data Set

Alan Greenspan served 19 years (5 terms) as Chairman of the Federal Reserve from 1987 to 2006. Alan followed Paul Volcker and was appointed by President Ronald Reagan. Alan was a highly intelligent man, a great economist, who could be funny (in his own way), charming, eloquent, and very likeable. He served under both Republican and Democrat Presidential administrations, getting along with both parties. Alan became a ‘rock star’ in the 1990’s as the rise of cable TV, the creation of business news network CNBC, and the Fed’s increased commitment to more communication led to a new kind of attention on the Fed Chair.  The news media and politicians would hang on to his every word, trying to decipher his ‘green-speak.’ Alan became known as the ‘maestro,’ for his mastery of managing the U.S. economy. However, everything was not pleasant during his tenure as he had to deal with the 87-stock market crash, a recession in the early 90s, and the dot-com bubble bursting in 2000 along with 9/11. Alan was not without his missteps. During the 90s, Alan allowed asset price inflation, which helped the economy to boom, but ultimately led to the dot-com bubble. Alan became known for the phrase ‘irrational exuberance’ in the market. Alan then lowered interest rates in the early 2000s and kept them low for too long, which again helped the economy to boom leading to a real estate bubble that burst in 2007. Alan’s legacy is complicated. He was a great Chairman of the Fed, maybe the greatest. At the same time, he ushered us into the age of bubbles. To this day we are still dealing with the ramifications of that. This episode examined articles from CNBC, The Wall Street Journal, and Investopedia.

Perpetual Futures (“Perps”) are derivative contracts without an expiration date. They allow traders to speculate on the underlying asset prices indefinitely. The critical item to note is that with a Perps contract you DO NOT OWN the underlying asset. Perps contracts are different from Synthetic Futures Contracts. Perps have recently come into the news as the CFTC recently approved Kalshi to start trading crypto perpetual futures. Trading volume on Kalshi exploded in the first week with over $1 billion in activity. One of the biggest bets was on the SpaceX IPO. Not everyone is happy about this. The CFTC chair Michael Selig went onto CNBC to plead his case and justify the approval. Shortly thereafter, CME CEO Terrence Duffy announced that CME will be suing CFTC over Perps approval. CME argues that Perps are swap contracts. Perps originally gained popularity in foreign countries with crypto traders as exchanges such as Hyperliquid and Binance began offering this product back in 2016. This episode examined articles from CNBC and Investopedia.

Bank News: M&A update – Santander-Webster deal receives OCC approval, MidFirst Bank will purchase Texas-based Dallas Capital Bank, Michigan-based Isabella Bank Corp. will purchase Grand River Commerce for roughly $54.6MM, Tyson Corner, Virginia-based ODNB Financial Corp. will purchase Washington, D.C.-based National Capital Bancorp for $97.8MM. Robinhood is eliminating 300 employees. Fiserv named its next CEO Takis Georgakopoulos. Mike Lyons leaves Fiserv to become CEO of Truist Bank as of September 1, 2026. Bank analysts have various opinions on what this new hire means for Truist. OCC revises MDI policy. GAO recommends that the FDIC start to rotate their examiners. A jury awarded plaintiff Patrick Byrne $16.525 million in compensatory damages and $62.9 million in punitive damages related to his wrongful termination from Ameris Bank. Nubank notifies customers that it is not being liquidated by the Brazilian Central Bank. Cameron Wadley has done an amazing job at Bank of America. JPMorgan, BofA, and others are now challenging the BNPL space. This episode reviewed multiple articles from Banking Dive and S&P Global Market Intelligence.

This video is a clip from BND: Strategy Room Live Stream on June 19, 2026. Kevin Warsh conducted his first FOMC meeting as Chairman of the Federal Reserve. Mr. Warsh wants to bring ‘regime change’ to the Fed. The first meeting focused on four main topics: 1) interest rates, 2) Fed statement (Forward Guidance), 3) Dot Plot, and 4) committees. The FOMC voted unanimously 12-0 to hold the Federal Funds Rate steady. The Fed’s normal statement was dramatically reduced from over 300 words down to just 130 words. It eliminated most of the forward guidance from the statement. The Fed governors put forth their Dot Plot projections; however, Mr. Warsh did not submit one. The group shows no rate cuts for the rest of 2026 and 1 rate increase before the end of the year. Finally, Mr. Warsh established five new committees that will focus on communications, balance sheet, data sources, employment, and inflation. These committees will have until the end of the year to submit their findings and provide recommendations.  

