Banking Brief: Financial Services Insights

Although it did not advance through the 2025 legislative session, Indiana General Assembly’s introduction of House Bill 1625 marks a noteworthy moment in Indiana’s ongoing conversation around noncompete agreements. The proposed bill, which would have prohibited virtually all noncompetes entered into after June 30, 2025, signals Indiana lawmakers are increasingly willing to reconsider the role restrictive covenants play in today’s labor market. For employers across all industries, the proposed bill serves as a reminder that the legal landscape surrounding noncompetes is evolving and future legislative effort could push Indiana closer to broader constraints. While it is not possible to predict if a similar bill will be introduced in the 2026 session, now is an ideal time for organizations to assess how prepared they are for a potential shift.

When a borrower defaults on a commercial loan, the lender's initial steps can make the difference between a successful workout and a drawn-out collection process. It is essential to understand the lender’s options and act with purpose in addressing the default and properly documenting any further modifications to the credit relationship.

On August 7, 2025, President Trump signed an executive order titled “Guaranteeing Fair Banking for All Americans,” asserting that financial institutions have restricted access of individuals and businesses to financial services on the basis of their “political or religious beliefs or lawful business activities, "and that some financial institutions have participated in “[g]overnment-directed surveillance programs targeting persons participating in activities and causes commonly associated with conservatism and the political right following the events that occurred at or near the United States Capitol on January 6, 2021.”

In commercial lending, the decision to designate a party as a guarantor or co-borrower is more than a technicality—it can significantly impact a lender’s ability to enforce a loan. Mislabeling a guarantor as a co-borrower, particularly when they do not receive loan proceeds, often weakens a lender’s position in the event of default. This is a common point of confusion in loan structuring, and it may even seem counterintuitive, but missteps in this area can lead to costly challenges.

On May 12, 2025, the Consumer Financial Protection Bureau (CFPB) filed a notice that seeks to rescind changes made in 2022 for administrative adjudications. The rules for administrative adjudications allowed the CFPB to enforce many cases in-house instead of in federal court. Recission of these rules would decrease the authority of the director of the CFPB in the management of cases, in turn leading to fewer regulations for lenders.

Financial institutions that use code-based tracking technologies may soon find themselves facing increased scrutiny and legal exposure as the next wave of class action litigation begins. A recent class action lawsuit alleging Everwise Credit Union disclosed sensitive personal and financial information underscores the importance of transparency and consent in the handling of personal and financial information.

The Federal Reserve Board (Federal Reserve), Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have recently taken steps to permit traditional financial institutions to incorporate crypto and digital asset services.

On April 23, 2025, President Donald J. Trump signed an executive order titled “Restoring Equality of Opportunity and Meritocracy.” This order states that the U.S. aims to limit the use of disparate-impact liability in order to stay aligned with the Constitution, federal civil rights laws, and core American values. For banks and other financial organizations, this signals a big change in how they will be regulated.

While AI presents challenges and opportunities to all types of organizations, banks must be especially aware of the risks of unchecked AI use. A well-defined policy identifies permissible AI tools, establishes protocols for their use, enforces ethical safeguards, and ensures rigorous vetting of practices and procedures.

On January 16, 2025, Representative Andy Barr (R-KY) introduced a bill aimed at increasing the formation of new banks by easing regulatory requirements, particularly for de novo and rural financial institutions. Banks, financial institutions, and industry stakeholders should monitor this legislation closely, as it could present new opportunities for growth and investment.