The Banker Next Door

A shortage of accountants is beginning to cause disruption with bank and corporation financial reporting and internal controls. The accounting shortage is becoming more widespread after the number of practicing accountants has declined 17% from the profession’s employment peak in 2019. What can banks and corporations do to address this? Try outsourcing certain functions and focusing on AI and Automation. Don’t forget to maintain guardrails. This episode examined a blog post from PCBB titled “The Accountant Gap: Reshaping CFI’s Financial Reporting.” A link to the blog post is included below. Link: The Accountant Gap: Reshaping CFIs' Financial Reporting

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 SBA has doubled the combined limit on 7(a) and 504 loans from $5 million to $10 million. This is the largest financing ceiling in the history of the agency. This is a tremendous opportunity particularly for companies in manufacturing, construction, logistics, distribution, and food production. In addition, time is running out for fee waivers the SBA enacted for 2026. The SBA is waiving upfront and annual fees on 504 manufacturing loans. The agency also waived upfront guarantee fee on 7(a) manufacturing loans up to $950,000. These waivers will end on September 30th unless the SBA extends them into 2027. This episode examined an article from Bank Director titled “The SBA just opened a $10 million window.” A link to the article is included below. Link: The SBA Just Opened a $10 Million Window | Bank Director

This survey includes responses from bank CEOs and board directors. The focus of the survey is around bank board governance. The key findings in this year’s report include AI in the boardroom, strategic planning, board assessments, virtual attendance, policy review, and debanking scrutiny. Additional insights include artificial intelligence adoption in the boardroom remains low, 39% of boards conduct an annual assessment, many see room for improvement in the strategic planning process, 87% of boards allow directors to attend virtually, more than half of boards have adjusted policies, reporting, or oversight in several key areas since January 2025, and just 20% have examined whether their institution could be subject to scrutiny from examiners for debanking activity. This episode reviewed Bank Director’s 2026 Governance Best Practices Survey. A link to the survey is included below.   Link: 2026-Governance-Report-Open.pdf

Bank News: Alma Bank to acquire in-state peer American Community Bank. Federal Reserve approves Santander-Webster merger. Augustus (formerly Ivy) receives FDIC approval to launch bank. Huntingdon Bank sees increased deposit cost competition. WSFS sees persistent deposit competition. Central Bancompany sees stable deposit costs. Seacoast reports lower deposit costs. BCB Bancorp got “too deep” in unfamiliar businesses, which resulting in a $14.8 million second quarter loss. Coastal Financial stock drops more than 40% after loss related to BaaS partnership. Federal Reserve issues enforcement action against Iuka Bancshares. Northwest Bank reshuffles C-suite. Chime’s CFO steps down. This episode examined multiple articles from Banking Dive and S&P Global Market Intelligence.

Four companies are currently racing to develop tokenized deposit networks. The companies include The Clearing House Payments Co., The Cari Network, The Hazel Network, and The DTX Consortium. The Clearing House and Cari Network are being developed by the big banks. The Hazel Network is trying to create more of a niche by allowing customer deposits to convert into digital tokens and then issue, transfer, and redeem them as stablecoins. The DTX Consortium is being developed with a focus on community banks. Banks stand to benefit in different ways from each of these networks. Banks should not worry that they must act around tokenized deposits tomorrow, but they should start thinking about them. Wells Fargo is ready to roll out tokenized deposits this fall. They see tokenized deposits as a blockchain-based representation of commercial bank money that will enable customers to move, program, and settle funds 24/7/365, all within banking guidelines and regulations. This episode reviewed an article from FinXtech titled “Choosing the right tokenized deposit network” and an article from S&P Global (subscription required) titled “Wells Fargo to mint tokenized deposits for corporate, commercial clients in fall. A link to the FinXtech article is included below. Link: Choosing The Right Tokenized Deposit Network - FinXTech

The SLOOS is a quarter survey of senior bank loan officers that the Federal Reserve puts out quarterly. It measures bank credit underwriting standards and loan demand. The 2nd quarter showed an increase in demand for commercial C&I loans with spreads tightening for large and middle-market firms. For commercial real estate, underwriter standards eased and loan demand remained stable. For residential real estate, underwriting standards were mixed and loan demand decreased. The same for HELOC’s and auto loans. Loan underwriting standards tightened for credit cards and loan demand remained unchanged. This episode reviewed the Federal Reserve Senior Loan Officer Opinion Survey for July 2026. A link to the survey is included below. Link: The Fed - July 2026 Senior Loan Officer Opinion Survey on Bank Lending Practices

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.