The Banker Next Door (BND) weekly live stream show. Strategy Room provides financial news, commentary, top stories in the business world, economic indicators, and all things banking for the week. Feedspot Podcasts list of 80 Best Banking Podcasts - https://podcast.feedspot.com/banking_podcasts/  

Bank Director’s 2026 Compensation & Talent Survey looks at compensation for bank CEOs, CFOs, and board members. The survey also looks at succession planning and AI impacts on the workforce. Some of the key findings include succession planning responsibility, developing the next CEO, increased costs (headcount), talent opportunities from M&A, rising CEO bonuses, and DEI value. This episode reviewed Bank Director’s Compensation & Talent Survey for 2026. A link to the report is included below. Link: 2026-Compensation-Report.pdf P.S. BND was named to FeedSpot Podcasts Top 80 Best Banking Podcasts for 2026. A link to the list is included below. Link: 80 Best Banking Podcasts to Listen to in 2026

Nonbank lenders generate more than 85% of all residential mortgage loans. Are banks losing opportunities because of price and product or are they losing based on timing? Banks already have a relationship with borrowers. They have their customers deposit data. But are banks watching signals in the deposit data that can alert them to when a customer may seek a residential mortgage? If they do have this data what is the communication strategy? The key for banks to win more residential mortgage deals is timing around deposit data and communication strategy. This episode examined an article from Bank Director titled “The mortgage conversation that never happens.” A link to the article is included below. Link: The Mortgage Conversation That Never Happens | Bank Director P.S. BND was named to FeedSpot Podcasts Top 80 Best Banking Podcasts for 2026. A link to the list is included below. Link: 80 Best Banking Podcasts to Listen to in 2026

Lending for community banks started off good in 2026 despite higher interest rates, geopolitical headwinds, and tariff uncertainty. Now banks must consider the current interest rate environment, further rate cuts are unlikely in 2026, and economic caution, the Iran conflict, oil prices, and inflation. Community banks should focus on staying disciplined with credit underwriting and focus on relationship banking. There is some potential good news on the horizon as changes to Basel III capital rules could help increase residential mortgage lending. What lending products should community banks focus on? SBA lending, CRE, C&I, farm lending, and residential mortgage lending. This episode examined an article from Independent Banker Magazine titled “The lending outlook and loan growth trends for community banks in 2026.” A link to the article is included below.    Link: The Lending Outlook and Loan Growth Trends for Community Banks in 2026 - Independent Banker - ICBA.org P.S. BND was named to FeedSpot Podcasts Top 80 Best Banking Podcasts for 2026. A link to the list is included below. Link: 80 Best Banking Podcasts to Listen to in 2026

Italian bank Monte Dei Paschi (BMPS) has had quite the saga over the last 9 months. It all started back in September 2025, when BMPS initiated a hostile takeover of investment bank Mediobanca for $19B. BMPS CEO, Luigi Lovaglio, then presented a plan for delisting Mediobanca and expanding the bank into international markets. The departing board for the bank did not like this plan and decided to remove Luigi as CEO, revoke his powers and cancel his contract. Then, in a surprise move, the banks shareholders voted to reinstall Luigi as CEO and picked a new board and chairman. However, in another twist, two rival banks have both made offers to purchase BMPS. What will the oldest bank in the world do? This episode reviewed multiple articles in The Wall Street Journal and S&P Global (subscriptions required). P.S. BND was named to FeedSpot Podcasts Top 80 Best Banking Podcasts for 2026. A link to the list is included below. Link: 80 Best Banking Podcasts to Listen to in 2026

This video is a clip from BND: Strategy Room Live Stream on June 13, 2026. Data center development problems have emerged. As big tech companies continue to build up their piles of cash to fund data center development, the build-out is falling behind. Local communities are starting to question just how many real jobs these data centers will create? One of the main companies at the heart of the electric grid, PJM Interconnect, is struggling to keep up with demand and bring new energy generation online. What does this mean for America’s electric grid? This clip examined articles from The Business Journal, The Wall Street Journal, and Montco Today.

This video is a clip from BND: Strategy Room Live Stream on June 13, 2026. Elon Musk has become the world’s first Trillionaire! At least on paper. With the IPO for SpaceX dropping this week we look at how much money Elon is worth. We examine a couple of articles from The Wall Street Journal that measure Elon’s wealth and consider just how large a trillion dollars is.

