Fed holds rates as two officials vote to hike

Week’s Lead Stories

FED · OCT 28 · RATES HELD, 10-2
Fed holds rates as two officials vote to hike
The Federal Open Market Committee (FOMC) held its target at 3.75 to 4 percent on October 28. The vote was 10-2. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of a quarter-point increase. Chairman Kevin Warsh declined to commit to December, saying he does not believe in forward guidance absent a crisis. Two days later Dallas Fed President Lorie Logan said the Fed needs at least two more increases. CME FedWatch put the odds of a December hike at 75 percent on decision day, ABC News reported. The next decision is December 9.

MARKETS · OCT 30 · TECH SELLOFF

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Tech and AI stocks slide: On Friday the Nasdaq Composite fell 2.9 percent and the S&P 500 fell 1.8 percent, after Alphabet's 12.6 percent drop on Thursday. The SPDR S&P Bank ETF lost 1.1 percent. OpenAI cut its funding-round target by $10 billion to about $20 billion, the Financial Times reported. The FT also reported that Blackstone, which anchors the $63 billion financing of Anthropic's Broadcom chips, now expects Anthropic to be rated double-B, the top tier of junk. A bond sale for a Texas data center tied to Anthropic was shelved.

FED · OCT 26 · VACATUR AFFIRMED

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The debit cap loses its footing: For more than a year, larger banks' debit interchange has rested on a 21-cent cap that a district court vacated and then left in place during the Fed's appeal. On October 26 a three-judge Eighth Circuit panel affirmed that ruling. Judge David Stras held that "incremental cost" means the cost of one more transaction, so fixed costs such as fraud-detection software cannot count. The Fed must now write "standards," not a flat cap. The court set no deadline and named no figure. Issuers with $10 billion or more in assets therefore enter 2027 planning with a court-ordered method and no number.

FED · DEC 17 · MANDATE NO EARLIER

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Why the cap still applies: The 21-cent cap stays in force for now. The opinion takes effect only when the court issues its mandate, seven days after the 45-day window for seeking rehearing closes. That makes December 17 the earliest date. The panel left the Fed room to use a proxy such as average variable cost. A rewrite would likely run through Fed rulemaking before it binds anyone. A Sixth Circuit appeal of a Kentucky ruling that upheld the rule is still pending.

OCC · OCT 26 · BANK NOT YET OPEN

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Ripple's charter and the trust queue: Ripple Chief Executive Brad Garlinghouse announced on October 26 that the Office of the Comptroller of the Currency (OCC) had granted final approval for Ripple National Trust Bank. The approval completes the conditional approval granted in December 2025. Within a day Ripple had its partners lined up. Robinhood will use RLUSD, Ripple's dollar stablecoin, for institutional settlement, and BNY expanded custody for XRP and RLUSD. Galaxy Digital then applied for its own national trust charter, following Ramp's October 16 filing. The Independent Community Bankers of America (ICBA) opposes the Ripple approval. A national trust bank is uninsured, takes no deposits and makes no loans. No issuer yet holds approval under the GENIUS Act, the federal stablecoin law.

OCC · OCT 27 · FORMS COMMENT BY NOV 23

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Gould courts community banks: Comptroller Jonathan Gould told the Ohio Bankers League on October 27 that community banks can issue payment stablecoins through a subsidiary. He added that the OCC will soon accept applications from prospective permitted payment stablecoin issuers (PPSIs). An OCC fact sheet answers the community-bank objections. Large issuers face a full-scope exam every 12 months, while certain small issuers qualify for an 18- to 24-month cycle. The agency calls the effect on deposits uncertain and says it is monitoring outflows. Bank deposits may serve as reserve assets. Applications open only after the Office of Management and Budget approves the forms. Comments on those forms are due November 23. The rule takes effect January 18, 2027.

FDIC · OCT 30 · PROPOSED

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Part 370 on the block: The Federal Deposit Insurance Corporation (FDIC) board voted unanimously on October 30 to propose rescinding part 370. That rule requires insured banks with two million or more deposit accounts to build and maintain their own deposit insurance calculation systems. Those banks would instead come under section 360.9, the large-bank determination rule, amended to reach them. The FDIC says banks already under 360.9 face no new requirements. It also says the change would not materially impede its ability to calculate deposit insurance if such a bank fails. Part 370 stays in force until a final rule. Comments are due 60 days after Federal Register publication of the proposal [FDIC part 370 rescission proposal, Oct. 30].

