Banking Collapse Update: The FDIC Dismantling is Underway

An update to the original analysis on the FDIC dismantling.

This is an update to the original analysis: The FDIC Is Being Dismantled—Most Won’t Realize Until It’s Too Late. If you haven’t read that piece, start here.

For actionable strategies, see the accompanying guide: The Playbook for Resisting a Banking Collapse.

When I published the original FDIC analysis in February, the dismantling of deposit protections was already underway—but still moving quietly. It was possible, then, to dismiss the warnings as speculative or premature. Now, nearly every structural change forecasted has materialized—on paper, in staffing, in policy, and in coordination with the Treasury.

This is no longer about early warnings. It’s about naming what is already happening while the public is still being told everything is fine. What seemed like long-term strategy just weeks ago has already begun reshaping regulatory structures in real time.

The collapse of institutional safeguards is not loud. It’s procedural. What was once a fringe blueprint is now being translated into law. This update tracks what has shifted, who is driving it, and what signals to watch for next.

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Why These Updates Matter for You

These policy shifts may seem technical or distant. But the weakening of FDIC oversight and the movement toward private digital assets doesn’t just affect large banks or cryptocurrency enthusiasts. It directly impacts you.

• Your savings: Deregulation is quietly transferring risk back onto depositors, meaning your personal savings and checking accounts could become less secure without clear public awareness.

• Your access: Centralizing control under the Treasury means fewer checks and balances. Decisions about your money—its protection, availability, and value—are becoming less transparent and more political.

• Your financial options: Rapid digitization and private-market solutions (like stablecoins and crypto) could exclude those who lack financial resources, technical literacy, or stable access to digital banking.

• Consumer protections: Recent legislation dismantling restrictions on overdraft fees and penalties directly exposes everyday consumers to heightened financial vulnerability, disproportionately affecting lower-income and financially insecure households. This isn't abstract—it's a direct hit to your financial safety.

• Crypto exposure: As deregulation fast-tracks cryptocurrency and digital finance, traditional banking institutions are increasingly involved in speculative activities. This creates a hidden layer of risk in seemingly "safe" banks, potentially putting your deposits in harm's way without you even knowing.

• Housing instability as a leading indicator: Recent data shows that FHA-backed mortgages—which typically support first-time homebuyers or those with lower credit scores—have accounted for 90% of the recent increase in mortgage delinquencies. This sharp rise signals growing financial instability among vulnerable populations, potentially foretelling broader economic stress.

The result: financial uncertainty isn’t just theoretical—it’s becoming structural. Understanding this is essential not just to protect yourself, but also to prepare for what may come next.

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Confirmed: The Dismantling is Now Policy

In the February analysis, I warned explicitly about planned leadership changes at the FDIC, staff reductions, and narrative shifts designed to normalize deregulation. All of these warnings have now materialized, reflecting a direct implementation of the Project 2025 policy blueprint.

The dismantling of the FDIC has gone from implicit to explicit. What was once observable through signals and strategic silence has now become formalized in policy and language.

• The FDIC has rescinded key regulatory proposals, including stricter brokered deposit rules and executive compensation limits—rules specifically designed to reduce reckless risk-taking in banks.

• Merger review guardrails have been rolled back, reopening the door to rapid consolidation and reducing barriers to “too big to fail” entrenchment.

• Examiners have been formally instructed to eliminate “reputational risk” as a supervisory category, following pressure from Congress and new guidance from both the FDIC and the OCC. This narrows the oversight lens just as emerging sectors—crypto, private fintech, AI-run financial platforms—are gaining ground.

• The FDIC has formally reversed its stance on crypto activity, stating banks no longer need prior approval to engage in cryptocurrency operations—so long as they manage risks “appropriately.” This marks a shift toward privatized digital finance with looser oversight, at a time when regulatory capacity is shrinking.

• In parallel, the Commodity Futures Trading Commission (CFTC) quietly withdrew its advisory imposing stricter conditions on crypto derivatives, further aligning regulatory stances across financial sectors toward lighter oversight.

• The FDIC has ended its decades-long practice of disclosing the total assets of banks on its “problem bank” list, leaving only a raw count of how many institutions are in distress. The size of potential risk is now intentionally hidden.

• Congress has also advanced legislation easing restrictions on banks' ability to charge overdraft fees and removing limits on penalties for bounced checks. This measure dismantles existing consumer protections, signaling a coordinated effort to shift financial risk and burden further onto ordinary consumers.