Bank News: FDIC outlines 5 potential changes that it is considering. Fed Governor Michael Barr is concerned about deregulation. FinCen is directing banks to report suspicious activity around customers immigration status following a recent EO. JPMorgan sees a longer timeline to Agentic AI usage by retail customers. Senator Warren blasts Goldman Sachs CEO for keeping disgraced legal council as and “advisor.” Oklahoma’s BancFirst to purchase SpiritBank. PNC and U.S. Bank CEOs dismissed concern around customer usage of AI. According to a recent study half of bank CEOs are over the age of 65. Citizens Bank losing deposits over ICE ties. Pagaya sues Klarna. President Trump named Brian Johnson as the new head of the CFPB. Judge dismisses suit against JPMorgan, Barclays, and Fifth Third around Tricolor Holdings fraud. The judge did not explain his reasoning. This episode examined multiple articles from Banking Dive.   P.S. BND was named to FeedSpot Podcasts Top 80 Best Banking Podcasts for 2026. A link to the list is included below. Link: 80 Best Banking Podcasts to Listen to in 2026

This video is a clip from BND: Strategy Room Live Stream on June 13, 2026. What are tokens? How do companies purchase AI usage through tokens? How are tokens valued from a dollar perspective? These are important questions to understand as the AI price wars have begun. Anthropic and OpenAI have both filed for an IPO, but will they make it? The government forced Anthropic to put the brakes on some of their new models. At the same time, OpenAI is slashing prices to compete against Anthropic and prevent companies from seeking cheaper alternatives. As the AI bill comes due, companies are experiencing major sticker shock! This clip examines articles from CNBC, The Business Journals, and The Wall Street Journal.

This video is a clip from BND: Strategy Room Live Stream on June 13, 2026. The SpaceX IPO has taken flight delivering approximately $75 billion in fresh capital and a $2 trillion dollar valuation. This clip looks back at SpaceX’s beginnings in 2002 and the journey that brought them to today. Elon’s goal was to spark people’s imagination and get them invested in space again. He achieved that and so much more! This clip examined articles from CNBC and The Wall Street Journal.

The Banker Next Door (BND) weekly live stream show. Strategy Room provides financial news, commentary, top stories in the business world, economic indicators, and all things banking for the week.

Metropolitan Capital Bank & Trust (MCB) failed in January 2026. I covered the failure in a previous episode, but this episode covers the FDIC Office of Inspector General (OIG) report that reviews what they believe caused the failure. The ongoing problems at MCB have been documented. The OIG report concluded that bad loans from poor internal oversight, governance, and risk management led to critically deficient capital levels and thus bank failure. The FDIC identified suspicious activity associated with bank insiders confirming their misuse of position and the self-dealing of senior bank officials, and yet none of the individuals involved will be prosecuted? Unfortunately, this report leaves us with more questions than answers. This episode reviewed the FDIC OIG failed bank review for Metropolitan Capital Bank & Trust, Chicago, Il and an article from S&P Global (subscription required) titled ‘high-risk lending’ led to Metropolitan Capital Bank’s failure – OIG review.’ A link to the FDIC OIG report is included below. Link: Failed Bank Review – Metropolitan Capital Bank & Trust, Chicago, IL

Is the Private Equity industry destroying our economy and thus capitalism? This is a very deep question that cuts to the very heart of what is ailing our economic system. Small business owners don’t want to grow their companies anymore; they just want to sell. There is no thought of building for the next generation, there is only the unicorn status, possible IPO, and then the sale. Private Equity is built on debt financing that promotes short-termism and financialization. This episode seeks to consider how and why this happened? What does it mean for our economy? What does the future look like if things don’t change? This episode reviewed an article from The Epoch Times (subscription required) titled “Has Private Equity ruined capitalism?”

Prominent Wall Street short seller Andrew Left was convicted of securities fraud on June 1st. Prosecutors alleged that Mr. Left used his TV appearances and website, Citron Research, to make certain assumptions about various stocks and then match these comments to his own trading positions. The problem is, he would use these tactics to pump up the stocks, while at the same time placing trades in the opposite direction. The big question here is what does this ultimately mean for Wall Street and other prominent short sellers that may engage in similar behavior? This episode reviewed an article from The Wall Street Journal (subscription required) titled “A short seller’s fraud conviction is spooking Wall Street” and an article from The Epoch Times (subscription required) titled “Short seller Andrew Left found guilty of securities fraud.” 

