The Banker Next Door

What has 8 years of Jerome Powell at the head of the Federal Reserve brought us?

Jerome Powell’s tenure as the Chairman of the Federal Reserve is coming to an end after 8 years. What has he left us? To say he has left us a mess would be an understatement. The Fed has lost approximately $240B in the last three years. The Fed has unrealized losses in their bond portfolio around $1T. Inflation remains well above the Fed 2% target. Powell has NEVER brought inflation below 2% in his 8-year tenure. The Fed balance sheet is back up to $6.7T, over 2T higher then when he started as Chairman. Powell drained all the liquidity out of the REPO market by bringing down the Fed’s balance sheet. He has since started QE light pumping money back into the market via purchases of bonds and treasuries. Powell has made one misstep after another. He caused a blowup in the REPO market in 2019, he overstimulated the market during covid causing massive inflation, which he deemed as “transitory,” he over tightened interest rates blowing a massive hole in bank balance sheets and leading to a banking crisis in 2023. Now he seeks to be a “shadow chair,” causing additional problems before his final exit. This episode reviewed an article from The Wall Street Journal (subscription required) titled “How eight tumultuous years pushed Jerome Powell and the Fed to the limit.”

Bank News: Bank charters, NCUA chair, SBA rebound, and M&A activity

Bank News: Fintech company Parker files for bankruptcy. JPMorgan is investing $14M in anti-fraud projects. White House names John Crews to NCUA board. Credit Union membership growth returns to positive territory in 1Q 2026. Payward, the parent company of Kraken, is seeking to get a bank charter from the OCC. Augustus Bank receives conditional charter approval from the OCC. Stellantis follows Ford and GM by receiving an ILC banking charter from the FDIC. In M&A news, Hancock and Whitney acquires One Florida Bank in a $377.6M transaction and NexTier buys Bank of Dublin. SBA 7(a) lending rebounded in the 1Q 2026. U.S. regional banks realized year over year earnings growth in the 1Q 2026. This episode examined multiple articles from Banking Dive and S&P Global Market Intelligence.

BND: Strategy Room Bonus - Private Credit: Blue Owl, KKR, and BlackRock under invesigation!

This video is a clip from BND: Strategy Room Live Stream on May 16, 2026. This is an update on Private Credit. Private Equity has a problem as the industry has a glut of over $3 trillion in companies that need to be offloaded from their portfolios. PE net asset values are also being called into question. This leads us to Blue Owl. The valuation of their funds is coming into question. The Private Credit hot streak is officially over as defaults continue to rise. KKR’s private credit fund takes a $560 million loss. The defaults in the fund increased to 8.1% in the first quarter of 2026 and the fund had a write-down equal to about 10% of the NAV. At the same time, JPMorgan Chase led bank group reduced KKR’s line of credit. Federal prosecutors announced on Friday (right after the bell of course) that they are probing a BlackRock Private Credit fund due to write-downs and poor performance. The Federal Reserve is increasing NDFI lending disclosures for large banks (because they have the largest concentration). U.S. banks did disclose 1Q 2026 NDFI exposure. Finally, following up on MFS and First Brands. Bankruptcy administrators allege that MFS owner transferred half a billion dollars into personal accounts buying Ferrari's and Rolls Royce’s. The U.S. government asked the bankruptcy court to liquidate First Brands.

BND: Strategy Room Bonus - Real estate update

This video is a clip from BND: Strategy Room Live Stream on May 16, 2026. Rents for apartments are down for the 33rd straight month. April home sales disappointed. Only 11% of new construction is in urban areas. The majority of newly built residential homes are in the suburbs. If you do want to build a new house in an urban area the cost is very high. According to research from the National Association of Realtors, America has a surge of foreign buyers in the form of Chinese nationals buying with cash!  

BND: Strategy Room 5-16-2026

The Banker Next Door (BND) weekly live stream show. Strategy Room provides financial news, commentary, top stories in the business world, economic indicators, and all things banking for the week.

