The U.S. financial system runs on a simple principle, and the regulatory perimeter is what keeps it intact: if you act like a bank, you should be regulated like a bank.

That principle — what regulators call the "regulatory perimeter" — defines which institutions and activities fall under banking oversight. Banks inside the perimeter get meaningful privileges: federal deposit insurance, access to core payment rails like Fedwire and ACH, access to central bank liquidity, and the public confidence that comes with rigorous supervision. In exchange, they accept extensive federal oversight, strict consumer protections, and safety-and-soundness requirements built up over decades.

That tradeoff is the whole point. It's also why U.S. law has long separated banking from commerce.

The perimeter exists to do three things.

1. It protects financial stability, because banks are deeply interconnected and stress at one institution can spread fast.
2. It prevents government-backed subsidies from flowing to commercial firms that haven't accepted the corresponding obligations.
3. And it preserves fair competition, by preventing companies from using a bank charter to advantage their own commercial business or disadvantage rivals.

Risk grows when firms offer bank-like products without the same safeguards. Bank-like activities performed outside the regulatory perimeter, without the protective limitations banks accept, increase the risk of harm to consumers and the market.

The privilege of engaging in banking comes with the obligation to comply with robust oversight, supervision, and risk controls. Anyone offering bank-like services should meet the same standards that protect consumers and preserve the stability of the financial system.

Read CBA's full position on the regulatory perimeter.

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What Else We're Watching

McKinsey & Company Report: For Every $1,000 In USDC, Banks Lose $850 In Funding

What Happened: A new report from McKinsey & Company highlights with an estimation that if users convert $1,000 in bank deposits into third-party stablecoins, only $150 would flow back to banks as interbank reserves, while the remaining $850 would become U.S. Treasury securities held by the issuers of those stablecoins. Why It Matters: The report comes as the full Senate is considering the Clarity Act, which was recently marked up and passed by the Senate Banking Committee and reaffirms the banking industry’s concerns with potential deposit flight. What They’re Saying: As the report says:

“The future architecture for on-chain payments will likely involve a complementary system of stablecoins, tokenized bank deposits, and central bank digital currencies operating in concert. However, structural challenges, from liquidity and operational costs to balance-sheet impact, would need to be addressed.”

Yes, and: Earlier this week, Coinbase announced that it has brought direct deposit back to its users, approximately 18 months after ending a previous version of the paycheck deposit service in late 2024. Coinbase says that users can earn 4.1-4.7 percent APY with this new program.

• Coinbase customers can now allocate any portion of their paycheck to be deposited right into their accounts, and automatically invest it in either stablecoins or other crypto assets, without the platform's typical trading fees.

Looking Ahead: It remains to be seen when the Clarity Act will be brought to the full Senate floor for vote. As CBA has suggested, this is not about competition or innovation, it's about deposit flight, which leads to reduced lending.

Dive Deeper: To read the full report, click HERE.

CBA Releases Chart Book for Q1 2026

What Happened: Last week, we released our Chart Book for Q1 2026 which shows a continued mixed economic outlook.

• This is the sixth iteration of the CBA Chart Book; a quarterly snapshot of aggregate data and resources related to the retail banking industry.

Why It Matters: Consumer sentiment has weakened amid persistent inflationary pressures as elevated prices continue to weigh on household budgets. And, though consumer spending remains strong, it seems to be moving from a post-pandemic “K-shaped” recovery—where higher-income consumers significantly outpaced lower-income consumers—to a more balanced pace of spending growth across income groups, reflecting a more “E-shaped” spending pattern.

• Balances on credit cards continue to increase at a slower pace. A higher percentage of consumers are paying off their full credit card balance each month compared to before the pandemic, despite elevated balances. Delinquencies for credit card and auto loans show signs of continued stabilization and improvement as growth in consumer loan demand led primarily by prime and super-prime credit card borrowers.