The FDIC Quarterly Banking Profile covers key financial activity for the banking industry, community banks, and the Deposit Insurance Fund (DIF). For the 1Q 2026, Net Income rose, Net Interest Margin decreased, loan growth continued, domestic deposits increased for the seventh consecutive quarter, and asset quality metrics remained generally favorable. Additionally, provision expense rose from the previous quarter, unrealized losses on securities increased from 4Q 2025, and banking industry assets increased. The number of problem banks decreased in the quarter. The DIF reserve ratio increased to 1.43%. This episode examined the FDIC Quarterly Banking Profile report for the 1st quarter of 2026. A link to the report is included below.   Link: Quarterly Banking Profile - Q1 2026 | FDIC.gov

Bank News: CFPB orders all remote workers to return to DC headquarters by August 31st. CFPB directs BILT Technologies to reimburse any customers affected by card transition. CFPB faces lawsuit over Regulation B rule change. California judge rules in favor of OppFi. LendingClub sees a learning curve for fintechs that are seeking a bank charter. First National bank buys Blue Ridge Bancshares. OceanFirst seeks to retain customers and employees after acquisitions. Chime is getting sued by J.D. Power over alleged improper use of #1 ranking. The fintech C-suite round robin has begun. Fifth Third to close 81 branches. This episode reviewed multiple articles from Banking Dive.

The Banker Next Door (BND) weekly live stream show. Strategy Room provides financial news, commentary, top stories in the business world, economic indicators, and all things banking for the week.

The Department of Labor recently reported that the labor force participation rate for prime age men (age 25 to 54) dropped to 66%! About 1/3rd of men or approximately 7 million have dropped out of the labor force all together. This is a shocking statistic. There is no doubt that the country, overtime, will feel the absence of these men in a very profound way. The big question right now is how did this happen? There is not one single issue or event but a compounding of changes over many decades that led to this point. The loss of America’s manufacturing base in the 60s, 70s, and 80s, the belief that College was going to be the magic job elixir, the dotcom bubble, the great recession, the rise of wokeness and DEI, COVID, and H1-B visas all conspired to play a part in making this happen. How can we fix this? How do we turn this around? This episode reviews an article from The Epoch Times (subscription required) titled “Where have the men gone?”

As consumer usage of Buy Now, Pay Later (BNPL) continues to increase, should banks consider offering this product for their customers? 50 million consumers have used BNPL over the last 12 months. Total transaction value increased to $70 billion in 2025. Problems with BNPL persist. There are concerns with consumers around delinquency and behavior finance issues. There are considerations internally regarding offering a product like this such as compliance, credit risk, and consumer protection. Despite the challenges, should a bank decide to offer BNPL to their customers there are several options available. Embedded partnerships, debit-based BNPL, and BNPL checking accounts are three options to consider. This episode reviewed a blog post from PCBB titled “An BNPL booms, CFIs weigh opportunity vs. risk.” A link to the blog post is included below.    Link: As BNPL Booms, CFIs Weigh Opportunity vs. Risk

This episode is an update on Private Credit. The failure of U.K. mortgage lender MFS continues to ripple through markets as banks and financial firms in the U.K. and the U.S. sustain losses. Investors should be very careful about buying shares of Business Development Companies (BDCs) because what may seem like a bargain but could be a disaster. Banks lending to NDFIs decreased in the 1Q of 2026. Regulators required the largest banks to start disclosing their exposure to NDFIs at the end of 2024. NDFI lending is broken down into 5 categories. Regulators are considering if banks should disclose additional information around NDFI lending as the bulk of lending is concentrated in the largest U.S. banks. This episode examined three articles from CNBC, The Wall Street Journal, and S&P Global.

We have all seen the movie It’s a Wonderful Life with Jimmy Stewart. Jimmy plays the President of a small savings and loan bank and in one of the pivotal scenes of the movie he prevents a bank run by talking to the customers and explaining how the bank works. Bank runs have been prevalent in the U.S. since the founding of the country as noted in various panics throughout the 19th and 20th centuries. But will a bank run today be like the bank runs we have experienced in the past? The answer, probably not. In a very weird way, a bank run today could be a quiet unsettling type of experience. The bank branch is closed, the ATM is empty, the bank is limiting withdrawals, and everyone is wondering what the Fed is going to do. No Jimmy Stewart to explain what is happening and calm customers down. Are banks ready for the speed and velocity at which a bank run can occur today? Are customers prepared for the way in which they could potentially be locked out of their money?  This episode reviewed an article from The Epoch Times (subscription required) titled “What would a bank run look like today?”