WHITE HOUSE · OCT 25 · EXECUTIVE ORDER

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Housing executive order runs through FHFA: President Trump on October 25 issued an executive order directing the Federal Housing Finance Agency (FHFA) to lower the cost of owning a single-family home and carrying a mortgage. The order's first step makes the agency's existing title insurance waiver pilot permanent. The FHFA director is also directed to consider waiving appraisals, income re-verification and other documentation requirements for limited cash-out refinances, and to consider reducing or eliminating loan-level price adjustments (LLPAs) on mortgages sold to Fannie Mae and Freddie Mac. A separate pilot would cancel borrowers' mortgage insurance premiums proactively once they satisfy their equity requirements, measured at the home's current market value. The order arrives alongside Treasury's October 22 proposal to bar large institutional investors from buying single-family homes; comments on that proposal are due November 23.

Regulatory Developments

OCC · FDIC · NOV 2 · EFFECTIVE NOV 2

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Exam findings narrow on Monday: The joint OCC and FDIC rule on unsafe or unsound practices and matters requiring attention (MRAs) takes effect November 2. Under it, a cybersecurity weakness that does not threaten a bank's finances draws only an informal observation, and the bank need not act on it. The agencies still differ at the edge. The OCC's enforcement manual lets examiners demand a compliance plan for serious, systemic or repeat IT deficiencies, American Banker noted. The FDIC expects to require such plans only in rare cases. In an October 23 letter, Senator Elizabeth Warren asked the Fed, OCC and FDIC to rescind policies she says curb examiners. Her targets include the Fed's September update to its supervisory operating principles.

N.D. CAL. · OCT 22 · DISMISSAL DENIED

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App scams inside Regulation E: In Chen v. Bank of America, a federal judge in San Francisco ruled on October 22 that the Electronic Fund Transfer Act (EFTA) can cover a scam loss sent by wire. A caller posing as the bank took remote control of Ricky Chen's iPhone over FaceTime. The fraudster then used the bank's app to move $106,000 to a Chase account. Judge Edward M. Chen held that the debit from the customer's account was a separate intrabank transfer that the act covers. Phone access granted unknowingly gave the fraudster no "actual authority." The order denies a motion to dismiss a putative class action. It is not a final judgment.

OCC · OCT 29 · LETTER

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Preemption reaches climate disclosure: Comptroller Gould wrote to the California Air Resources Board on October 29. He asked the board to exempt national banks and federal savings associations from two state climate disclosure laws, or to clarify that they need not comply. The letter cites conflict with OCC regulation and Supremacy Clause concerns, among other grounds. It imposes no obligation on banks. State-chartered banks fall outside the request. Separately, state attorneys general urged a court to reject the OCC's bid to pause their challenge to its interest-on-escrow preemption rules.

CFTC · OCT 27 · LITIGATION PENDING

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Prediction markets meet prosecutors: The Commodity Futures Trading Commission (CFTC) sued Utah on October 27 to block state enforcement against federally registered contract markets. Days later Utah brought criminal charges in state court against Kalshi and its co-founders under its anti-gambling laws. Securities and Exchange Commission (SEC) Enforcement Director David Woodcock warned that contracts tied to corporate earnings could draw insider trading and manipulation cases, Bloomberg reported October 29. Kalshi is pitching Consumer Price Index futures to banks for a December launch, per Bloomberg.

TREASURY · OCT 27 · SUIT FILED

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States sue over ownership data: Twenty states and the District of Columbia, led by Oregon, sued Treasury and FinCEN on October 27. They seek to vacate the rule that exempted all domestic companies from beneficial ownership reporting. Those companies were more than 99.9 percent of the entities originally required to report. The complaint says the exemption effectively repeals the Corporate Transparency Act. It also seeks a stay of what it calls the "Data Purge."

…and 6 further developments this week — the full log is at lexregpulse.com.

Market & Macro Signals

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Inflation runs hot behind the hold: September's personal consumption expenditures (PCE) index, the Fed's preferred gauge, ran at a 3.6 percent rate. Core prices rose 3.1 percent from a year earlier, and the economy grew at a 3.4 percent annual rate in the third quarter. The 30-year fixed mortgage rate averaged 7.24 percent. Yields slipped late in the week. By Friday morning the 10-year stood at 4.93 percent and the 2-year at 4.60 percent. Warsh also said one of the eight meetings will carry no rate vote starting next year. The balance sheet comes up early next year.

