News

• ABA Banking Journal: OCC seeks to clarify procedures for approving, denying filings
• ABA Banking Journal: Senate, House committee leaders reach agreement on housing bill
• ABA Banking Journal: Talent and innovation in community banking
• ABA Viewpoint: Higher upfront APRs were a policy choice
• Beyond the Teller Window: Breaking Banking Myths
• CISA News: Anthropic releases its first Mythos-class model to the public

SDBA Updates

• HB 1238 Toolkit: July 1 Effective Date Approaching
• SD Bankers Foundation: Scholarships Offered Through our Member Banks

SDBA Events

• 2026 WBA Commercial Lending Development Program 
• 2026 SDBA IRA School

Online Education

• Additional Educational Opportunities

ABA Banking Journal: OCC seeks to clarify procedures for approving, denying filings

The Office of the Comptroller of the Currency today issued a bulletin to clarify its standards for approving or denying filings, stating that “it is important that the public understand how filings are decided under applicable laws, regulations and policy.”

The OCC said it is committed to acting on all filings in a timely manner, as appropriate to the nature and complexity of a filing. A filing may be returned if it is materially deficient, such as if it lacks required biographic information of the individuals involved in the institution, or if the filers do not sufficiently respond to agency requests for more information.

“When the OCC finds a significant supervisory, Community Reinvestment Act (if applicable), or compliance concern exists with respect to the filer, approval is inconsistent with law, regulation, or OCC policy, or the filer fails to provide requested information, the agency plans to deny the filing,” the bulletin states. “A filing is inconsistent with law or regulation if it does not meet the applicable statutory or regulatory criteria for that filing type.”

The OCC added that it plans to make all denial decisions public “in order to provide the industry and all applicable stakeholders awareness of how the OCC has applied the decision criteria in that proposal.”

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ABA Banking Journal: Senate, House committee leaders reach agreement on housing bill

The leaders of the House and Senate banking committees today announced they had reached an agreement on a bipartisan housing bill that includes several provisions related to banking, from brokered deposits to de novo bank formation.

The 21st Century ROAD to Housing Act would reward communities that build more housing supply, ease environmental review of new construction, rethink regulations that hamper additional lending for small-dollar mortgages, and expand tenant assistance and protections.

The House Financial Services Committee and Senate Banking Committee both introduced legislative packages aimed at increasing housing supply and affordability, but the two chambers disagreed on several policy points. The revised text incorporates priorities from both and is endorsed by the majority and minority leaders of the committees.

The revised text includes several banking provisions sought by House lawmakers, each previously introduced as a standalone bill:

• Custodial deposits of an insured depository institution would not be considered brokered deposits if the total amount does not exceed 20% of an institution’s total liabilities and the institution has less than $10 billion in assets. The bill also would modify the amount of deposits that are not considered to be brokered deposits under a graduated scale based on an institution’s total liabilities.
• The consolidated asset threshold would be raised from $3 billion to $6 billion for insured depository institutions to qualify for an 18-month examination cycle.
• Banking regulators would be directed to streamline the de novo application process and study ways to improve the growth of rural depository institutions.
• A new two-year phase-in pilot for de novo financial institutions to meet federal capital requirements.
• The Treasury Department would be required to establish a mentor-protégé program pairing large
  financial institutions with other depository institutions, with the goal of enhancing their capacity to serve customers and potentially act as financial agents.

The bill also would increase, from 15% to 20%, the Public Welfare Investment cap applicable to banks supervised by the Office of the Comptroller of the Currency and the Federal Reserve.

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ABA Podcast: Talent and innovation in community banking

Adam Metz, the newly appointed president and CEO of Central Pennsylvania-based Orrstown Bank, joins the ABA Banking Journal Podcast to discuss the bank’s strategy and growth, its dedicated innovation group, how the bank is using AI and the bank’s client-focused talent strategy.

Click here to download the episode

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ABA Viewpoint: Higher upfront APRs were a policy choice

Three key choices by lawmakers and regulators pushed credit card pricing toward higher annual percentage rates. Rate caps would have even more unintended consequences for consumers.