How did America get its banks? How was the American financial system created? How has it evolved over the last 250 years to become the largest economy in the world? This episode seeks to answer these questions by exploring the economic history of the U.S. This episode primarily focuses on Alexander Hamilton and President Andrew Jackson. These two historical figures had immense influence over the American economy and financial system in the early years of the country. The battle between Federalists and Anti-Federalists; between people that wanted a Central Bank versus those that wanted a decentralized banking system was central to how the early banking system evolved. This episode examined an article from Bank Director titled “250 Years Later: How America Got its Banks.” A link to the article is included below.   Link: 250 Years Later: How America Got Its Banks | Bank Director Books recommended in this episode: Alexander Hamilton by Ron Chernow, Robert Morris by Charles Rappleye, The Banker Who Made America by Richard Vague, and Nicholas Biddle by Thomas Payne Govan (this book is no longer in print and can be hard to find).

Three years in, how is FedNow doing? The FedNow instant payment service realized an 80% increase in volume growth quarter over quarter. Active senders have increased 85% over the last year. FedNow has 1800+ financial institutions participating and membership represents all 50 states. Approximately 50% of members exclusively use the FedNow service. Over 50% of all U.S. checking accounts are reachable. FedNow continues to combat fraud by offering various tools which include FraudClassifier and ScamClassifier. It takes approximately five days for a Bank to sign up and onboard to FedNow. This episode examined an article from Banking Dive titled “FedNow advances over hurdles” and an infographic from the FedNow website. Links to both the article and infographic are included below. Link: FedNow advances over hurdles | Payments Dive Link: Three Years Strong

NACHA released 2nd quarter 2026 number for their ACH Network. Highlights for the 2nd quarter include an almost 30% gain in Same Day ACH, nearly 10% increase in B2B payments, total volume on the ACH Network was 9.3 billion payments with a value of $25.9 trillion, Same Day ACH handled 435.7 million payments up 29.5%. Additionally, volume across major transaction types increased year over year. Healthcare increased 2.3% to 141M, Internet increased 7.6% to 3B, Direct Deposit increased 3.6% to 2.3B, and P2P increased 21% to 136.6M. This episode examined NACHA’s website and ACH Network infographic. A link to the website is included below. Link: Large Gains in Same Day ACH Help Drive ACH Network in Second Quarter of 2026 | Nacha

Bank News: BitMEX crypto exchange to close after 11 years. Twin City Bank is rebranded into Increase Bank after receiving regulatory approval on name and business plan changes. PNC targets wealthy clients with new lending option. Rent fintech Flex applies for an ILC banking charter. Banc of California has a large loss of $251MM for the second quarter. The Federal Reserve bans two bankers from future work in the industry. FinCEN chief heads for new role at Citibank. Visa is cutting their workforce by 7%. Chime is cutting their workforce by 10%. This episode examined multiple articles from Banking Dive and CNBC.

The Private Credit Market has emerged over the last year as a big potential risk to the U.S. banking system. What are the main risks from this newer segment of the lending market? This episode examines four main risks. 1) Banks could experience direct losses from loans secured by private credit funds, i.e. NDFI lending. 2) Banks could lose their largest loan segment. Lending to NDFIs has become big banks #1 lending category over the last few years. 3) Banks will no longer be able to pass bad deals onto the Private Credit Market, SRTs anyone! 4) A contagion of delinquency leads to a drop in values. NAVs drop, real estate values drop, company value drops, leading to defaults, leading to bad loans, which leads to loan losses. This chain goes from company to Private Credit Fund back to originating bank. This episode examines an article from Bank Director titled “The real risk of Private Credit to banks.” A link to the article is included below. Link: The Real Risks of Private Credit to Banks | Bank Director

This video is a clip from BND: Strategy Room Live Stream on August 2, 2026. BlackRock and Blackstone both removed private credit executives in July. BlackRock removes Phil Tseng, CEO of their private credit business development company (BDC). He was removed over company performance and an ongoing federal valuation probe. Jonathan Bock resigned from his position as Co-CEO of Blackstone’s BCRED and BXSL private credit funds. Bock also stepped down as Co-CEO of Blackstone’s Secured Lending Fund, which is Blackstone’s publicly traded BDC. Bock resigned over the performance of the private credit funds. Furthermore, Blackstone is partnering with Vanguard Group and Wellington Management to create two new private credit funds for individual investors. Goldman Sachs is launching a private credit collective investment trust to make investing in private assets available in 401(k) retirement plans.

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.