Key Takeaways: This edition of the Chart Book highlights:

• Consumers: Total consumer debt increased in the first quarter of 2026, largely driven by increases in mortgages and home equity balances. Credit card balance growth continues to moderate and the share of consumers paying off their full balance every month remains above pre-pandemic levels. Delinquency transitions for credit card and auto debt continue slight declines but are still above pre-pandemic levels. The number of auto loan accounts increased in the fourth quarter. Student loan delinquencies remain at record levels, driven by federal borrowers in repayment who continue to fall further behind on payments and transition to default.

• Small Business: Small business loan demand remained flat compared to the fourth quarter of 2025 as reported credit quality remains sluggish. SBA 7(a) loan volume remained steady, trending closer to the pre-pandemic average after remaining elevated throughout 2024.

Dive Deeper: To read the full Chart Book, click HERE.

ICYMI: How America’s Leading Retail Banks Work to Understand their Small Business Clients and Build Frameworks to Support them Best

What Happened: As Small Business Month comes to a close, we wanted to reup our recent blog post that highlights the many ways in which America’s leading retail banks are working to support small businesses on Main Streets across the country.

Why It Matters: This blog showcases how three CBA members – TD Bank, JPMorganChase, and Huntington Bank – are utilizing surveys and data from the nation’s small business owners to better understand the state of the Main Street economy and best identify the tools and resources small businesses need to thrive.

TD Bank: TD Bank’s second annual Financial Preparedness Survey: Small Business Owners’ Report highlights the state of financial preparedness of American small business owners and their goals and ambition.

• In TD Bank’s survey, respondents (94 percent of small business owners) shared that while they are optimistic about the coming year, a lack of adequate savings and the constant threat of fraud remain ongoing concerns.

JPMorganChase: JPMorganChase’s American Dream Initiative is a multi-year effort to expand economic opportunity by scaling solutions to help the economy work for more people.

• As a part of the Initiative, Chase provides financing, advice, training, tools, and more to help small businesses. Much of this support work starts from the ground up – including a better understanding of the needs of small businesses across the country.

Huntington Bank: Huntington Bank’s 2026 Beyond Business Report – an annual study examining business sentiment and market conditions among small- to mid-sized businesses – surveyed over 750 small business owners and financial experts to share insights on the small business economy.

• Though small businesses remain optimistic about the future, many still face a complex operating environment. Nearly all (95 percent) of businesses report rising costs and wage pressure, while 87 percent of businesses cite cybersecurity and fraud risks as major threats.

Dive Deeper: To read the full blog post, click HERE.

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The Week Ahead

📅 June 2, 2026, at 9:30 a.m.
The Brookings Institution: The Powell years at the Fed: A retrospective
Washington, D.C., and Virtual

📅 June 3, 2026, at 8 a.m.
The Hill: Invest in America Summit
Washington, D.C., and Virtual

📅 June 4, 2026, at 10 a.m.
U.S. House Financial Services Committee: Oversight of Prudential Regulators
Washington, D.C., and Virtual

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What We’re Reading

• Axios: The CEOs are losing confidence
• Bloomberg: Fed’s Cook Prepared to Raise Rates If Inflation Lingers
• Cato Institute: Addressing Civil Investigative Demand Overreach at the Consumer Financial Protection Bureau
• CNBC: Kevin Warsh’s real Fed ‘regime change’ may happen deep inside Wall Street’s plumbing
• POLITICO: Factions inside the Trump administration wrestle over how to handle AI
• Point of Impact: The Mythos Moment and What It Means for Banking

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CBA Mentions

• The End of the Grad School Lifeline?, Inside Higher Ed, May 26, 2026
• It May Be Tough for Banks to Avoid Trump's Immigration Crackdown, Capitol Account, May 21, 2026
• Scott denies vote on bank-favored fix on yield, American Banker, May 14, 2026
• Banks lay out critique of deal to resolve Wall Street-crypto clash, POLITICO, May 8, 2026