As some Americans face real challenges paying their monthly bills, policymakers in this election year have looked to find easy solutions as well as people and businesses to blame. One of the common targets is the credit card industry, and recently some have questioned whether the spread between credit card annual percentage rates, or APRs, and the Federal Reserve’s benchmark interest rate is evidence of excessive pricing by card issuers.

While APR margins have indeed widened in recent years, a close examination of the data shows the reasons for that gap lie less with card issuers’ decisions and more with the policy environment issuers operate in. Proposals to add price caps to that policy environment will only make things worse for consumers.

Let’s take a trip back in time to see how we arrived at today’s APRs.

In the wake of the 2008-2009 financial crisis, a mix of deliberate legal, regulatory and monetary policy decisions altered the credit card marketplace and the pricing of risk. Their goal was to improve transparency, limit certain repricing practices and make the entire banking system more resilient. But policies can have unintended consequences, and these decisions not only changed the rules governing the credit card market but also altered the economics of credit card lending.

Post-financial crisis reforms shifted pricing away from back-end fees and repricing mechanisms toward higher upfront interest rates. Today’s higher headline APRs are a predictable response to the legal and regulatory framework that emerged after the financial crisis. That shift does not mean that issuers are earning higher profits, nor does it mean that the total cost of borrowing for consumers has risen. In fact, when total borrowing costs are measured accurately in an apples-to-apples comparison (see figure 1 below) the overall cost of credit card credit has remained remarkably stable over the past 15 years, even as headline APRs have risen.

Accordingly, recent proposals to reduce APRs through interest rate caps fail to account for the underlying economics created by these policy choices. Rather than delivering meaningful savings, rate caps would further distort credit pricing, sharply reduce access to credit cards, and drive consumers toward riskier and less-regulated alternatives.

How lenders price credit

An APR represents the yearly cost of borrowing on a credit card when a consumer carries a balance. It reflects several key costs involved in providing credit, including the cost of funds (the cost issuers incur to obtain and hold the money they lend to consumers), operating costs (technology, employees, fraud prevention systems, cybersecurity, customer service, marketing and compliance) and provisions reflecting the risk of loss.

This latter point is especially important for understanding credit card pricing. The risk of loss is significantly higher for the vast majority of credit cards than it is for mortgages or auto loans because the latter are secured by collateral that can be repossessed if a borrower fails to repay. APRs also reflect the regulatory constraints card issuers face on pricing. Because legal restrictions limit how issuers can adjust pricing after a card has been issued, lenders must price future risk into their APRs at the outset.

Each of these components has been integral to the economics of the credit card industry for decades. However, as outlined below, the legal and regulatory environment establishing the rules of the road for credit card issuers fundamentally shifted in the wake of the financial crisis.

Three policy changes that altered credit card pricing

Three developments in particular have reshaped the credit card industry and APRs.

1. The Credit CARD Act. Perhaps the most significant development for credit card issuers following the financial crisis was the Credit Card Accountability, Responsibility and Disclosure Act of 2009. Prior to the law’s enactment, credit card pricing was far more dynamic. Just as auto insurers typically adjust premiums when a driver’s risk profile changes due to receiving tickets or getting in accidents, card issuers commonly adjusted APRs (for example through penalty rates) when a borrower missed a payment or experienced rising debt levels that affected their ability to repay previous loans. This system allowed card issuers to offer lower initial APRs to most borrowers; pricing could be adjusted later if a borrower’s risk increased. New restrictions put in place by the CARD Act (for example, limiting when an interest rate can be increased on an existing balance) effectively eliminated this risk-based repricing because policymakers wanted the cost of credit to be more transparent to borrowers. As a result, issuers now price in both current and potential future risk at the time a credit card account is opened. This achieves policymakers’ goal of more transparency, but it leads to higher upfront APRs and a wider APR margin from the beginning compared to the benchmark rate.

Evidence of this change can be seen by comparing consumer credit card APRs with small business credit card APRs, which were not subject to the CARD Act’s provisions. From the end of 2008 through the end of 2016, the average APR for a newly opened small business credit card account increased by 0.45 percentage points, essentially mirroring the 0.50 percentage point increase in the prime rate during the same period. Meanwhile, the average APR for a newly opened consumer credit card account rose about 1.85 percentage points, an increase nearly four times larger. This result provides strong empirical evidence that the CARD Act played a significant role in raising the cost of consumer credit.