Banking regulators have been approving a lot of bank charters recently and multiple types of charters at that. De Novo charter, Trust Charter, National Bank Charter, and ILC Charter, to name a few. While the OCC is approving charters that does not mean their standards for attaining approval have diminished. There has been a surge of Crypto, fintech, and digital asset companies applying for various types of bank charters and Federal Reserve Master Accounts. However, time might be running out. President Trump’s second term ends in January 2029 and midterm elections are coming up in November. If Republicans lose control of the House of Representatives to the Democrats, things could change quickly. There has probably never been a more favorable time to seek a bank charter, but how much longer will it last? This episode examined an article from Bank Director titled “Applicants race to secure national bank charters.” A link to the article is included below. Link: Applicants Race To Secure National Bank Charters | Bank Director

There are 7 different types of check fraud. They include new account fraud, check kiting, dormant account fraud, counter check fraud, withdrawal fraud, deposit ticket fraud, and split deposit fraud. Which type is the most common? Which is the most invisible? Which is the most evolving? Which is the most targeted? What can banks do to combat check fraud? Banks have many tools at their disposal including Positive Pay, SARs, customer education, Federal Reserve tools, and employee training. This episode examined a blog post from PCBB titled “Seven Types of Check Fraud – and How to Combat Them.” A link to the blog post is included below. Link: Seven Types of Check Fraud — and How to Combat Them

Bank News: First Financial buys Finward Bancorp in $208MM deal. Northrim BanCorp acquires PBCO Financial Corp in $167.3MM deal. Gesa Credit Union acquires Willamette Valley Bank. Mechanics & Farmers Bank will merge with Optus Bank. Upstart receives conditional bank charter from the OCC. Wise’s trust bank charter is rejected by the OCC over deficiencies. Former Bank of the Valley CFO, Aaron Luneke, sentenced to 36-month prison term for $4.3M loan scheme. Former TD Bank assistant store manager, Wilfredo Aquino, sentenced to prison for money laundering and fraud involvement. GOP lawmakers press the Fed to increase bank M&A approval timelines. Democrats grill new CFPB nominee, Brian Johnson, over his ties to Capital One and potential staff-cuts. This episode reviewed multiple articles from Banking Dive.

For the 2nd quarter of 2026, Community Banks saw some slight Net Interest Margin (NIM) compression, loan growth increased especially around C&I lending, underwriting tightened for C&I loans while CRE loans remained steady, and the deposit base remained sticky, but funding costs remain higher. There is a question now around the Federal Reserve and whether they will increase interest rates in the second half of 2026. This episode reviewed a blog post from PCBB titled “H2 2026 Outlook: Mixed Signals for Community Bank Earnings.” A link to the blog post has been included below. Link: H2 2026 Outlook: Mixed Signals for Community Bank Earnings

What are the top regulatory ‘hot buttons’ for the banking industry? ICBA does a great job in covering the top regulatory concerns for the U.S. banking industry on a quarterly basis. Big issues currently include Digital Assets Regulatory Framework – the Clarity Act and the Genius Act, Farm Bill, Executive Order on Immigration Status, AI Executive Order, Deposit Insurance, 1033 Rule, Section 1071 Legislation, and Fed Master Account Access and OCC Trust Charter. Banks have additional concerns around fraud and credit unions buying banks. There have been some wins around legislation with the 21st Century Road to Housing Act and the Main Street Capital Access Act. This episode reviews ICBA’s Advocacy in Action for the 3rd quarter of 2026. A link to the PDF is included below. Link: top-issues-2

This video is a clip from BND: Strategy Room Live Stream on July 25, 2026. What do surging bond yields mean for consumers? This past week the escalation of the military conflict with Iran sent treasury yields soaring, especially the 10-year and 30-year treasuries. The 10-year treasury has a direct impact on residential mortgage rates, auto loan rates, credit card rates, and student loan rates. As the 10-year yield increases, so do borrowing costs. Why is the 30-year treasury so important? The 30-year treasury is a gauge of sensitivity. It gives us an indication of how confident investors are that a government will be able to pay its debt.

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.

Market expectations now favor increasing interest rates and thus expectations around deposit cost pressures have changed. Many banks were hoping for continuing rate decreases to continue relieving funding cost pressures. With the market now expecting the Federal Reserve to increase the Federal Funds rate in the second half of 2026, this means that funding costs will stay flat for the moment and then rise with both rate increases and competitive pressures. If rates increase that means loan rates will increase and thus banks should be able to maintain net interest margin (NIM), however if loan demand decreases due to increased interest rates (loans become less affordable) then margins could compress with higher funding costs. This episode examined a series of articles from S&P Global Market Intelligence (subscription required).