As explicitly forecasted, merger guardrails have been rolled back, examiner standards reduced, and crypto deregulation fast-tracked—each step precisely mirroring the sequence outlined in my original analysis.

Crypto was first, but it won’t be the last. Now that the regulatory framework has softened, expect similar approaches applied across other sectors under the guise of 'innovation.’

We've seen this quiet pattern of dismantling before. Historical precedents, such as Argentina’s 2001 banking freeze or the 2013 financial crisis in Cyprus, show how safeguards vanish incrementally, leaving depositors vulnerable without warning.

What’s unfolding now isn’t isolated or random—it’s coordinated. It reflects a deliberate philosophy: banking risk should be managed by markets rather than protected by public oversight. The FDIC isn’t simply weakening; it's being systematically hollowed out, even as public reassurances continue.

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Inside the Agency: Staff Cuts and Strategic Weakening

Structural collapse doesn’t always come from external pressure—it often begins from within. The FDIC is no longer just walking back regulations; it is reducing its own capacity to supervise the system it’s meant to protect.

• Roughly 10% of FDIC staff have already been cut, including over 450 employees who accepted buyouts and at least 160 terminated probationary staff. The cuts came swiftly, framed as part of a broader “efficiency” initiative.

• An additional 8% are on deferred resignation tracks, meaning they’re expected to exit later this year.

• 17% of remaining employees are eligible for retirement in 2025—a potential cumulative loss of one-third of the workforce within a year.

• The FDIC’s own Inspector General has issued warnings that these reductions put the agency at risk of failing to complete its legally mandated bank examinations by year-end—even as risks across the financial system continue to mount.

These are not cost-neutral reductions. Bank examiners take years to fully train. The system doesn’t simply bounce back when staffing resumes—it hollows out and stays hollowed, often until a crisis forces a reaction.

When deposit protections are quietly dismantled while the agency responsible is systematically downsized, the end result is not just deregulation—it is engineered fragility.

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Treasury Takes Control: Centralizing Financial Power

The dismantling of the FDIC does not exist in isolation; it is part of a broader effort to consolidate financial regulatory power directly under the Treasury Department. Treasury Secretary Scott Bessent, who also chairs the Financial Stability Oversight Council (FSOC), is now the central figure directing this shift, quietly turning a once-independent regulatory landscape into a single point of executive oversight.

• An executive order signed in March now requires independent agencies—including the FDIC, OCC, and CFPB—to submit their rulemaking and supervisory plans directly to the White House for review. This order, unprecedented in scope, effectively places their regulatory independence under executive control.

• A second executive order—“Modernizing Payments to and from Americans’ Bank Accounts”—was issued to accelerate the transition to full digital federal payments. While framed as modernization, it also lays groundwork for phasing out paper-based currency distribution, especially among the unbanked.

• A third order established a Strategic Bitcoin Reserve, using forfeited crypto assets as a national financial backstop. These symbolic shifts reinforce the administration’s orientation toward private-market digital assets over public monetary systems—and position Treasury as the operational hub for both.

• Internal leaks have surfaced, revealing active discussions around fully merging FDIC functions into Treasury and OCC oversight. Official denials have been issued, but internal preparation—including reassignment lists and structural planning documents—suggest these plans are well underway.

• Coordination meetings between Treasury officials and banking executives have quietly intensified, aligning policy shifts and reducing industry resistance. Treasury’s messaging has increasingly focused on “modernizing” regulation, signaling deeper deregulation and promoting privately managed stablecoin frameworks.

This centralization directly implements Project 2025’s explicit recommendation to 'reduce independent regulatory power and consolidate banking oversight under the Treasury Department,' confirming the deliberate, coordinated nature of these recent changes. Public oversight is quietly giving way to centralized executive control.

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Blueprint Confirmed: Project 2025’s Playbook in Action

The coordinated dismantling of financial oversight isn’t an isolated policy shift—it’s the explicit implementation of the conservative Project 2025 blueprint, which openly advocates for centralizing executive authority by dismantling independent regulatory bodies.

• Project 2025 explicitly outlines a strategy to rapidly "deconstruct the Administrative State," using an "army" of aligned political appointees ready to dismantle existing oversight from within. This mirrors precisely the current rapid staffing cuts and the quiet reshaping of agencies like the FDIC.