Despite the increase in average APRs, however, data published by the Consumer Financial Protection Bureau in 2025 indicate that after accounting for changes to the prime rate, the overall cost of credit cards has remained relatively stable since implementation of the CARD Act. Specifically, as shown in Figure 1, the CFPB’s measure of total credit card borrowing costs has generally remained within a narrow range of approximately 11% to 12% over the last 15 years, with the 2024 reading of 11.8% slightly below the 2010 level of 12%.

That does not mean every borrower paid the same amount as before; rather, it suggests that the composition of costs changed. The restrictions on risk-based repricing and reductions in the amount and frequency of penalty fees that Congress mandated were offset by card issuers pricing risk at account inception into the headline APR. Put another way, the total cost of credit card borrowing has changed little overall; rather, costs were reallocated from riskier cardholders toward the broader population of all cardholders.

Figure 1: Total cost of credit card credit (consumer cards.)
Adjusted for changes to the prime rate

2. Higher capital requirements and balance sheet costs.

Post-crisis reforms significantly increased the capital and balance-sheet costs of credit card lending. Large credit card issuers now hold substantially more capital than they did prior to the financial crisis. Regulatory stress tests require banks to demonstrate that they can withstand severe economic downturns, including scenarios where credit card losses rise sharply. For example, the Fed’s stress scenarios simulate extreme conditions that have rarely been experienced outside the Great Depression and the 2007-08 Financial Crisis, such as 10% unemployment concurrent with a 30% reduction in housing prices. Because credit card loans are unsecured and revolving, losses can grow quickly during recessions. As a result, banks must maintain significant capital buffers against their credit card portfolios — not just during times of economic stress, but at all times.

Since the CARD Act effectively prevents banks from repricing credit to reflect evolving risk, the requirement to hold additional capital against credit card assets reduces the return on equity that banks can earn on those assets — unless pricing increases correspondingly, thereby increasing the overall cost of providing credit.

Further changes to accounting rules also increased the balance sheet impact of credit card lending. Prior to the financial crisis, banks commonly securitized portions of their credit card receivables through structures that allowed the vast majority of those assets to remain off their balance sheets. Post-crisis accounting standard updates largely eliminated this treatment, requiring most securitization trusts to be consolidated onto bank balance sheets. As a result, securitized credit card receivables are generally subject to capital and leverage requirements that apply to bank assets on the balance sheet. While these accounting changes were not unique to credit cards, they increased the amount of capital banks must hold against credit card portfolios, further raising the cost of providing revolving credit.

Finally, post-crisis accounting reforms also increased the upfront cost of credit card lending. Under the current expected credit loss accounting framework, lenders must estimate and record estimated lifetime credit losses at the time the account is originated. And because issuers are limited in their ability to reprice existing balances under the CARD Act framework, those costs are likely to be incorporated into the initial APR. The magnitude of CECL’s upfront reserving requirement is substantial, particularly for credit card portfolios. According to Federal Reserve data, credit card loss allowances at large U.S. banks increased by approximately 48 percent upon CECL adoption. Importantly, this measure reflects pre-pandemic economic conditions and therefore is not conflated with COVID-related provisioning. For unsecured revolving products such as credit cards, which are especially sensitive to changes in expected loss estimates, the accounting shift reinforces the broader post-crisis move toward higher upfront pricing.

3. Changes to monetary policy.

Another important factor affecting APRs is monetary policy. Prior to the CARD Act, issuers typically assigned fixed APRs to credit cards but could easily apply penalty rates if an account became delinquent. After restrictions on risk-based repricing were implemented, credit card APRs shifted toward variable rates tied to market interest rates, typically the prime rate. In 2022–23, the Federal Reserve increased its benchmark rate by roughly five percentage points in response to rising inflation. Because most credit card APRs are now variable, these increases automatically flowed through to consumers. Indeed, credit cards are an important part of how shifts in monetary policy affect the macroeconomy: when the Fed raises interest rates to counterbalance inflation risks, credit card borrowing becomes more expensive, which encourages more consumer saving and helps to slow inflation. These are the intended outcomes of such policy decisions.

