Senior US banking regulators appeared before the House Financial Services Committee on 7 June to defend a sweeping agenda that includes easing select post-crisis rules and building a federal framework for payment stablecoins — drawing sharp pushback from Democratic lawmakers who warned the moves could erode hard-won financial safeguards.

Regulators Back 'Sound and Resilient' Banking System

Federal Reserve Vice Chair for Supervision Michelle Bowman told the committee that the US banking system remained 'sound and resilient' and that bank lending to households and businesses 'continues to grow.' She said regulators had made 'substantial progress' in modernising the supervisory framework while preserving safety and soundness.

Committee Chairman French Hill argued that the Trump administration was restoring regulators to their 'core regulatory and supervisory mission', contending that the reforms under way would encourage lending, support community banks, and foster innovation without compromising financial stability.

GENIUS Act and the Stablecoin Push

A dominant theme of the hearing was the rollout of the GENIUS Act, the recently enacted legislation establishing a federal framework for payment stablecoins. Bowman confirmed the Federal Reserve was already drafting the required regulations. FDIC Chairman Travis Hill called implementation a 'top priority', while OCC Comptroller Jonathan Gould said his agency was working through hundreds of public comments on proposed rules.

NCUA Chairman Kyle Hauptman argued that stablecoins could make payments 'faster, cheaper, and more inclusive' and help reinforce the global standing of the US dollar. He noted that more than 80 per cent of existing dollar-backed stablecoin usage occurs outside the United States, suggesting the technology could deepen global demand for dollar-denominated assets.

Gould struck an expansive tone, declaring that 'the OCC is open for business again' and pointing to a rise in applications for new bank charters as evidence of renewed competitive momentum in the sector.

Basel III Capital Rules Under Scrutiny

Regulators also defended proposed revisions to the Basel III capital framework, which would alter how banks calculate and hold capital against potential losses. Bowman argued the proposals were designed to better align capital requirements with actual risk profiles while supporting lending. Several Republican lawmakers backed that position, contending that earlier proposals would have unnecessarily raised borrowing costs and constrained credit availability.

Democratic Warning: 'Most Deregulatory Campaign We've Ever Seen'

Committee Ranking Member Maxine Waters offered a starkly different reading, accusing the administration of pursuing 'the most deregulatory campaign we've ever seen.' She warned that regulators were weakening capital requirements, easing scrutiny of large financial institutions, and loosening guardrails around crypto-related activities — a combination she said risked repeating the conditions that led to past crises.

SVB Review, AI, and Cyber Risks

Lawmakers also pressed officials on artificial intelligence, cyber-security vulnerabilities, and the lessons from the 2023 collapse of Silicon Valley Bank. Bowman confirmed that an independent review of supervisory failures linked to that collapse was ongoing, and acknowledged that some former officials had declined to participate in interviews connected to the review. The admission added a layer of unresolved accountability to an already contentious session.

With stablecoin rules being finalised, Basel III revisions still contested, and the SVB review incomplete, the regulatory landscape for US banks is set to remain unsettled well into the next legislative cycle.