• The document emphasizes preemptive and coordinated executive and legislative actions to circumvent resistance and delay. This strategy is evident now in simultaneous legislative and regulatory maneuvers, alongside unified narrative framing across Congress, the Treasury, and regulatory bodies—employing language like "modernization," "efficiency," and "streamlining" to mask deeper deregulatory goals.

• A core tenet of Project 2025 is prioritizing market-based regulation over public oversight, precisely aligning with the current acceleration of crypto deregulation and the quiet privatization of financial risk.

Every structural shift now observed—agency consolidation under Treasury, reduced examiner capacity, and quiet crypto deregulation—directly confirms the accuracy of my original analysis and aligns explicitly with the Project 2025 playbook I highlighted a month ago.

Understanding this is crucial: the current dismantling of safeguards isn't spontaneous—it’s intentional, systematic, and now demonstrably unfolding as previously laid out.

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Why Crypto Is Being Pushed—And Why You Should Reject It

The dismantling of traditional financial safeguards isn’t happening in a vacuum. It’s being paired—deliberately—with the rise of crypto and stablecoins, framed as “freedom,” “innovation,” or “decentralization.” But these narratives are not accidental. They are engineered.

Crypto isn’t emerging as an alternative by coincidence. It’s being positioned—aggressively—as the replacement for a public system undercut from within. And the same forces accelerating that collapse are also behind the new rails.

This isn’t decentralization. It’s privatization in disguise.

The appeal is understandable. A failing system makes any alternative look viable. But crypto is not a neutral hedge. It is:

• Unregulated by design—and increasingly captured by a small elite of early adopters and tech-aligned capital

• Volatile by nature—offering false hope to those most at risk, while absorbing their losses

• Marketed as freedom—but built to strip away every remaining public protection

And most importantly, it is not separate from what’s happening to the FDIC. It is the intended replacement—a private, programmable financial system that serves those who built it and leaves everyone else to fend for themselves.

What’s coming is not a free market. It’s a fragmented one—without guardrails, without recourse, and without a clear place for ordinary people to stand.

Rejecting crypto isn’t about rejecting technology. It’s about refusing to follow the collapse of public protection into a privately governed void.

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Legislative Control and Narrative Engineering

The shift toward centralized financial control isn't simply a bureaucratic process—it’s being explicitly enabled through coordinated legislative maneuvers and carefully orchestrated public messaging.

• Congress is advancing the FIRM Act, which permanently removes "reputational risk" from bank supervision—aligning closely with recent OCC and FDIC regulatory changes. At the same time, the GENIUS Act pushes regulation favoring private stablecoins over traditional federally-backed deposit protections.

• Congress also contributed explicitly to this deregulation push by repealing an IRS rule that imposed stringent tax reporting requirements on cryptocurrency and decentralized finance platforms—a bipartisan signal that legislative support aligns with the administration’s deregulatory agenda.

• Across regulatory agencies, Congress, and the White House, terms like "modernization," "efficiency," and "streamlining" are being deliberately deployed in recent executive orders, guidance memos, and legislative discussions. Such coordinated narrative engineering doesn’t happen organically—it indicates an intentional strategy to frame deregulatory dismantling as neutral or even beneficial.

• Meanwhile, internal oversight bodies—including the FDIC Inspector General and the Government Accountability Office (GAO)—are increasingly sounding alarms. Their warnings directly contradict public assurances that the banking system remains robust. The gap between public messaging and internal reality is widening.

• The IG warned that examiner capacity may fall short in 2025 due to staff reductions—despite rising risk from high uninsured deposits and unrealized losses. GAO reinforced the message, noting structural weaknesses in oversight that pre-date these cuts.

This synchronized legislative and narrative campaign serves to normalize structural changes that would previously have faced significant public resistance. The goal is clear: reduce oversight quietly, while reassuring depositors that nothing substantial has changed—until it's too late.

Expect intensified narratives from mainstream financial media, increasingly framing banking instability as necessary market corrections or beneficial streamlining. Such narrative shifts typically precede significant reductions in depositor protections.

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Silent Alignment with the Financial Sector

While these regulatory shifts have moved quickly, major banks have remained notably quiet. That silence is not accidental—it’s a signal of alignment.

• CEOs from JPMorgan, Bank of America, and other major institutions have met privately with Senate Banking leaders and Treasury officials last month. Public statements have remained measured, suggesting quiet reassurance behind closed doors.

• No major U.S. banks have publicly opposed the ongoing changes. Instead, financial institutions are beginning to loosen internal restrictions—resuming relationships with controversial industries and moving cautiously into crypto and stablecoin markets.