What a rate cap would mean for credit cardholders

This regulatory backdrop informs proposals to cap credit card interest rates. Some policymakers have proposed limiting credit card APRs to as low as 10 percent, which a recent ABA analysis found would result in 73 to 85% of cardholders nationwide effectively losing access to credit. Voices from across the political spectrum — including the Progressive Policy Institute, the Committee to Unleash Prosperity, Americans for Tax Reform, the U.S. Hispanic Business Council, the Hispanic Leadership Fund, Prosperity Now, and the editorial boards at Bloomberg, the Wall Street Journal, and the Washington Post — all oppose credit card rate caps, and each commentator’s reasoning comes back to the same central point: when lenders are unable to price based on risk, credit availability will fall, and many cardholders with good credit will suffer from unnecessary price increases.

Rate cap advocates often dispute these facts, arguing that card issuers could continue to lend profitably to most cardholders even if APRs fell. However, the rise in credit card APRs since the CARD Act was implemented has not been accompanied by a commensurate rise in profitability — in fact, profitability has fallen over the last three years compared with the decade that preceded the pandemic (see Figure 2).

Figure 2: Annualized pretax return on assets at large U.S. credit card banks

Nor is the relevant question simply whether some borrowers would benefit from a lower stated APR in the short run. The more important policy question is which borrowers would still qualify for credit, at what limits, and with what product features if lenders were now prohibited from pricing for risk at origination, particularly given the restrictions they already face regarding risk-based repricing. Upfront APRs have risen because policy decisions have forced lenders to bundle more costs and cover future risks in the APR. Squeezing APRs without providing other mechanisms to account for risk would result in less generous rewards, lower credit limits and fewer cards — especially for marginal and subprime consumers.

The tradeoffs behind credit card pricing

In the late 2000s, policymakers made a conscious choice to require issuers to move away from fees and risk-based repricing and toward upfront pricing. They believed doing so would make it easier and more transparent for consumers to understand the cost of credit and compare across competing options. Regulators imposed more stringent capital requirements and accounting rules to help make financial markets more resilient to economic downturns, and later the Federal Reserve raised interest rates to fight inflation. Higher headline APRs today are the byproduct of the shift toward upfront pricing and reflect the cumulative effect of conscious and deliberate policy choices made over the past 15 years.

Imposing a rate cap on top of these regulatory and legal changes would lead to further tradeoffs: reduced access to mainstream credit for borrowers across the credit spectrum, lower credit limits, and fewer product benefits and features for those who maintain access. Those effects would not be incidental. They would be the predictable result of preventing lenders from pricing unsecured revolving credit in a manner that reflects expected loss, capital, servicing and compliance costs. Consumers who lose access to credit cards would likely turn to less regulated (and far more expensive) alternatives such as payday loans, auto title loans or buy-now pay-later products.

At a time when affordability remains a top consumer concern, the central question is not whether lower advertised rates sound appealing in isolation, but whether consumers would be better off after accounting for reduced access, tighter terms, reduced rewards and cardholder benefits, and substitution into costlier, less flexible, less transparent, and less regulated alternatives.

The answer is clear: given the current rules, a credit card rate cap would leave consumers worse off.

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Beyond the Teller Window: Breaking Banking Myths

CISA News: Anthropic releases its first Mythos-class model to the public

Anthropic is making its first Mythos-tier model available to the general public. On Tuesday, the AI lab announced it was rolling out Fable 5—the first widespread release of an AI model from a significantly more powerful class of model—as a general release, and Claude Mythos 5 to vetted partners who already have access to the Claude Mythos Preview.

It's a considerable step for the lab, which initially deemed Mythos-class models too dangerous to release owing to their increased ability to find cybersecurity weaknesses. It also comes just over a week after the company confidentially filed for IPO paperwork.

Fortune first reported the existence of the new and more powerful model in March after a data leak revealed its existence. In April, Anthropic officially announced Mythos, calling it a "step change" in capabilities. It opted to tightly control its rollout through an initiative called Project Glasswing. The project was aimed at giving cybersecurity professionals access to the models' cyber skills so they could strengthen their defenses against new threats posed by increasingly advanced AI models.

