'The check is in the mail' may not work as an excuse much longer

Checking out
If paper checks disappeared tomorrow, I'd be in a lot of trouble. My wife and I still use checks (to be completely honest, my wife still uses checks; I have not been allowed inside the family checkbook since I incorrectly recorded a $100 payment as a $10 payment.) We grew up using them and feel comfortable using them. My wife balances our checkbook by hand to the penny (which is why a $90 mistake was such an egregious error). If we had to switch to whatever it is non-check writing people use, I guess we'd do it, but it'd be a scramble. 

Community bankers apparently feel the same way. The Federal Reserve's exploration of getting rid of paper checks has community bankers alarmed, our Kate Berry reports (note: I'll include link in CMS). If the Fed were to abruptly squelch paper checks it would cause widespread disruption, bankers have warned, particularly for (ahem) older Americans, small businesses, and rural areas in general. 

What exactly are we talking about? The Fed laid out four scenarios in a December request for information: eliminating checks entirely, maintaining the status quo, eliminating key services (that would really hurt small banks), or investing heavily in new technology (which would result in new fees). It's not clear how serious the Fed is about this, or why it's doing it now, but some have called it a "nuclear option."

Look, I get it. The future is digital. But some of us, a lot of us, are still happily and comfortably living in the past. All we ask is that you ease us into the brave new world.

Downward force
Enforcement actions under the Trump administration have plummeted, our Ebrima Santos Sanneh reported on Friday (include link). Bank-level enforcement actions from the FDIC, OCC, the Federal Reserve and National Credit Union Administration fell by 55% in the first year of the second Trump administration, according to advisory firm Klaros.

It isn't entirely clear what's driving the change, though the Trump administration has been decidedly de-regulatory, but it also isn't entirely clear that it's a good thing for banks. In the short term, sure it's good in that it means less interference with banks' business operations from regulators. But in the longer term, some experts have warned that the lack of regulatory oversight will allow risk and frictions to build up in the system.

While we're on the topic of the Trump administration, the Consumer Financial Protection Bureau's acting director, Russell Vought, got a stinging rebuke in District Court judge who ruled he unlawfully refused to seeking funding in an attempt to shut down the bureau. Kate Berry has that story as well.

We've only just begun
Getting rid of paper checks may seem like a monumental task, to us oldsters at least, but that kind of transition is only the beginning of modernizing the banking system, Eugene Ludwig argues in a BankThink essay (include link). There are new technologies that are operational and available, that will result in costs saved, better customer experience, better compliance and overall better quality. These new methods will improve small-businesses lending, community banking and large-scale commercial banking, he argues. 

We've only just begun, as Karen Carpenter sang. And speaking of the new world of banking, later this week American Banker is hosting its inaugural On-Chain Executive Summit (link), with leaders from both the traditional world of finance and the digital world for an exploration of how modern technology and methods is changing the world of finance. It's an invitation-only event, but we will be covering it here at American Banker, so look for stories coming out of the summit later this week.

And, lastly, you can still register to watch my Leaders interview with M&T Bank CEO Rene Jones (link). We talk about how M&T finds new growth opportunities, how it fends off competition from both other banks and nonbanks, private credit, regulations, and even the changing nature of money itself. You can register here (the fields on the right-hand side) to watch later today at 1:30 p.m. ET.