• Regulatory filings show subtle language shifts: several banks have added new risk factors noting that changes to federal deposit protections could impact depositor behavior or liquidity. Others are increasing short-term liquidity buffers, hedging against reduced oversight in the event of instability.

These moves suggest a quiet understanding: the regulatory guardrails are coming down, and the largest financial institutions are preparing themselves accordingly. There is no panic—because the people with power are being briefed, not blindsided. The public will be the last to know.

Pay close attention to state or municipal funds quietly shifting deposits away from major banks. Such movements often indicate internal concerns about systemic banking stability.

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What to Watch for Next

The collapse of institutional safeguards rarely arrives with a headline. It unfolds through small, bureaucratic changes that only become visible in hindsight—unless you're watching for them.

These are the signals that we are entering the final phase:

• Legislative language consolidating regulatory agencies, especially provisions that would move FDIC functions under Treasury or the OCC.

• Further reductions in transparency, such as narrowed disclosure requirements for problem banks, exam schedules, or capital risk reporting.

• Changes to how bank examiners are deployed—or skipped exams altogether due to staffing shortages.

• Coordinated use of narrative terms like “modernizing deposit insurance,” “risk-based efficiency,” or “restoring market discipline.”

• Legislative or regulatory shifts that authorize cryptocurrency and stablecoins as private-sector alternatives to federally insured banking.

• Earnings call language from major banks hinting at shifted asset strategies, liquidity hedging, or risk positioning in the absence of expanded federal backstops.

• Executive orders accelerating digital payment infrastructure, particularly moves to phase out paper-based systems or centralize control over disbursement mechanisms.

• Legislative rollbacks targeting consumer protections on fees, penalties, and retail banking transparency.

• Increased banking exposure to speculative crypto assets and derivatives due to further regulatory leniency.

• Further easing of crypto-related tax reporting and AML rules, signaling a deeper shift toward opaque private finance networks.

• Media narratives increasingly framing banking instability as a necessary correction or beneficial market-driven reform.

• Accelerated movement toward Central Bank Digital Currencies (CBDCs), which would significantly enhance governmental oversight and control over personal financial transactions.

• Municipal or state deposits quietly relocating away from major institutions, signaling internal concerns over systemic bank stability.

These are not abstract indicators. Each of them signals that regulators are not preparing to protect depositors. They are preparing to redefine the boundaries of responsibility—and the public will be left outside them.

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Immediate Steps to Prioritize Now

Evaluate your bank's stability: Assess your bank's latest earnings calls, SEC filings, and public disclosures for indications of liquidity and risk changes. Move excess funds to safer assets like short-term Treasury bills.

Increase cash accessibility: Secure physical cash reserves to ensure liquidity if digital payment systems become unstable or restricted.

Diversify banking relationships: Spread deposits across institutions, prioritizing community banks or credit unions, and proactively secure alternative financial channels (like prepaid debit cards or secondary accounts).

Prepare low-resource financial plans: If your resources are limited, utilize low-cost resilience measures—such as prepaid debit cards, budgeting for potential fee hikes, and identifying local financial assistance and consumer protection resources.

Monitor legislative signals: Watch for emerging legislation related to consumer fees, digital payments, and cryptocurrency, especially provisions signaling further deregulation or reduced depositor protections.

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Final Takeaway

The dismantling of the FDIC is no longer theoretical. It is happening—through policy rollbacks, staffing cuts, and the quiet absorption of regulatory independence into a centralized executive apparatus. Outwardly, the system presents business as usual. Internally, it’s being hollowed out by design.

This is not just about weakening deposit protections. It’s about shifting financial risk back onto the public—while consolidating control into fewer, more politically loyal hands.

There will be no moment when they announce the system is no longer safe. There will only be phases of silence, then restrictions, then containment. By the time public trust is openly addressed, it will already be gone.

The goal of this update is not alarm. It is alignment.

To help you recognize the phase we’re now in—and to move accordingly before the system closes the window.

The question isn’t whether a different system is being built. It already is. The question now is: what will ordinary people be allowed to access within it—and how do we prepare if the answer is: less than we’ve had before.

For specific, actionable strategies, reference the original playbook: The Playbook for Resisting a Banking Collapse. You do not need wealth to move early—you need clarity. Acting on that clarity now gives you control over your financial future, while you still have room to maneuver. Additional strategies to come.

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