Now, Anthropic says it is confident new guardrails are enough to ensure these dangerous skills don't fall into the wrong hands.

"The reason why we're releasing Fable 5 now is very much due to us feeling more confident with our safety guardrails in place," Dianne Na Penn, Anthropic's head of product management, research and labs, told Fortune.

The company said that responses in specific high-risk areas, such as biology and cybersecurity, will be blocked and will, in most cases, be answered by Claude Opus 4.8, Anthropic's less powerful model, released earlier this year. The fear is that giving users free access to Mythos-level intelligence could enable bad actors to carry out more advanced cyberattacks or develop bioweapons more easily. The company also said it had extensively red-teamed its classifiers (machine learning algorithms) to test their robustness against jailbreaks.

Anthropic says the new model capabilities "exceed those of every model we've previously made generally available," and demonstrate exceptional performance in areas such as coding, knowledge work, and vision.

Penn said that Fable 5 is particularly strong at what is known as "long-horizon memory management"—an AI model's ability to keep track of what it's doing over a long, complex task.

Where previous models sometimes "lose the thread" partway through complex, long tasks, the new model is much better at remembering what it's doing over long stretches, she said. Penn added that the lab has seen improvements in self‑verification and instruction following: The model is more deliberate about checking its own work, validating assumptions, and course‑correcting before producing a final answer. These changes mean higher overall quality across both coding and non‑coding tasks, she noted.

"We think there are some use cases where it's a replacement [for knowledge work], whether it's coding or others, but we also think that it's really expanding the use cases," Penn said. "Now you could use a model like Fable 5 to run very long-horizon projects, potentially overnight … and that might include things like being able to review your whole code base for improvements.

"We recommend that customers give their most challenging work to Fable 5," she added.

The lab said that early data shows at least 95% of Fable sessions run entirely on Fable's own responses, rather than being routed back to Opus. However, Anthropic has faced backlash from some users in the past, who claim that the company's safety filters occasionally "over-block" benign requests or issue false refusals.

Penn acknowledged the guardrails might not be perfect the first time around.

"We recognize that there might be some benign requests that end up being blocked initially," she said. "We're working actively on making those safeguards improvements post-launch, but we wanted to make the model accessible generally in a safe manner as soon as we could."

Fable 5 and Mythos 5 are being offered at $10 per million input tokens and $50 per million output tokens—twice the price of the standard version of the next most advanced model, Opus 4.8.

This story was originally featured on Fortune.com

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HB 1238 Toolkit: July 1 Effective Date Approaching

HB 1238 takes effect July 1, 2026, providing South Dakota financial institutions with new authority and protections to help prevent the financial exploitation of consenting, senior, and vulnerable adults.

To help members prepare, the SDBA has developed a toolkit outlining key provisions of the law, common red flags, and practical implementation considerations. We encourage banks to review internal procedures, train frontline staff, and evaluate documentation and reporting protocols ahead of the effective date.

Financial exploitation continues to rise, making early intervention more important than ever. Access the toolkit today and begin preparing your institution for implementation.

HB 1238 Toolkit

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SD Bankers Foundation: Scholarships Offered Through our Member Banks

In support of the South Dakota Bankers Foundation’s mission to “Develop South Dakota Banking Industry Professionals,” the Foundation continues to offer scholarship opportunities designed to strengthen and sustain South Dakota’s banking workforce. These programs help support the development of current and future banking professionals by investing in education, leadership, and career growth within the industry.

For more information on South Dakota Bankers Foundation scholarships, contact Foundation Executive Director Halley Lee.

Deadline to Apply: June 30

Online Education

Participating in learning opportunities outside the bank can be challenging. Take advantage of the SDBA's extensive selection of webinars and on-demand training to enhance your banking expertise directly from your computer.

GSB Online Seminars
OnCourse Learning
SBS Institute
ABA Training

Learn how to put compliance management solutions from Compliance Alliance to work for your bank, by contacting (888) 353-3933 or [email protected] and ask for our Membership Team. For timely compliance updates, subscribe to Bankers Alliance’s email newsletters. 

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