The FDIC released a report titled “Dissecting Depositor Flight: An analysis of the Spring 2023 Bank Failures.” This report is about the three regional banks that failed during the Spring banking crisis of 2023. The three banks in question include Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank (FRB). This report sought to examine the deposit flow of each back and attempts to determine if a ‘bank run’ is what caused their failure. The report found that the largest depositors were the ones that moved all their money and did it quickly. Small depositors that were covered by FDIC insurance moved very little money. The report analyzes how the deposits were moved via wires and ACH. Perhaps most alarming is that the research showed that all three banks lost a substantial number of deposits in a single day. SVB lost 50% of their deposits on May 6th. There is a lot for banks to learn and take away from this research about preparing for the next banking crisis. This episode examined a research report from the FDIC and an article from Banking Dive. A link to the FDIC report is included below.   Link: Staff Studies 2026

Banks are constantly challenged in the fintech era, not with loosing accounts, but with maintaining day-to-day financial engagement. Consumers continue to diversify away from bank offerings to multiple fintech platforms, mainly for P2P payments and digital wallets. Bank’s share of the financial relationship with fintechs is shrinking. Speed, flexibility, and control are the main items that customers are looking for. Payments are the front door for customer engagement. Right now, Venmo and Cash App are winning the race, but banks have options such as Zelle. Bank’s can retain financial engagement with their customers, but it will require them to make changes and adapt current offerings. This episode reviewed a research report from S&P Global (subscription required) titled “Community banks in the fintech era: Competing for customer engagement.”

Bank News: Standard Charter CEO Bill Winters apologized for his ‘lower-value human capital’ remarks that he made about his employees. Flagstar CEO Joseph Otting will stay until 2028 when a successor will be named. Federal Reserve and FDIC approve US banks’ living wills. Senator Warren wants charter details from OCC. Jay Gould justifies conditional trust charter approvals. Senator Warren questions Morgan Stanley exemption allowing them to fold their German investment bank into their holding company. President Trump directed the Federal Reserve to review how it grants access to central bank payment rails for fintechs. Chime is definitely in the market for a bank charter. Ally offers new brand platform. CFPB eliminates information prior to February 2025. Goldman Sachs settles 1MDB case. This episode reviewed multiple articles from Banking Dive.

The CAMELS rating system is used by bank regulators to assess a financial institution. The rating system evaluates six key factors – capital adequacy, asset quality, management, earnings, liquidity, and sensitivity. Banks are then rated on a scale of 1 (Best) to 5 (Worst). This scale helps examiners to determine which banks require closer supervision because of poor performance. The CAMELS framework was originally created in 1979 but has not been updated since 1996. Federal regulators are now looking to make changes by shifting the focus to material financial risk and bolster ratings transparency. The focus of the changes will be related to composite rating changes and management rating changes. Some of these potential changes are welcome as bank executives have complained for years about how the ‘management’ category is rated.  This episode reviewed articles from S&P Global (subscription required) and Investopedia. A link to the Investopedia article is included below. Link: Understanding the CAMELS Rating: Evaluation and Calculation Explained

What has AI unleashed on the banking industry? Anthropic’s development of Mythos has sent shockwaves through banking executives. Palo Alto Networks tech chief Lee Klarich sees a small window before hackers begin to use programs like Mythos to launch attacks against software vulnerabilities. Banks should consider this a wake-up call. Think about your current platforms and technology stacks. Consider shifting from static cybersecurity models to dynamic monitoring. This threat is only about to begin. This episode covered an article from S&P Global (subscription required) titled “Anthropic’s new AI model pushes banks to shore up cyber defenses” and an article from CNBC.

Customers Bank CEO Sam Sidhu caused quite a stir when he used an AI clone for the first 25 minutes of the bank’s most recent earnings call to provide prepared remarks. Mr. Sidhu was trying to display how adept the bank has become at using AI technology. Mr. Sidhu showed how the bank has been able to deploy AI and decrease the efficiency ratio from 62% in 2024 to 49% in 2026. Mr. Sidhu is also hoping that AI will help to shrink the time it takes to close a loan and open a deposit account. This episode reviewed an article from S&P Global (subscription required) titled “Customers targeting efficiency ratio, customer onboarding improvements with AI” and a blog post from Emily McCormick at Bank Director.