Review of OCC Semiannual Risk Perspective report for Spring 2026

The semiannual OCC report on risks to the U.S. banking system found that bank financials remain sound but risks around cyber threats and fraud continue to be a concern.  Bank earnings, balance sheets, liquidity, and capital levels remain strong by historical standards. Credit risk is manageable but there are concerns such as the maturity wall and private credit. Past-due, nonaccrual, and charge-offs remain below long-term averages. Cyber and various types of fraud threats remain a concern. Recent developments in AI present opportunities and challenges. This episode reviewed the OCC Semiannual Risk Perspective report for Spring 2026. A link to the report is included below.
Link: OCC’s Semiannual Risk Perspective Highlights Key Risks in Federal Banking System | OCC

Review of Federal Reserve Senior Loan Officer Opinion Survey (SLOOS) for April 2026

The Federal Reserve Senior Loan Officer Opinion Survey (SLOOS) for April 2026 examines how bank senior lenders are feeling about loan demand and lending standards. This report is released on a quarterly basis. The report found tighter lending standards for C&I loans. Unchanged standards and weaker demand for CRE loans. Unchanged or easier terms for almost all loan policies across CRE loan categories, which is interesting given the increase in delinquency on construction and multifamily loans. Unchanged standards and weaker demand for RRE loans. Unchanged standards and stronger demand for HELOCs. Unchanged standards and weaker demand for credit cards and auto loans. The survey also asked some special questions about lending to NDFIs. The survey found tighter standards and stronger demand across all five lending categories for NDFIs. This episode examined the quarterly Federal Reserve SLOOS report. A link to the report is included below.  
Link: The Fed - The April 2026 Senior Loan Officer Opinion Survey on Bank Lending Practices

Bank News: Failed bank CEO going to jail, M&A activity, AI activity, and payment fraud

Bank news: Failed Oklahoma Bank, First National Bank of Lindsey, ex-CEO Danny Seibel plead guilty to bank fraud and now faces up to 20 years in prison and a fine of up to $1 million. Cambridge Savings Bank has agreed to acquire First Seacoast Bank in an $80 million deal. BayFirst Bank makes a change at CEO and carries out an $80 million dollar capital raise. U.S. Bank takes a quieter approach to branch expansion. M&T Bank takes a patient approach to M&A. Kraken’s parent company Payward is acquiring a Hong Kong-based payments infrastructure platform named Reap in a $600 million deal. Anthropic continues to develop new AI offerings for financial services firms. Citi looks to scale AI agents across the bank. Citi is also making their pitch on improved performance. Chime found success with its AI agent Jade. Chime is also facing three lawsuits over a potential data breach incident. Finally, Fed is looking to launch a roundtable that would focus on fighting payment fraud. This episode reviewed multiple articles from Banking Dive.

Private Credit: NDFI lending tightens, Apollo tries transparency, and HSBC gets pulled in!

Problems in the Private Credit Market continue to unfold as banks are now tightening lending standards around Nondepository Financial Institutions (NDFIs). As this is happening, Apollo Global Management is trying transparency by offering their investors daily valuations for their private-credit funds starting at the end of September. Most funds provide this information on a quarterly basis. Apollo is trying to calm down fears of larger credit issues within its funds. Meanwhile, HSBC is getting pulled into the Private Credit conversation through ‘back leverage’. When MFS failed in February (U.K. mortgage lender), investors were trying to figure out who was going to absorb the losses. Through a chain of special-purpose vehicles, HSBC turned out to be one of the most exposed banks and is now expected to take a $400 million dollar loss. HSBC made a loan to Apollo Global, which then lent the money to MFS. This episode examined two articles from The Wall Street Journal and one article from S&P Global Market Intelligence (subscriptions required).

China is rolling up its rural banks to hide massive economic issues!

China’s economy has been dealing with a number of issues over the last few years. Mainly a real estate bubble collapse and trade issues with the U.S. These issues are spilling over into the banking system in the form of rural banks. Forced mergers are being used to stem potential chaos. The banks being rolled up are known as “village and township banks”. Years of weak oversight, low capital, and risky lending have left these banks vulnerable. The pace of banks being rolled up is accelerating from 83 in 2024 to 226 in 2025 to 72 so far in 2026. The question is how long can the banking system in China continue to hide their underlying issues through forced mergers? This episode reviewed an article from The Epoch Times (subscription required) titled “Wave of rural bank closures exposes growing risks in China’s financial system, analysts say.”