The Texas Stock Exchange TXSE “tex-ee” is gearing up to start trading. With big IPOs getting ready to come to market the TXSE might be opening at just the right time. Texas has been laying the groundwork for making a run at a successful exchange with more Fortune 500 companies headquartered than any other state and the establishment of their own business court. The players are already coming. Goldman Sachs has 4,500 employees in Dallas. JPMorgan has more employees in Texas than New York. NYSE rebranded its electronic exchange in Chicago into NYSE Texas and moved to Texas. Nasdaq rebranded its BX electronic exchange into Nasdaq Texas and moved to the state. SpaceX chose to do a dual listing on Nasdaq and Nasdaq Texas for its IPO. TXSE is operating in temporary space right now but is planning to move into Bank of America Tower when construction is completed in 2027. This episode examined an article in The Wall Street Journal (subscription required) titled “There’s an IPO Gold Rush – and Texas is coming for New York.”

Bank News: Stripe and Advent have teamed up and put in an offer to purchase PayPal. First Bancorp of NC is purchasing First Carolina Bancshares Corp of SC for $166MM. First Hawaiian is purchasing Tri Counties Bank of CA for $2B. New de novo bank named Sagehaven Bancorp to form in Pittsburgh. Regulators issue guidance to banks on unauthorized workers. Jamie Dimon: Lake chose to retire. CFPB is working with union on future staff-cut plan. Bank of America chatbot Erica continues to grow. Custodia continues to plead their case for Fed master account. Citizens Bank to close 100 in-store branches and retool 50 other branches. State AGs taking a closer look at OppFi and Enova bank purchase deals. This episode examined multiple articles from Banking Dive.

This video is a clip from BND: Strategy Room Live Stream on July 18, 2026. This video looks at a series of articles that examine the current state of the AI market. The White House announces AI clearinghouse. The White House created Gold Eagle, an initiative to enable AI innovation by creating a clearinghouse for cybersecurity vulnerability coordination. At the same time, Google DeepMind chief Demis Hassabis calls for the U.S. to spearhead an AI standards body. Chamath Palihapitiya says that companies’ earnings are going to be impacted by ‘tokenmaxxing’. Apple is suing OpenAI after accusing executives of stealing trade secrets. This is yet another problem for OpenAI as they are trying to complete an IPO. Current and former employees of Meta are suing the company alleging discrimination by using AI in layoffs. TSMC is set to invest another $100 billion in Arizona. The White House’s plan to fix Intel is working. Elon Musk built a huge data center in Memphis; it is now the epicenter of the data center backlash. Tech companies are overloading Wall Street with AI bond requests as their capex spending is out of sight. Data center builders are racing to offload ownership stakes that are worth billions. Why would they be doing that now? The rush for cash through IPO’s, bonds, and capital raises is threatening to overwhelm the bull market. Why is everyone rushing to get cash out? It seems like the AI bubble is in real danger. The music has not stopped, but it appears to be slowing. This episode examined a series of articles from The Wall Street Journal and CNBC.

Bank News: SoFi gets into small business lending. CFPB gives employees warning on geographic reassignment. Valley Bank executive thinks AI is changing the conversation around build versus buy. Circle gets OCC full trust bank charter. Fed informs Iowa’s TS Banking Group that they need to increase capital levels for two subsidiary banks. Fed enforcement actions have been declining over the last decade according to Brookings. Easthampton, MA based Hometown Financial Group is purchasing Bedford, NH based Primary Bank for $160MM. Fiserv president exits again. U.S. bank is targeting Gen Z with a payments first strategy. PNC releases new mobile banking app. Sony receives OCC conditional approval for trust charter. AI will reshape financial services and regulations. Klarna applies for ILC charter. Lawmakers reintroduce cannabis legislation. Morgan Stanley gets OCC conditional approval for trust charter.  EagleBank pays $9.7MM fine to resolve BSA violations. Regions bank purchases Frazer Lanier. This episode examined multiple articles from Banking Dive.

Kentland Federal Savings Loan Association (KFS) located in Kentland, Indiana and Small Business Bank (SBB) located in Lenexa, Kansas are the 3rd and 4th bank failures of 2026. KFS was closed on Friday, July 10th by the OCC after its capital position became critically undercapitalized. KFS had $3.73 million in assets at the time of its closing. Nearby (but unrelated) Kentland Bank was appointed receiver by the FDIC. SBB was closed on Friday, July 17th by Kansas state regulators after the bank was deemed to be significantly undercapitalized. SBB had $73 million in assets at the time of its closing. The Farmers State Bank agreed to assume all of SBB’s deposits and purchase some of its assets according to the FDIC, who is acting as receiver. The deposit insurance fund will incur small losses from both bank failures according to the FDIC. This episode examined multiple articles from S&P Global Market Intelligence and Banking Dive.