This video is a clip from BND: Strategy Room Live Stream on May 24, 2026. The American citizen is revolting against AI. From the job losses to the data centers being put in our back yards to the amount of overall danger posed from this new technology, Americans are pushing back. President Trump pulled his executive order on AI due to a split in his administration over how tightly AI development should be regulated. Anger is simmering as Eric Schmidt, former Google CEO, was booed off the stage at a recent Arizona graduation commencement over his comments around AI. Standard Charter CEO Bill Winters stepped in it last week as he considers his employees “lower-value human capital” to be replaced by AI. There are currently 3,100 data centers in the U.S., more than any other country in the world. There are also 1,800 new data centers in various stages of development. There will be 4,900 data centers when they are completed. How much is enough? The new data centers are massive behemoths that are sucking up unprecedented levels of energy, polluting the water, and creating light and sound pollution. American’s hate them. The constant increases in electric bills are about to cause major problems for politicians. This last week saw a major M&A deal announced between NextEra and Dominion Energy. Finally, the amount of CAPEX being proposed for AI and data center development over the next five years has gone to crazy town.  

The Banker Next Door (BND) weekly live stream show. Strategy Room provides financial news, commentary, top stories in the business world, economic indicators, and all things banking for the week.

The Financial Stability Report is the Fed’s current assessment of the stability of the U.S. financial system. The Fed seeks to assess vulnerabilities using four broad categories, which include asset valuations, borrowing by businesses and households, leverage in the financial sector, and funding risks. Asset valuations remain elevated. Vulnerabilities from business and household debt remained moderate. Vulnerabilities associated with financial leverage remained notable (Private Credit). Funding risks have remained moderate. Additionally, the report looks at salient risks to the financial system. Survey respondents had concerns about geopolitical risks, oil shock, artificial intelligence, private credit, and persistent inflation. This episode reviewed the Federal Reserve Financial Stability Report for May 2026. A link to the report is included below.    Link: Financial Stability Report, May 2026

With Jerome Powell existing and Kevin Warsh coming in as the new Fed Chair, he must walk a tight rope across an already strenuous economy. Is the situation hopeless? This seems a fair question given that any action the Fed takes could lead to dire circumstances. Inflation remains elevated, fiscal debt and deficits are out of control, yields are rising in the bond market to compensate for these risks, and the American consumer is running on fumes. Raising rates increases pressure on consumers, banks, and the federal government. Holding rates steady means waiting until something breaks. Decreasing interest rates when inflation remains elevated could risk another spike in inflation further crushing American consumers and the economy. What could be an answer for the Fed? Changing the data, as Warsh has suggested, could be what the Fed uses as rational to lower interest rates. Warsh wants to make changes at the Fed. I am rooting for him, but he faces the Mount Everest of financial difficulties. This episode reviewed an article from Zero Hedge titled “The Fed will invent new inflation numbers out of thin air.” Link: The Fed Will Invent New Inflation Numbers Out Of Thin Air | ZeroHedge

Jerome Powell’s tenure as the Chairman of the Federal Reserve is coming to an end after 8 years. What has he left us? To say he has left us a mess would be an understatement. The Fed has lost approximately $240B in the last three years. The Fed has unrealized losses in their bond portfolio around $1T. Inflation remains well above the Fed 2% target. Powell has NEVER brought inflation below 2% in his 8-year tenure. The Fed balance sheet is back up to $6.7T, over 2T higher then when he started as Chairman. Powell drained all the liquidity out of the REPO market by bringing down the Fed’s balance sheet. He has since started QE light pumping money back into the market via purchases of bonds and treasuries. Powell has made one misstep after another. He caused a blowup in the REPO market in 2019, he overstimulated the market during covid causing massive inflation, which he deemed as “transitory,” he over tightened interest rates blowing a massive hole in bank balance sheets and leading to a banking crisis in 2023. Now he seeks to be a “shadow chair,” causing additional problems before his final exit. This episode reviewed an article from The Wall Street Journal (subscription required) titled “How eight tumultuous years pushed Jerome Powell and the Fed to the limit.”

Bank News: Fintech company Parker files for bankruptcy. JPMorgan is investing $14M in anti-fraud projects. White House names John Crews to NCUA board. Credit Union membership growth returns to positive territory in 1Q 2026. Payward, the parent company of Kraken, is seeking to get a bank charter from the OCC. Augustus Bank receives conditional charter approval from the OCC. Stellantis follows Ford and GM by receiving an ILC banking charter from the FDIC. In M&A news, Hancock and Whitney acquires One Florida Bank in a $377.6M transaction and NexTier buys Bank of Dublin. SBA 7(a) lending rebounded in the 1Q 2026. U.S. regional banks realized year over year earnings growth in the 1Q 2026. This episode examined multiple articles from Banking Dive and S&P Global Market Intelligence.