- Key insight: Comptroller of the Currency Jonathan Gould said the burden of banks collecting citizenship information would be "minor," likening it to existing I-9 employment eligibility requirements.
- What's at stake: On debanking, Gould said the OCC is reviewing the largest national banks and investigating complaints. The OCC and other regulators have proposed eliminating "reputation risk" as a supervisory tool, which he said has been used to cut off politically disfavored customers.
- Forward look: Federal Reserve Vice Chair for Supervision Michelle Bowman said regulatory proposals are coming soon to encourage community and commercial banks to re-enter the mortgage market, while Federal Deposit Insurance Corp. Chair Travis Hill offered a cautious assessment that deposit insurance reform may only have a minor impact on bank assessment fees.
WASHINGTON — Comptroller of the Currency Jonathan Gould dismissed concerns about the cost for banks associated with collecting citizenship information at a hearing in front of the Senate Banking Committee on Thursday.
Gould appeared alongside other prudential regulators — Federal Reserve Vice Chair for Supervision Michelle Bowman, Federal Deposit Insurance Corp. Chair Travis Hill and National Credit Union Administration Chair Kyle Hauptman — in nearly three hours of testimony in the Senate Banking Committee Thursday morning, the first prudential regulator hearing in the upper chamber since 2024.
While most of the Trump-era bank regulation has centered on a
Gould spoke to several of those issues during the hearing.
In response to a direct question from Sen. Catherine Cortez Masto, D-Nev., about the potential costs associated with banks potentially being required to collect citizenship information, Gould said that the impact would be "minor." The Wall Street Journal reported earlier this week that the White House is considering an executive order that would require banks to obtain citizenship documentation as part of banks' know-your-customer requirements.
"I think the additional burden would be minor," he said.
Gould said that, for people who do not have easy access to their birth certificates or who don't have a passport, there are alternative forms of paperwork, although he didn't specify what those alternative options would be. He said that employers already collect so-called I-9 employment eligibility data, which requires similar documentation.
"Just like with an I-9, I think there are alternatives available," Gould said. "Banks have demonstrated an ability to find ways to know their customer under the existing framework."
He also tried to avoid discussing the national trust charter application of World Liberty Financial, a crypto firm owned partly by President Donald Trump and his family. Banks have
"I'm not going to discuss the specifics of any application," Gould said.
In response to a question posed by Sen. Bernie Moreno, R-Ohio, on whether a loose regulation of stablecoin issuers or third parties offering yieldlike rewards to stablecoin holders could sap core deposits from traditional banks, Gould offered the most candid analysis.
"I can, I think, say with some certainty, that any significant deposit flight or material deposit flight would not go unnoticed — certainly by me, by you and other elected officials on this committee," Gould said. "And if there were to be significant deposit flight, I believe that I and other federal bank agency regulators would take steps, since that would raise safety and soundness concerns."
Gould also outlined the concerns he has about banks dropping customers for political reasons, a phenomenon known as "debanking," which has
"No American should be denied access to banking products and services because of political or religious beliefs or lawful business activity," Gould said in his prepared remarks. "We are implementing President Trump's Executive Order on Guaranteeing Fair Banking for All Americans by, among other things, reviewing the activities of the largest national banks and investigating complaints of alleged debanking."
Gould's comments came in contrast to his fellow regulators on the panel, who largely navigated around questions posed to them with familiar talking points. Bowman continued to tout tailoring efforts for community banks — a longtime priority of hers — and her
Bowman said that regulatory proposals will be introduced in the near-term as a means to reengage both community banks and commercial banks in the mortgage space. She also said that other agencies have a role to play in making banks bigger players in the home mortgage market.
"We're very focused, as we were thinking about the Basel approach in ways that we could right-size and recalibrate the approach for residential mortgage lending, so that we could encourage the banks to get back into the mortgage business," Bowman said. "[Consumer Financial Protection Bureau] regulations … put onerous requirements and large fines on banks for making mistakes in mortgage applications and things like that. So I think it's important that we think about this in a more broad manner and holistically."
When asked by Sen. Angela Alsobrooks, D-Md., about his view of the impact on raising deposit insurance for business accounts on banks' deposit insurance assessments, Hill gave a cautious answer, saying the impact would likely fall on larger banks, but the details would determine the outcome.
"I said last time it is possible that it would not result in increases," Hill said, adding that if such a reform did have an impact, it would likely be small and fall on large banks, "just based on the way that the current assessment formulas work."
He also said that regulators would "need to think about the potential impact on the reserve ratio."
"If you increase the amount of insured deposits in the system based on the way that the reserve ratio was currently defined, that would result in a decrease in the reserve ratio," he said.