This video is a clip from BND: Strategy Room Live Stream on July 18, 2026. While the overall economy remains decent, there is a segment of the American consumer that is starting to show signs of stress. This video covers a series of articles that delve into consumers trends. Consumers are turning to buy now, pay later for essential expenses, they are cutting back on purchases at grocery stores due to the increasing costs, an increasing number of U.S. families are taking on debt and dipping into savings to meet food needs, credit card delinquencies are at the highest rate in 15 years, and housing affordability slipped for the fifth straight month. As the economic outlook weakens for the lower end of the consumer segment, this reality is coming to the doorstep of Republicans and President Trump.  This episode covered a series of articles from The Epoch Times, The Wall Street Journal, and CNBC.

This video is a clip from BND: Strategy Room Live Stream on July 18, 2026. Here is my summer reading list for 2026: 1) Suicidal Empathy by Gad Saad (2026) 2) Reshore: How Tariffs will bring our jobs home plus revive the American dream by Spencer Morrison (2025) 3) The Repo Market: Shorts, Shortages, and Squeezes by Scott E.D. Skyrm (2023) 4) Crisis and Leviathan: Critical episodes in the growth of American government by Robert Higgs (1987) 5) The Banker Who Made America: Thomas Willing and the rise of the American Financial Aristocracy by Richard Vague (2026) 6) Steve Jobs in Exile: the untold story of NeXT and the remaking of an American visionary by Geoffrey Cain (2026) 7) 1873: The Rothschilds, the first great depression, and the making of the modern world by Liaquat Ahamed (2026)

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.

This is the best of BND: Interviews. A discussion with Allan Burkley about the failure of Heartland Tri-State Bank in Kansas and the fraud that was committed by their CEO Shan Hanes. This story is fascinating from many angles including internal controls, separation of power, checks and balances, who should serve on the board, the effect of a dominant CEO, internal fraud at banks, and how a bank’s failure can affect all stakeholders. This episode examined an article from Bank Director titled “Victim or Perpetrator?” A link to the article is included below. Link: https://www.bankdirector.com/article/magazine-exclusive-victim-or-perpetrator/

This is the best of BND: Interviews. A discussion with Mac Thompson, who is the Founder & President of White Clay. We discuss how White Clay’s software helps banks and credit unions maximize profitability within a product or business unit. How you can fully utilize existing data to build stronger relationships with your customers. How White Clay can help with balance sheet management and thus strategic planning. We also discussed Mac’s background and why he decided to start White Clay. A link to White Clay’s website is included below. Link: https://www.whiteclay.com/

This is the best of BND: Interviews.  A discussion with Greg Smith, Curriculum Director for the Stonier Graduate School of Banking. Stonier is a banking school, which is run through the American Bankers Association (ABA) and has a partnership with the Wharton School of Business at the University of Pennsylvania. Stonier has been around for 91 years and was originally founded by Dr. Harold Stonier in 1935. Listed below is a link to the Stonier website with information about the program. Link: https://www.aba.com/training-events/schools/stonier-graduate-school-of-banking/about-stonier

This is the best of BND: Interviews.  Continuing the discussion with Bob Newman from Chatham Financial. Chatham is a global advisory and technology firm focused exclusively on financial risk management. Chatham has expertise in the debt and derivatives markets. The conversation here is based around an example of a “vanilla” derivative transaction, that can help a bank turn mismatches in assets and liabilities on their balance sheet into matches. Link: https://www.chathamfinancial.com/

This is the best of BND: Interviews. A discussion with Bob Newman from Chatham Financial. Chatham is a global advisory and technology firm focused on financial risk management. Chatham has expertise in the debt and derivatives markets. The conversation focuses on derivatives and how banks can effectively use them to hedge the risk on their balance sheet. Link: https://www.chathamfinancial.com/

This is the best of BND: The Lords of Easy Money. Dr. Thomas Hoenig is the former Governor of the Kansas City Federal Reserve Bank and Vice-Chairman of the FDIC. Dr. Hoenig is the main character in the book The Lords of Easy Money by Christopher Leonard. Dr. Hoenig became famous for his dissenting votes during FOMC meetings in 2010 along with his warnings about prolonged easy money policy.

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