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Hormuz keeps crude above $100: Crude futures rose to near $104 a barrel on Friday morning after a tanker attack in the strait. Attacks on ships reached a record in October. Treasury Secretary Scott Bessent said transit is back to pre-conflict levels "minus Iranian barrels." Tehran signaled it could reopen the strait within two days if Washington accepts key demands. President Trump may restart the campaign after Tuesday's midterms, Punchbowl News reported.

Earnings Watch

▸ PayPal beats, BNPL volume up 25 percent: PayPal posted an adjusted earnings-per-share beat of 8.5 percent. Buy now, pay later volume rose 25 percent.
▸ Robinhood beats by 5.6 percent, crypto revenue falls: Robinhood beat earnings estimates by 5.6 percent. Its crypto revenue fell 55 percent from a year earlier. The shares slipped 4 percent.

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Coinbase revenue misses, services near half: Coinbase reported third-quarter revenue of $1.22 billion, about 3 percent below estimates. Subscription and services revenue is nearing half the total, PYMNTS reported.

computed from company filings and verified earnings data

Industry Watch

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Community buyers cross state lines: First Community Bankshares of Bluefield, Virginia, will buy Ohio's Main Street Financial Services for about $243 million. The deal adds 21 branches, 17 of them in Ohio. Renasant will pay $142 million for Commercial Bank & Trust of Paris, Tennessee. UMB Financial will buy California's El Dorado Savings Bank for $506 million, citing low-cost deposits. The Fed approved The Bank of Nova Scotia's purchase of MapleMark Bank of Tulsa on October 29. It will be Scotiabank's first US commercial bank. Private equity firms CD&R and GTCR are in talks on a buyout of Global Payments, the FT reported, and those talks may not produce a deal.

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New charters and new owners: Upstart Holdings applied to the Fed to become a bank holding company by acquiring Upstart Bank, National Association. Comments are due November 27. Strategist Bank of southern New Hampshire said it won conditional FDIC and state approval, per its EIN Presswire release. nbkc bank agreed to assume LSBX's banking-as-a-service programs from Lincoln Savings Bank. The Numerica and SELCO credit unions plan a merger creating a nearly $8 billion institution. Truist is seeking a buyer for Afco Credit, Bloomberg reported.

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The Binance freeze test: Binance halted withdrawals on October 29 after a hack it says affected $6.3 billion. The FBI blamed a North Korean group. Stablecoin issuers, including those behind USDT, USDC, RLUSD and USD1, froze stolen tokens, and Binance put the frozen total near $3 billion. The hacker split $1.4 billion of bitcoin into 19 wallets no one can freeze. The FBI has asked DeFi operators to block the addresses. Binance says its reserve fund and corporate cash will cover all losses.

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Stablecoins reach the payout: Western Union now pays some remittance recipients in USDPT, its dollar stablecoin, which Anchorage Digital Bank issues on Solana. Stripe lets some OnePay customers deposit USDC, which converts to dollars in their checking accounts. Coinbase listed RLUSD, and Moody's rated the coin A2. Visa's stablecoin settlement has passed a $25 billion annualized run rate.

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Big banks pick their gates: J.P. Morgan, Bank of America, Citi and Morgan Stanley signed on to the DTCC Tokenization Service, which launched October 28 for round-the-clock blockchain stock trading. JPMorgan Chase and Goldman Sachs objected to their own shares trading on a tokenized venue planned by Intercontinental Exchange and OKX. At least five large US banks are blocking external AI agents from customer accounts. BMO, CIBC, RBC and TD are doing the same in Canada. Visa expects its AI partners in production to double.

Cross-Agency Patterns

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Federal preemption against state action: The OCC's California letter, the CFTC's suit against Utah and the states' ownership-data suit (Regulatory Developments) show the same contest from both sides. Colorado's AI law moves the other way: it pulls banks into scope.

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Supervisors ease, courts tighten: The MRA rule and the part 370 proposal reduce supervisory burden. The Eighth Circuit and the Chen ruling push the other way, on fees and fraud liability (Lead Stories; Regulatory Developments).

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North Korea on two fronts: OFAC's IT-worker designations name crypto converters, and the FBI tied the Binance theft to a North Korean group (Regulatory Developments; Industry Watch). Freezes worked only where an issuer stood behind the asset.

Fed holds rates as two officials vote to hike — Weekly Intelligence Digest, Nov 1, 2026