Treasury Secretary Janet Yellen defended the administration's systemic risk exception and said regulators will backstop small banks that pose contagion risk.

More than 140 current and former lawmakers are defending the constitutionality of the agency's funding arrangements. The nation's highest court is expected to rule on the issue in its upcoming term.

In its biannual supervision and regulation report, the Federal Reserve said the banking sector was strong but showing signs of shakiness after recent bank failures.

Comments from Federal Reserve Gov. Michelle Bowman last week show that supervisory reforms outlined by the Fed's top regulatory official could meet significant opposition, policy analysts say.

Balances reached nearly $1 trillion at the end of the first quarter, up 17% from a year earlier. The increase reflects higher spending by well-off consumers on travel and entertainment, as well as the pressure that lower-income households are facing from inflation and higher interest rates.

One of the oldest U.S. banks sees innovation as part of risk management, not a discretionary cost.